Tuesday, September 15, 2009

The One Reason the Recession Is Not Over…


A year ago we wrote plenty about the collapse of the Investment Bank economy on Wall Street due to years of frontier-style deregulation. Lehman Brothers imploded exactly a year ago this week. Now, today, --Ben Bernanke, says the recession is “probably over.” Well, I think our Federal Reserve Chairman Ben Bernanke is “probably out of touch.” He said this recession is over, while fully acknowledging that the almost 15 million unemployed Americans will remain jobless as the nation “recovers.”

I don’t think that Ben Bernanke and I have the same definition of “recovery” in mind. I’m not even sure if he’s from the same planet as myself and every other person doing the living and dying on earth. If you’re reading this and you’re out of work, what in hell does “probably over” mean to you? For that matter what does a “recession” or “recovery” mean to you?

If you don’t have a job, no amount of macroeconomic rationalization will help you. In fact the easing of credit and flow of goods is just a slap in your face, because you can’t pay for any of it.

Aside from the obvious intrinsic ties to that entire “supply and demand” concept that is practically religion here and in the United Kingdom (or for that matter its cynical, Randian cousin “supply-side economics”), there are a host of reasons why we need all people at work in America and throughout the world (read consumers) who can actually pay for things. The most important among these reasons is the consumers themselves, because they and the citizenry they benefit with their work and taxes are one in the same. When people are out of work it doesn’t just mean boom times for Campbell Soup Co. and bad times for Ruth Chris. It means the fabric of society is coming undone. Every fraction of a percentage point up in Unemployment is another tear. We’d do well to remember Flint Michigan in the 1980s, and remember New York City in the 1970s. We must remember that every riot we have ever had in this country had an ultimate, underlying economic cause. Violent crime will inevitably rise with unemployment, igniting a holocaust in regions where unemployment soars above the national averages.

But Ben Bernanke says the economy “likely is growing now,” warning that “growth” won't be sufficient to stave off the unemployment rate from rising from its (as of this writing) 9.7 rate; nearly double what is considered “normal.”

“Normal” is a word that should be legislated into disuse. No term with such built-in relativity can be harmless.

The consequences of crime, deregulation and greed “from above” are now wrecking lives anew “down below.” The cycle will “likely continue” in my estimation as the usurious credit card debt that is crippling the nation’s consumers, out of work or not, finally brings the remaining transnational banks to a reckoning not imagined since the evaporation of Bear Stearns.

The question remains, who will be the next parade of “experts,” officials, financiers, bankers and regulators who will claim not to have seen the next collapse ahead of time? Who will be the new fools charged with telling the world they did not know that joblessness would wreck every remaining institution in the now Global economy?

What fool believes this recession is over?



Jack Jodell said...

Brilliant post and superbly relevant analysis, SJ! I would suggest that joblessness is actually the proof that the recession is not over, not the reason. I believe the actual reasons it has not ended are two-fold. One, conservatives and Republicans fought and successfully limited the size of the President's stimulus package. The GOP is too callous and stupid to recognize that if you feed a sickly-thin person only 1500 calories a day he will continue to lose weight, or, at best, only maintain the weight he has. This patient requires a temporary level of about 3600-4000 calories, but the GOP would only allow half that, hence continued job losses. Two, the big money boys on Wall Street have recovered from their light slap on the cheek, and now it's once again business as usual for them, overblown salaries, risky maneuvers, market manipulation and all. Until we get some strong, widespread, fundamental market regulation and reform back in place, this economy will remain weak and anemic.

SJ said...

I agree, the cynnic in me thinks the GOP was and still is willing to whittle away any efforts to ameliorate our situation (we the people) at the ground level with stimulus because they don't want it to work, same goes for healthcare, frankly.
The last thing Boehner and company want is for any Democratic-authored or sponsored plan to be effective.
I understand your point about joblessness being a symptom, or indicator of the problems in our system.
But if,
our government attacked joblessness today the way FDR's administration did after the Great Depression, in effect treating it like a disease to be quarantined by region and then obliterated by the WPA and other aggressive innovations instance-by-instance; I think we'd see the advantages of turning supply-side economics, and trickle-down economics on their head.

Jack Jodell said...

You are SO very correct! And if our government were to start actually dealing with our many problems at hand instead of always bending to lobbyist pressure, there would not only soon be full employment, but effective and visual progress in areas of infrastructure decay and overall quality of life issues, too. That's why we've all got to keep kicking their butts over to our side and away from the corporate sugar daddies!
Hey, miss hearing from MyCue23! Is he ok, or just waiting in the weeds, thoroughly disgusted and left speechless by the current scene?