“Hard times in the land of plenty:
Some got it all and the rest … ain’t got any.” — Hard Times in the Land of Plenty, Omar & the Howlers
After a full week of the American Stock Market tanking, it’s finally drawn attention of politicos in Washington that the economy’s not doing so well! My first response to these folks is “Welcome to America in the 21st century! So where’d you fly in from?”
It nonplusses me to no end how our elected officials and the over-accommodating media have managed to overlook this for so long with so many warning signs practically shoving themselves in their faces. The home loan crisis didn’t just materialize last night. The high fuel costs and accompanying rise in utilities didn’t arrive in the mail this morning. The record number of individual bankruptcies, especially among middle and working classes, didn’t weren’t the byproduct of last week. It took a tremendous effort to keep their eyes averted from this subject for so long – and now to act surprised!
So all of a sudden, now that it’s worked its way up the chain far enough to start affecting the wealthy by the slumping sales figures and downtick in profits, the evaporating consumer confidence and the plunging stocks, we see them all take notice! How quaint!
Why is it that economic hardships are never even noticed until it affects the rich?
Does anyone in DC realize how long it takes for a recession to work up to the point that the wealth class takes heed? (So far, about six years as it currently stands). Did it ever occur to them what’s happened to the middle class, the working class, the working poor and homeless who’ve been submerged in this long enough for the water level of hard times to rise its way to the point where it finally starts wetting the tootsies of these upper level folks? Apparently not.
The insular elite are just now recognizing the gathering clouds moving inland over their Shangri-la, so now it’s a pressing issue. For years, the rest of us out on the coast have weathered this storm and have been battered by wave after wave of layoffs, outsourcing, offshoring, stagnant or declining wages, disappearing benefits, smaller businesses withering and dying from “flat-earth” economic competition, the shrinking dollar, and rising costs on everything from health care to insurance to gasoline to food.
And what relief did we coastal “lowlanders” receive?: Rhetoric about how great the economy is and, as recent as a few weeks ago, how the economy is “fundamentally sound.” No one could hear us over the howls of the ravaging storm.
Now that this gradual redistribution of wealth from bottom-to-top has taken seed and dampened their sales and thus their market futures, Wall Street and the investors “demand the Fed take action now!”
“Show me the money! Show me the money!” — Cuba Gooding Jr. & Tom Cruise from the movie “Jerry Maguire”
They want bailouts for the investors who are bleeding from their vicious losses in the speculative sub-prime loan market. These investors were more than happy to rake in money hand-over-fist while the sun shone, and now that it’s finally begun to rain on their parade, they want a government bailout. So much for the “free market economy” and accepting risk when investing! Whatever happened to that aversion to the welfare state and irresponsible freeloaders trying to make a buck off of “Uncle Sugar”? Ah, maybe it’s only the “little people” who should accept the losses from risky commitments, not the high-dollar types. That’s a nice little dual standard, to say the least.
Some want the Feds to continue aggressively slashing interest rates. Of course, this raises the specter of attendant inflation – which we’re already experiencing, mind you – as interest continues to be slashed simply to prop up job growth, meager as it is. If we look at the last period of stagflation, the inflation eventually climbed to the point to where there had to be draconian choices resulting in layoffs and unemployment in the Reagan years that climbed well into the double-digits. Sure, that’s what the lower-90% of this nation’s economy needs to boost confidence: either scarce jobs, or continued stagnation of wages with even higher prices. Businesses? Eh, they’ll keep raising their prices to keep pace with inflation or simply cut loose the workforce when needed.
Fed. Reserve Chair, Ben Bernanke and President Bush seem to believe that providing a tax break for everyone will help “get money into the hands of the consumers” immediately, in the hopes that we’ll turn around and spend it on consumer items. So for the lower levels of the economy, we’ll see a couple hundred dollars. Considering the increasing difficulty in just making the basic bills, chances are that will help catch up with some of those and perhaps a precious little for some small-ticket items. That’s a “Band-Aid” per Michael Niemira, chief retail economist with the International Council of Shopping Centers (ICSC). “It won't get consumers out of the woods," Niemira noted, adding that “the rebates will also add to the national debt.” That’s a solution as sound as giving a crack-head a twenty because the dope-dealers are standing around idle and need to drum up business. As a country we don’t save money, we pile on more debt, and yet Bush wants to put money into indebted hands to go out and spend on our consumer fix. They can’t be serious.
Then there’s a solution proffered by Glenn Beck of CNN, and conservative business types everywhere: make the tax-cuts – especially corporate tax cuts – permanent. Surely he couches his argument with a neat enough cover – the needs of small businesses to expand, to compete and to hire. That part sounds fine. But Beck slickly slides in corporate tax breaks under the guise of “helping the little guy.” Therein lies the true issue that’s gotten us to this situation we’re in currently. Over the course of the past quarter century, the gap between haves and have-nots have grown beyond mere fissures to the size of the Grand Canyon, especially since the millennium. As a result of Bush/Cheney tax policies and big business giveaways, corporate profits reached stratospheric profit levels even just over a year ago. Yet even with all of this unprecedented profit, we still saw bankruptcies rise, foreclosures rise and consumption drop. Oh, don’t forget – there was also a mass increase in high-end consumer products and a very robust spike in multi-million dollar home sales. Business profited specifically due to Americans losing jobs to cheaper foreign labor and domestic demands to produce to offset any possible consideration of moving jobs overseas. How very Republican.
The result of this Capitol Hill / Media sensitivity to corporations and wealthy along with their tone-deafness to the American workforce results in everyone from middle management on down learning to fear their own career free-fall and attendant loss of income. That causes cutbacks and downscaling in spending. As this trend continues, and as costs continue rising, the entire lower 90-percentile learn that hard times are here to stay and that there may be no help in sight. Obviously folks like us plan on as little spending as possible, regardless of whatever little tax rebates occur. Lowering interest rates provide nothing to the most impacted, nor do bailouts of investors in mortgage banks.
Glenn Beck and the corporate set’s hopes to provide a market boost by making permanent the very same tax breaks and incentives that have created this chasm of disparity are laughable. It’ll be great for the upper 5% who will reap the lion’s share of the tax breaks – bully for them. But if you want spending to perk up again to make up for the lower 90-percentile’s economic anorexia, well … you need to go bother these upper 5% to pony up and get out there to buy enough to make up for this shortfall. If they can be gluttons for income, then they should be gluttonous consumers for the market.
I may be a layman with no economics schooling, but I’m not stupid enough to buy a polished turd.
Personally, if I got a couple hundred dollars in tax breaks, maybe I’ll begin using a little bit of heat or air conditioning or perhaps fill some of the prescriptions I’ve let lapse or go dormant thanks to the austerity of “Economic Recovery.” No real marketplace impact there.
Then again, it’s probably smarter to just continue doing without … and save the money for the foreboding possibilities in the oncoming storm. There’s a distinct feel that it’s time to hunker down and hang on for dear life. Welcome to America in the 21st Century.
“Breathe deep the gathering gloom.
Watch lights fade from every room.
Pensive people look back and lament,
Another day's useless energy's spent.” — Nights In White Satin, Moody Blues
“For what shall it profit a man, if he shall gain the whole world and lose his soul?” — Mark 8:36, Jesus Christ