by Mike Whitney
In the next couple of weeks, George Bush will prove that the last 30 years of supply side, free market economics was nothing more than a overripe pile of horse manure. In fact, right now, the B-52s are being loaded with pallets-full of freshly-minted hundred dollar bills which will be air-dropped “from sea to shining sea” as soon as King George gives the nod.
Think I’m crazy?
The Bush “Stimulus Package” is the biggest and most obscene hyper-inflationary swindle ever perpetrated on the American people. It’s a $100 billion taxpayer-funded bailout that is being slapped together at breakneck speed to forestall a collapse in consumer spending, an exodus of foreign capital, and a painful slide into recession. And, guess what? Both political parties are on board. It is an act of utter desperation designed to address the catastrophe that was created by the Federal Reserve: the housing meltdown. Greenspan’s subprime boondoggle is now in full-crisis mode and threatening to deliver a knockout punch to the global economy. That’s why the lights are blinking red at 1600 Pennsylvania Ave. And, that’s why the whole 435-member army of lacquer-haired political jacklegs who run the Congress is racing around in circles trying to find solutions.
The emergency bailout scheme is spearheaded by Goldman Sachs’ former head honcho, Hank Paulson. Paulson warns that the economy is slumping “rather materially” and needs massive jolt of capital to keep from sinking altogether.
“We are looking at things that could be done quickly,” Paulson opined. “Time is of the essence.”
Paulson sounds more and more like a man on the verge of a nervous breakdown. He’d be better off concealing his fear and coming clean with the American people about the dismal state of the economy.
Summer’s Snake Oil
Former Treasury Secretary Larry Summers has recommended a “timely, targeted and temporary” tax rebate “of $250 per tax-filer, and $500 per couple for families with taxable income of less than $100,000.” (Wall Street Journal) Some variation of Summer’s plan will undoubtedly be implemented in the near future. The “invisible hand” of the market — that Bush praises ad nauseum — will be used to steer the Fed’s helicopters as they scatter the nation’s wealth like confetti across the fruited plains. This multi-billion dollar giveaway should put to rest, once and for all, the silly notion that Voodoo economics is anything more than a charlatan’s parlor trick. Supply side theory is a chimera which leads inevitably to disaster.
At present, the financial system is so clogged with subprime gunk and other mortgage-backed garbage, the banks can’t even provide loans to applicants with good credit. The gears have simply frozen in place. That’s why the Fed and the Dept of the Treasury cooked up this wacky scheme to hand-out tens of billions of dollars via tax rebates to low and middle income families. It’s the only way they can revive the maxed-out US consumer long enough to get him spending again. The Washington brainiacs who conjured up this latest quick-fix don’t see that it will only buy us a few more months of fake prosperity while pushing us further into debt. If Paulson gets his way, the IRS will start cutting checks in a matter of weeks, which will get the cash registers at TJ Max and Target ringing shortly thereafter.
Does anyone in Washington ever worry about the mess that they’re leaving for our kids or do they figure that the Chinese will pay for that, too? The National Debt is already $9 trillion, and yet, the politicians are just dying to write another $100,000 billion check on an overdrawn account. It’s madness.
The Shining City on a Hill Might Be a Poorhouse
30 years of Reaganism has destroyed the country. It’s eviscerated our industrial base, broken the social contract, crushed our unions, savaged our schools and infrastructure, and shifted the nation’s wealth from the middle class to the upper 5%. Now that same multi-headed Hydra is devouring itself. Wages have stagnated, the dollar is nosediving, the banking system is paralyzed, and subprime poison is surging through the global system shuddering banks and businesses around the world. Bush’s anemic stimulus package doesn’t do anything to reverse this trend. It’s like injecting a dying man with a massive dose of methamphetamine. It’ll only rouse him long enough to know that he is slipping the mortal-coil. What good does that do?
Of course, some people will argue that the $250 government checks are a welcome respite and a verification of “compassionate conservatism.” But how does that square with our seven-year experience of GW Bush?
Is this the same “compassionate” Bush who deliberately withheld food, water and medical supplies from Katrina’s disaster victims while they huddled in the stinking, feces-infested Superdome or clung to the roofs of their homes while rescue boats were turned away by FEMA goons?
Yes, it is.
The government largess is not an expression of magnanimity, but despair. The checks are a last ditch effort to rev up the moribund economy and see if the ship of state can be put aright. There’s nothing generous about it. Besides, Bush and colleagues are ideologically opposed to giving working people a break and, if they had a choice, they wouldn’t do it now. But the real estate market is crashing, the stock market is headed into ICU, and the country’s financial giants are stretched out on a marble slab waiting for the cathedral music to begin. Bush knows he has to act fast or face the consequences. That’s why he’s abandoned his alleged commitment to “free market fundamentalism” and ordered the Fed to put the printing presses on Full Throttle. To hell with principle, it’s crunch time!
What Bush is planning is the moral equivalent of exhuming Milton Friedman from his moldy sepulcher and pounding a wooden stake through his heart. But, then again, honor never mattered much to this crowd. It’s all about power and greed.
“Free Cash” or Trillions of Dollars of Debt?
The Bush administration’s unprecedented cash giveaway (aka, the “stimulus package”) will be accompanied by dollar-crushing rate cuts that will send gas and food prices to the moon. As the nation slides deeper and deeper into recession, it may be worth remembering that the present troubles began with Greenspan’s “low interest” monetary policy and a corrupt-deregulated “structured investment” market that allowed chiseling bankers to sell the subprime loans of unemployed restaurant workers — with no collateral, no down payment, and bad credit — into the secondary market as though they were valuable assets. That Ponzi-scam is imploding, and it’s now clear that we’ll all be expected to pay the multi-trillion dollar losses.