Sunday, January 15, 2012

Quiet Rooms

A new Pew Research study came out this past week that focuses on how Americans’ view of the class war has changed over the past two years. The numbers showed a dramatic shift toward more awareness of the inequality and this cut across all demographics. Most notably the change occurred no matter what the party affiliation was, with independents having the biggest increase. Going from 45% to 68% increasing by more than half. Democrats increased 18 points to 74%, and even Republicans increased 17 points to 55%. These numbers don’t make any distinction as to why the respondents felt this way. It’s possible that the Republican and independent numbers may reflect some who see a conflict, but see the rich as the victims in this class struggle, despite their “suffering” taking place in the lap of luxury.

Mitt Romney says any talk of such inequality “is just the politics of envy”. When challenged by Matt Lauer on the Today Show to back away from the use of the word “envy” in the previous day’s speeches, Romney doubled down. He said, “You know, I think it’s about envy. I think it’s about class warfare. When you have a president encouraging the idea of dividing America based on 99 percent versus one percent, and those people who have been most successful will be in the one percent [he felt he needed to point that out, Freudian slip?] , you have opened up a wave of approach [reproach?] in this country which is entirely inconsistent with the concept of one nation under God. The American people, I believe in the final analysis, will reject it.”

So Mitt believes we’re one nation under God, but all the blessing should go exclusively to the one percent, and all Americans in the final analysis will simply accept this as God‘s will. He went on to pooh-pooh the very idea that this should even be discussed in public, Romney said, "You know I think it's fine to talk about those things in quiet rooms“. Presumably out of earshot of the rabble who demand bread; after all they could eat cake if they really wanted to.

It appears from the just released minutes of Federal Reserve Board meetings in 2006 that the people who put themselves in charge of our economy were completely oblivious to the approaching tsunami in the financial sector. They sat in their quiet room discussing all the bad news that was coming in and drew exactly the wrong conclusions. To a person, they went on about “the problem being small”, “the landing will be soft”, “this will be good for the overall economy” and “inflation is the real problem”. Not a word about the tens of trillions in deflation looming in the distance when all the markets collapsed wiping out the middle class and plunging the country into a depression.

 At least this is the official record; I find it hard to believe these people were that oblivious. I think that in the meetings without stenographers, in the really quiet rooms, the tone was somewhat different. The apologists for the Fed are saying that the economists got it wrong too and didn‘t see any problem, but that simply isn‘t true. A lot of them were sounding the alarm, the rest of economists who speak in public just said what they were paid to say by the very people who didn‘t suffer from the collapse.

I wasn’t surprised at the time to see Alan Greenspan leave unexpectedly before his term as Fed Chairman ended. If you were paying attention, you could see the what was happening. This was the exact time when the Fed stopped publishing the M3 report that shows how much money is in circulation. The Federal Reserve was already propping up the banks by printing more and more money. On the right they were screaming about hyper-inflation, but just the opposite was going to happen.

Tim Geithner (still at the NY Fed in 2006) was revealed in these minutes as lauding Alan Greenspan’s great success for having presided over the longest period of uninterrupted growth in history. While Tim is talking, Greenspan is glancing nervously at his watch to see if he can get out of the door before the bubble burst. Greenspan wrote his thesis on the real-estate bubble of the 1920s; he knew exactly what was happening. But this apparently wasn’t fit talk even for the quietest of rooms, at least not where notes would be taken.