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This Is What Democracy Looks Like
Today's Note From a Madman
February 20, 2008
The Fed and OUR Problems
"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action,"
-Ben Bernake's Federal Reserve Committee, from the minutes of its closed door meeting in late January
The Fed is now predicting that the outlook for our nation's finances is just not all that good. Earlier in January, Bernake and his band of merry financiers, reduced the interest rate which the Federal Reserve Bank loans money to those who lend money to us, the middle class, by one-half of a percentage point. A little more than a week before that, they lowered that very same rate three-quarters of one percent. Both rate cuts were to stimulate the stagnant Bush economy.
Maybe stagnant is too nice a word. how about anemic?
This all leads me to one question: Where does the Fed get all of this cash to lend out?
The Federal Reserve Bank holds our money, the money which the American people put into the US treasury. They, in turn, loan that money to banks and other financial institutions who then, in turn, loan it back to us.
In the case of the mortgage industry's climbing all over itself in successful attempts to lend money to those who they shouldn't be lending money to, those banks lent our money unwisely. After taking our money and giving it to those who can't or won't, pay it back, they wanted us, the American middle class, to give them even more money to take care of their losses.
Are we freakin' stupid, or what?
It was just yesterday that we printed the White House's belief (through OMB Director Nussle) that the economy must get worse before it gets better. Let's call it their "It's always darkest before the dawn" economic outlook. Is there anyone who actually believes that?
In addition to the gloomy economic news from the Fed, they added these little predictions:
The Gross Domestic Product will grow at a slower pace than anticipated previously, lowered from 1.8 to 2.5 percent to a dismal 1.3 to 2.1 rate. I'm sure that somewhere, sometime President Bush will come out and say, "The Fed says things are going great. They're anticipating growth!"
The unemployment rate, even considering the normal Bush spin, will climb to as high as 5.3 percent by the end of this year, just a few short months away. With Americans now scheduled to lose jobs as the Summer approaches, that won't be good for one of the few industries that have shown growth in the past few years: the Hospitality industry. Of course, they can always look forward to Europeans coming into out nation to convert their Euros to dollars at the most favorable rate in its short history. Just as a reminder, the unemployment rate has already risen three points from its low of a year ago (4.6 percent) to today's much higher rate. In increase in just one year of seven points would represent an increase of nearly 16 percent. A rate increase of that magnitude would mean that at least one million American workers will be unemployed around the time we choose a new President. That number might even be in excess of 1.6 million formerly employed workers. Those workers will no longer be contributing to the economy with their "disposable income"; they'll no longer be able to afford health care insurance; and they will become a greater stress on our already stressed national economy.
How will they Fed fix that? How will President Bush?
They and he won't
The Fed also attributes our problems to higher oil prices and the unstable financial markets. To that, all I have to say is, "No kidding."
In his last few months in office, President Bush has decided that fixing things to make them better is less important than to fix them for appearances sake. The Photo-Op President can try to do something, but he is either unwilling to do so, perhaps out of an inability to ever admit a mistake.
Maybe he's just unable to something. After all, that isn't his job, is it?
In response to the John McCain for President campaign web site's, "McCain promises to cut taxes for the middle class," Robert Scardapane writes:
Let's put this in perspective. During one of the GOP debates, McCain said:
"The issue of economics is not something I've understood as well as I should,"
He went on to say:
"I've got Greenspan's book,"
Geez whiz! I am sure glad he's reading about how Dr. Greenspan created the housing bubble.
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