Ever since the Great Recession shook the foundations of the
U.S. economy, President Obama has been promising recovery. Evidence of
this recovery, we were told, was manifested in the massive post-bailout profits
corporations made. Soon enough, the President assured us, these
corporations would tire of hoarding mountains of cash and start a hiring
bonanza, followed by raising wages and benefits. It was either wishful
thinking or conscious deception. The recent stock market meltdown has
squashed any hope of a corporate-led recovery.
The Democrats fought the recession by the same methods the
Republicans used to create it: allowing the super rich to recklessly
dominate the economy while giving them massive handouts. This strategy,
commonly referred to as Reaganomics or Trickle Down Economics, is now
religion to both Democrats and Republicans; never mind the staged in-fighting
for the gullible or complicit media.
When it becomes obvious to even the President that the
economic recovery never existed beyond the bank accounts of the rich, questions
will have to be answered. Why, for example, did nobody in either political
party foresee the disastrous consequences of the bailouts? Not only did
the U.S. deficit drastically increase but the same U.S. corporations that
caused the recession were given reinforcement for their destructive actions,
ensuring that it would continue unabated.
In his book, Crisis Economics, Nouriel Roubini outlines
the insane response to the recession by Republicans and Democrats. Because
both parties simply threw money at the banks and hedge funds instead of
punishing them, a condition of "moral hazard" was created, meaning,
that banks would assume another bailout would come their way if they destroyed
the economy again -- too big too fail, remember? Roubini explains how the
Democrats allowed the "too big" banks to get even bigger; how Wall
Street salaries based on short-term profits went unregulated; how the regulations
that were put into place were inadequate and filled with loopholes; how nothing
of any significance changed.
Roubini has also written extensively about how the post-bailout Federal
Reserve policies were fueling a commodity bubble that may be in the midst of
bursting, possibly triggering a double dip recession. Essentially the big banks
and rich investors were borrowing cheap dollars from the Fed and investing
abroad in commodities with the hopes of higher returns. Roubini
"The risk is that we are planting the seeds of the next
financial crisis...this asset bubble is totally inconsistent with a weaker
recovery of economic and financial fundamentals." (October 27,
This investor-created commodity bubble pushed up prices in
oil, food, and other basic products, causing further pain for working families
and the economy as a whole. This speculative bubble was easily predictable
but ignored by both political parties, since they claimed the bubble was a sign
Another mainstream economist, Paul Krugman, also admits
that the rich's death-grip on the U.S. political and economic system is causing
pain for everybody else:
"Far from being ready to spend more on job creation,
both parties agree that it's time to slash spending - destroying jobs in the
process - with the only difference being one of degree...policy makers are
catering almost exclusively to the interests of rentiers [rich investors] -
those who derive lots of income from assets, who lent large sums of money in
the past, often unwisely, but are now being protected from loss at everyone
else's expense." (June 10, 2011).
Krugman explains that this process continues because the
rich dominate the political system through campaign contributions, "access
to policy makers," promises of high paying corporate jobs after their
congressional term is over, and good o'l fashion corruption. Because he's a
true blue Democrat at heart, Krugman nevertheless focuses most of his rage on
Krugman's repeated calls to Democrats and Republicans to
create jobs have fallen on deaf ears. Both parties agree that the
"private sector" [corporations] should create jobs; until they decide
to hire, nothing will happen. This is not merely "bad policy,"
as liberals like Krugman like to fret about, but the conscious agenda of the
rich. Corporations and rich investors love high unemployment. The
Kansas City Star explains why:
"Last year , for the second year in a row, U.S.
companies got more work out of their employees while spending less on overall
labor costs." (February 3, 2011).
It really is that simple. High unemployment creates a
downward pressure on wages, allowing employers to work the remaining employees harder and
thus to increase profits. This dynamic, combined with the above commodity
speculation, has been the entire basis for the corporate recovery, while
working people have literally seen nothing beneficial.