The Unreal and the Real Economy Part II
Published 12/10/09 Perry L. Weed - Print ArticleE-mail - editor@economyincisis.org
Main Street Americans – the real economy – have not realized most of the benefits of federal outlays and efforts. The damage to the real economy has been enormous and has left permanent scars. Americans are impatient. Many are angry. They no longer anticipate strong and decisive leadership from the White House. Congress is dysfunctional and detached from mainstream America. The efforts at health care reform reveal an out-of touch and ineffective government. The health care legislation, largely a product of corporate lobbying, extends expensive new benefits and enriches its corporate sponsors but does not provide basic health care reform or control of rising costs. Its estimates of future costs are riddled with budget gimmicks and, ultimately, dishonest accounting. Lost in the immediacy of the current crisis, we continue to overlook a glaring reality. The nation’s structural and fundamental problems that existed before 2008 are not only still present but have worsened. Our government and financial institutions are failing us. Public finance is severely weakened by massive deficits and debts. Persistent U.S. foreign and military outreach continues to cost trillions of dollars. Oil dependence grows. The dollar continues to decline. Wages and salaries for most Americans are flat or declining and gaping inequality among segments of American society worsens. Global competition and global pressures have intensified. The world’s economic balance of power is shifting from West to East and from a long-standing concert of Western powers to the Group of 20. Unsustainable trade imbalances persist. U.S. manufacturing continues its inexorably downward slide – with automakers on life support and commercial aircraft companies at the mercy of unreliable foreign suppliers. The nation’s competitive advantage in the world economy erodes. Financialization and its activities are replacing tangible export products as the nation’s most profitable economic output. The super-easy money and fiscally excessive policies of Washington have caused concern in Asia and Germany and among such respected analysts as Nouriel Roubini and Meredith Whitney. They worry that the U.S. is stoking new asset bubbles – inflating the value of stocks and other assets and inviting another bust. Excessive risk-taking is rampant in world financial markets. Nearly free money is flowing into markets; financiers are using it to speculate and artificially push asset valuations. At home, the Federal Reserve is providing large banks with virtually free money and no-fail guarantees, thereby assuring another round of false prosperity and asset bubbles. Washington’s apparent answer to overheated and speculative assets markets is to strengthen banks and financial firms to withstand the inevitable dangerous swings and crashes. In short, gambling that the clean-ups are manageable after the busts occur. The American public recognizes that American economic hegemony is weakening and that the country is on the wrong track. It is no surprise that they are losing confidence in their institutions and in the very future of the American economy. Click here to read Part 1 of the Unreal and Real Economy.
Perry L.Weed is an attorney and economist.He is the author of The White Ethnic Movement & Ethnic Politics (Praeger). During the last 30 years, he has been engaged in Washington policy-making in positions in the U.S. House and Senate, the Department of Commerce and as vice-president for government affairs for a major national trade association.
The Unreal and the Real Economy Part II
RSS feed