Can you say economic recovery? Everyone is saying it around the country club, the congressional cloakroom, and it's even popular up at the White House. It's a term that's hip and now, and it's upbeat and positive and chock full of warm and fuzzy, but it is an absolute lie from alpha to zed.
"The deceleration in real GDP in the first quarter primarily reflected decelerations in private inventory investment and in exports, a downturn in residential fixed investment, a larger decrease in state and local government spending, and a deceleration in nonresidential fixed investment that were partly offset by an acceleration in PCE (personal consumption expenditure) and a deceleration in imports." (Commerce Department)
The Democratically controlled Senate voted down the jobs bill yesterday by a 56 to 40 vote. Republicans and Democrat Ben Nelson objected to the cost, but the bill was also full of give-aways that would do little to aid those suffering. Is suffering the right word when you once earned $700 or $800 a week and now must survive on $310?
The Senate will try again with clever ideas like cutting the amount of unemployment benefits.Missouri Democrat Claire McCaskill said, "This is not something that can go on indefinitely. Otherwise, it begins to look like a brand-new level of entitlement program, which is something that we really can't afford to do right now."
This same august body that recently voted with McCaskill to approve $7.5 billion in additional foreign aid for Pakistan is now worried that America's unemployed will get too comfortable on the dole. We can afford decade-long wars and can finance petty dictators around the world with $150 billion in annual aid, but to help our own people, in the worst economic times in almost a century, that needs long and careful consideration.
Nowhere to go, no money to get there and no money to do anything once I got there.
Yet, to these detached Earthkins, all is well. It's getting better all the time. California's Democratic Senator Barbara Boxer is ahead of Carly Fiorina and Boxer has the strong support of Silicon Valley because of her strong support for H1-B visas. Apparently there are no qualified American college students to work in Silicon Valley so we import them from overseas. It must be difficult to be an American college kid, working, studying, trying to do right and to be closed off from opportunity.
Meanwhile, back at the ranch, the stock market had their best two-week gain this year. Based on what? The rising new claims for unemployment? The falling GDP numbers? Or is it perhaps blind optimism based on free-money banking?
With ten million dollars borrowed for a mere $25,000, me and my Wall Street buddies can all invest in, I don't know, just for the sake of argument let's say Caterpillar. With my ten million dollars I can buy 163,300 shares for around $60.00 per share and my other banking friends decide to do that, too. Suddenly Caterpillar stock is in great demand and surges to $65.85 per share for a one week profit of $955,305, less, of course, that miniscule $25,000 interest charge.
No money for small business loans? Why should there be? The banks, with a couple of desks, a few telephones and computer monitors, can rake it in until the next crash. This is what was done on Wall Street in 1929; it is called pump and dump. Come Friday, when the suckers are getting in, the big boys are getting out. It is a sucker gambit where everyone waits to see when the shooter craps out.
Yet, not all stocks are created equally. Game Stop and Best Buy declined by 8 percent as well as homebuilder Toll Brothers down by 3 percent. Investment stocks go up while consumer stocks go down. Are they that divorced from reality? Forget that I'm a bleeding heart liberal and ask yourself, "Is that possible?" Do they actually believe the laws of gravity don't apply to them? Like Icarus do they believe that they can fly up to the sun?
The free money policy of .25 percent interest has addicted them to free money. Imagine that you could pick up the phone and borrow ten million dollars for next to nothing. Nothing! Then the guy from the local restaurant comes in and wants to borrow twenty grand to remodel. That's peanuts, that's like borrowing a quarter to use the phone. It's more trouble than it's worth so, sorry, pal. Besides, they can invest the money on Wall Street and be hip and now, to be positive and chock full of warm and fuzzy.
Then they can listen to the latest stock tip from their broker who says, "Buy Caterpillar!"The profits are grifted off as salaries, bonuses and dividends. We have a sick financial system hooked on free money, like a cat chasing its tail. More and more money chasing less and less profit until it one day it creaks to a stop when they get tired of swapping each others' money.