The Conference Board, a private group that tracks the economy, says its index of leading economic indicators fell two tenths percent last month but that wasn’t as bad as a survey of economists had predicted. The indicators had been rising every month for just over a year as the stimulus such as it was bolstered the economy. Economic modeling demonstrates in a new paper being presented by economists Alan Blinder and Mark Zandi where we would be today if nothing had been done. Not surprisingly that without the various things the government did current unemployment would be twice as high as it is now and the country would be in a full blown depression.
While it’s good news that the stimulus worked as far as it went, the problem is that the stimulus is running out and austerity is becoming the conventional wisdom. It was the austerity programs of the then new Hoover Administration that turned the credit bubble collapse of 1929 into the Great Depression of the 1930’s.
Weakness is worsening in the housing sector, consumer spending is down as well as are durable goods orders and continued high unemployment have raised fears about another big slowdown. Unfortunately fear itself is enough to cause the slowdown to become reality, even without the lack of reform to the underlying problems.
The other big problem is greed, the major corporations are flush with cash to the tune of a trillion dollars. They aren’t really interested in fixing the economy as they are sitting pretty. High unemployment allows them to further drive down wages and their profits are coming from offshore where they can dodge taxes. Instead of investing here the corporations are starting to buy back their own stock to keep the share price up. After all they have stock options to exercise and so they need to keep the price up.
The right wing mantra is that government should just get out of the way. The problem is that the vast bulk of this countries assets have fallen into the hands of people who have no interest in the United States surviving, let alone that they care not a bit about the welfare of her people.
The wealth held by the small people is merely something to be harvested as fast as the wealthy can engineer schemes to do that, its what business in Reagan’s post industrial economy is all about. Taxes are something to be paid by those same small people and if oil is spilled on the small people that’s too bad, it just means a few more Congressman will need bigger bribes. It’s just another cost of doing business and business is good, at the top. www.prairie2.com