Thursday, January 24, 2008

It's The Economy, Pendejo!

Overseas stock market indices fell precipitously on Monday. Hong Kong went down 7.2% India went down. Germany went down. It was as though gravity was pulling the strings. The United States stock market was off on its dutiful Martin Luther King murder day. American stock traders et al watched in horror. Ben Bernarke convened a teleconference with the other 17 Fed governors and they decided collectively to cut the fed funds rate 75 basis points, the largest cut ever. Did this panicked move (after all, there was a scheduled Fed meeting next week) calm the markets? God knows. The market fell on Tuesday, then swung wildly on Wednesday descending 300 points only to close up 300 points (approximately).

Some in the global economic discourse decry Bernarke's actions. Perhaps lower interest rates are not the answer. After all, didn't they cause the housing bubble by throwing money at everyone with a pulse? Also, doesn't this kind of move make it look like Bernarke is responding only to equity investors, in a sense, rewarding risk-taking? Moral hazard, anyone?

In Davos, Switzerland where the great minds are meeting (wedged in between Alpish skiing) Bill Gates works on his speech about how capitalism doesn't seem to solve the problems of the very, very many more poor people there are in the world other than billionaires. He of course is the very pillar of the modern lethal capitalist. Now that he has all the money, he wants the moral high water mark as well. He even quotes from the crazy Adam Smith's book written prior to "The Wealth of Nations" (something like the Moral Sentiment of the Sentient?) where not only naked self-interest drives altruism(?) but where it's self-enriching to help others! What about that invisible hand? Is that only for pornographic web sites or counting the spoils as one exits as ex-CEO from a demolished financial institution, now a wholly owned subsidiary of Bahrain?

Gack the brain dead walk among us like the stunned wounded middle class, darkly drinking in the ineptitude of our so-called elected representatives. Representatives? What the fuck does that mean? Who do they represent, anyway? The NY Times briefly sketches the horrendous band aid stimulus package cooked up by Congress with Bush's eager pen floating above it--give a few hundred dollars to the great unwashed (Republicans--none to those who pay no taxes because they don't make enough to pay taxes); extend the length of unemployment compensation (Republicans--let's have unemployment drop to Depression-era levels before we do that) and other pittances, bones to throw at the barely rabid rabble.

People are gloomy. They see their children inheriting a world where they will do worse than the generation before them. They feel America's stock has fallen in the world. A landlord has to work an hourly job at Home Depot to help pay the mortgage on his building. At least he gets some health insurance. My insurance premium jumped from $55.50 to $98.50. Jesus Christ that's $43.00, a leap of almost 80%. What the fuck! At least the economic powers-that-be don't talk about core inflation so much anymore. Inflation is everywhere I look for "regular" folks. Gas prices will not recede. My Con Ed bill is sky high. Oil may have declined on the market, retreating from a brief flirtation with $100-a-barrel to about $86 but we will not feel it in our wallets. I shop out of my way to get less expensive eggs. Milk is high. In Davos they deride the U.S. as an "emerging market" economy:

[A]n American economist, Nouriel Roubini, said bluntly, "The United States looks like an emerging market," with large deficits and a weak currency. Brazil, an actual emerging market, had done a better job overhauling its economy, he said.

In the gloomy article the Times ran today about how the average person sees their prospects, one man says when he travels he doesn't tell anyone he's an American. "I tell them I'm a Canadian. I get a much better response that way."

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