Monday, October 5, 2009

The view from the bottom of the open grave

Desperate to stop any new stimulus plan from Obama, the corporate media even dusted off Alan Greenspan for the Sunday talk shows. He stated emphatically that we should not have any new stimulus plan to create jobs but we should just extend unemployment benefits instead. His reasoning is that the debt is getting too big. He didn’t say where the money will come from for benefits when no jobs are created. He went on to claim he had always been careful to keep the debt below a level of the GDP that would cause any problems. --- Oh really. What caused the mess we are in exactly? The Fed was loaning money at such a low rate that when adjusted for inflation Greenspan was really paying banks to take the money. Can you say "debt bubble"?

The Republicans who ran up 12 trillion in debt and under funded everything for even more trillions are counting on the Democrats being cowed into not spending any money. It worked with Clinton. So why not just do what Clinton did? Times were great, right? Clinton and Greenspan created a series of bubbles that revolved around massive consumer debt while the manufacturing base was sold to China. That trick simply can’t be repeated. We are at the bottom of an open grave, more digging won't help.

So much money is disappearing from the economy because of the collapse of the debt bubble that without massive government spending we would go into an out of control deflation spiral consuming our entire economy. The Republicans are whining that Obama is spending so much money that 40% of the GDP is now government spending and they complain that state and local governments are cutting back at the same time. The implication is of course that the FEDERAL GOVERNMENT is taking over! But Obama’s spending has been quite modest, most of the "stimulus" went for tax cuts and bank bailouts. Things that the Republicans claim will always fix what ails you.

The reality of course is that the Republicans have effectively destroyed the economy so that the government is the only thing still working. The GDP is shrinking rather than the government growing and if the big box stores weren’t filled with things we get on credit from China, the damage would be much more apparent. When the Walmart is boarded up like the rest of downtown, people will start to catch on.

Greenspan and people he works for did this on purpose. When they started us down this road there were a few heretics that told us exactly how it would turn out. Welcome to the New Plutonomy, the worst is yet to come.


Unknown said...

It does my sanity good to see the words spelled out...Greenspan did it ON PURPOSE. (As he continued to do during Bush's term.)

Just about everyone, yourself excepted, continues to glibly talk about the job picture improving eventually. As Bob Herbert wrote this morning (10/6/09): It ain't.

The Dems are talking now of extending unemployment benefits. This will not win voters in 2010. And gives the GOP more credibility when they harp on the exploding deficit.

Does Obama still think he can bring change to DC? I find myself hoping he was really just an especially slick pol during the campaign rather than find he is someone adrift in a fantasy.

John said...

It appears that Bush did a bit of his own ON PURPOSE:

"Study: Bush administration blocked efforts to prevent housing crisis"