by Mike McCune
The elitist Washington economists deserve to be laughed at for their adherence to the Beltway’s continued belief that creating debt is the only way to contain debt. The rest of us have to be laughed at for the continued popular belief Washington can do anything about the economy’s problems. All you have to do is follow Ben Bernanke’s thought process in Wednesday’s disastrous press conference and the ensuing meltdown in Thursday’s stock market to realize the futility of our government in the economic arena.
My stance has been steadfast–Washington cannot create jobs, it can only destroy them or, to borrow a phrase from the movie “King Ralph” when his secretary was speaking to the new king, “You are prohibited from solving problems. Unfortunately you are not prohibited from creating new ones.” Washington, please take heed!
Bernanke’s shrug-off “I don’t know what we can do now” as the realization all his and Obama’s efforts are producing the opposite results of what was planned, put the whole of Wall Street into a panic mode. Follow this with the news release the Administration plans to tap the strategic oil reserves and Federal Reserve’s admission it miscalculated on how long the “temporary” economic setbacks would persist and these buffoons’ two-step is revealed for the farce the electorate never anticipated in ’08. When you don’t elect a leader but a anti-government rebel what you get is a loss of any positive direction you had. Obama, unfortunately, was only a rebel without an iota of talent when it comes to directing the band.
Behind the flash bulbs and TV cameras following Obama’s campaign kick-off, the two underlying factors of housing and unemployment continue to be the spearhead of a myriad of chronic economic problems Washington cannot solve. The problem with housing goes back to Washington’s belief it could magically banish the tests of credit worthiness and put everyone into the home of his or her choice without punishment. When this once mighty American sector collapsed under the weight of underwater owners, the jobs market was flooded with unemployed construction workers which caused deep problems in a banking sector now awash in mortgages that now weren’t worth the paper they were printed on. People who own their homes are beginning to tire of waiting for a bottom to be reached so they know what they actually have valuewise. Meanwhile their erosion of confidence can no longer be masked by Washington’s spin doctors.
This housing collapse began in the fourth quarter of 2007. Now, nearly four years out, Bernanke’s belated announcement he misjudged the depth of the housing and unemployment problem shows how Washington’s skewed “progressive” thinking is cutting the heart out of America’s economy. But it isn’t just here but across the globe, the population’s belief in government’s ability to fix problems is leading the way to changes of extreme magnitude.
The European Central Bank renewed warnings about the EU’s debt crisis almost at the same time 28 countries announced increases in oil production. While that may supply energy relief in six to eight weeks to pump prices, the immediate effect pushed oil stocks much lower, creating a market sell-off that had reached 230 points at mid-morning Thursday.
Within minutes of the ECB’s report came the U.S. jobs report. First-time claims rose to 429,000 when major economists had projected a slight decrease. Again, Beltway and Wall Street “experts” are too insulated from the real world to know what they are talking about. They continue to ignore the averge person’s plight because Wall Street and DC are going so well. But the significance of the jobs report: the four-week average was unchanged at 426,500. That means the more stable measure is going to move higher again next week, not lower as projected just last month.
The next report to come in was May’s housing records. This area was expected to be hit hard (some had even said it was the nadir point for home sales) but the annual pace of 319,000 units made it the weakest part of the economy by far and pointed to continued problems on the jobs front. What is really galling is housing continues to lag some two years after the recession officially ended. Sorry DC, something doesn’t end because the President issues a statement to that effect. Come take a look at us unwashed masses outside your gates. The recession lives on and is having a good party.
Companies that pulled back on spring hiring because of higher food and fuel prices might be able to rehire when the lower fuel prices reach the pump. But the inflation problem won’t be solved because by then the damages done to the anticipated harvest by a late, cold, wet spring will be better known. along with the effects of other new laws forcing management to refigure costs while trying to winnow nickels from the dollars they once earned.
But the ”private economists” who are attached at the hip to Wall Street didn’t help Wall Street’s mood Thursday. Those geniuses tested the winds and are now dropping their stated hiring goals for the year. America is expected to create only 1.9 million jobs this year (how many outside of government was not answered) and the 9.1 percent unemployment rate is expected to drop all the way to 8.7% by 2012 even if Labor does change the way it counts the “unemployed” before then.
I know Ben and Barack won’t tell anyone this economic trend will continue until Americans, as a whole society, stop looking to Washington for answers and start looking at the person in the mirror. Unfortunately our public education, as decreed from Washington for 47 years, has taught too many they’ll be equally rewarded whether they put out an effort or not.
By the time this commentary was finished the markets had recovered somewhat but the DJIA was still below 12,000-Mike
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