To say that I am concerned about the world economy would be an understatement. I have looked at both the Obama budget and the stimulus package with some hope. The president's budget which has passed the Congress is probably the best he could have gotten. While I would have preferred much needed cuts in defense spending and more investment in America's infrastructure, it was at least a break with the past but not quite the change that I had hoped for.
This morning I read that Obama is asking Congress for an additional $83.4 billion on top of $534 billion for military expenditures already in the budget. These amounts do not include unknown hidden military expenditures buried in such areas as education and research. So much for the break with the past. Meanwhile we apparently are going to let our prized auto manufacturing go under for lack of $32 billion. How can we dare say that we are a leader of the world when our finest manufacturing companys are allowed to go bankrupt and with it the healthcare and pensions of its workers. We are number one in military power only. In all other realms we are second rate. Even the finest fighter planes are now being built by Germany. Their newest is said to be 1,000 times more agile than the F-16. Europe is now ahead of us in every measureable field except projected force.
The $700 billion stimulus package, while much needed, is way to little to be effective in a $14 trillion economy. Every dollar spent at the lower end of the economy is a help, but do not expect that this amount will turn the economic ship around. We are a very long way from heading in the right direction. And what are we to do when the party in power is moving too slowly while the opposition wants to go in reverse?
The financial side is a total disaster. If even a small percentage of the huge amount of around $12 trillion had been spent on infrastructure, I would be much more optimistic about the domestic economy. To me this seems to be a "tricle down" approach on a grand scale. It has never worked and I do not expect that this will be any exception. It is a shame that this amount will be added to the national debt without any benefit to the average American. What I see is nothing less than opening the door of the Treasury and the Federal Reserve and letting the financial "banksters" walk out with as much as they can carry. Amazing, we give the banks trillions so that they can lend our money back to us at usury rates of interest. In the past two weeks I have received notice from the credit card companies that the interest rate is increasing from 7.9 percent to 14.9 percent while the default rate is as high as 29.9 percent. Luckily, I do not keep open balances. But what of the millions who have had to borrow against their credit cards in order to stay afloat? We may be heading for a bankster-initiated credit card default crisis while a commercial real estate crisis is heading our way.
As bad as the domestic outlook is, the world economic outlook could be even worse. Again, an infusion of $1 trillion to the IMF from the G-20 is bound to be siphoned off by multinational corporations with debts applied to the poorest countries with stiff repayment terms. This is nothing more than a replay of what has been going on for decades. But this time the devastation to the world economies is likely to bring to power the most unsavory of characters. We only have to look at the history of Germany after WW-I. You may also see a really big money pipeline open up just like during the great depression. That pipeline was called World War II. Subsequent U.S. wars were tailored to prevent economic recessions: the Korean War, the Vietnam War and the Gulf War. Now the wars in Iraq and Afghanistan are no longer enough to sustain our economic growth. Scarcities of key commodities are preventing continued growth through waste.
Unfortunately, we are still in the age of Reagan-Clinton-Bush. We are still trying to prop up a bankrupt economic system in hopes that the unsustainable can be sustained by raiding the Treasury.
For those readers who read my commentaries, you know that I like to compare macroeconomics with the game of Monopoly. What the Bush and now Obama administrations are doing is in effect giving huge sums to the bank and the winner(s) in hopes that they will restart the game. As anyone who has ever played the game of Monopoly will tell you, the bank and especially the winner already have all the money. Giving them more will not restart anything. The only way the Monopoly game can be restarted is to get money into the hands of the losers.
Since 1980 the majority of Americans have been in a daze. They have been told that if the rich are taxed much less that investment will increase and we will all be living like kings. If this were true Haiti would have the most vibrant economy in this hemisphere. Even though this theory has always flown in the face of reality and sound macroeconomic practice, it hasn't stopped the news media from selling this nonsense to the public.
Perhaps the conglomerates that own the major news media have a vested interest in low taxes and less government spending. Well almost. They certainly haven't railed against government money going to the major corporations and to the wealthiest among us. Then as now, they question Obama's stimulus package and his budget for raising the national debt and putting that burden onto our children. Apparently, that money that is to be spent on infrastructure, healthcare and education will be a burden on our children, but the much larger amount of $12 trillion lavished on wealthy Americans for which we will see no return is not a burden on our children. I guess I must have missed that economic lesson in school.
As in the most recent administrations, we are now repeating the same mistakes. But, this time it will be a dark daze. This isn't going to be pretty folks.
I sure hope that I am wrong.
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