Do attempt to convince me that the economy is not now in recession. Please. I want to have something to laugh about when you brag about all those bargains you picked up on the way down. Will they be worth anything a year from now?
I've been through many recessions in my time, and over the years, I have discovered one sure-fire sign that the economy is in recession: employers carp about having to pay their workers more than they "deserve". "Expensive" labor causes employers to take out their poor management on their employees' incomes, including reducing their hours of work (if workers aren't terminated completely) even though productivity improved. As Nigel Gault, chief U.S. economist at research firm Global Insight, insists, "As long wages stay under control, inflation is not going to be able to get out of control like it did in the 1970s".
No matter how the captains of industry and commerce attempt to spin the facts, workers know that they are being made the fall guys. Those who have jobs are doing all that they can to keep them, and those who were thinking of changing jobs are delaying taking action. There is a significant correlation between workers' impressions of the condition of the job market and the onset of recessions. As people lose jobs and seek work, their neighbors are approached to aid in the search for replacement income, being asked if their own employers are hiring. That condition is more likely to be seen as an accurate assessment of the state of the economy no matter what so-called experts like Ben Bernanke and Henry Paulson say. These jobless facts don't lie.
The search for new employment isn't being helped by the record oil prices. Local LA television news is reporting, as of this writing, gas prices as high as $3.80 a gallon, and the effects of the record wholesale oil prices aren't going to hit the pumps for several weeks yet. Few of those interviewed by the local reporters doubt that $4 gas is on the way.
Without that job, even those with good credit aren't going to be able to continue to pay the mortgage. Those not yet caught up in the record numbers of foreclosures are instead walking away from their homes before they are foreclosed.
Just to show that the trickle-down theory can work only if one inverts the scale — as homeowners lose their homes, the investors who originally funded the mortgages are increasingly in borrowing trouble themselves. This will only lead to more investors distancing themselves from the mortgage market, making home loans as rare as a truthful statement from the Bush administration.
Mortgage investors and homeowners in distress are being joined by local governments, who are losing funding for their bonds as the costs of borrowing to float these notes exceeds the value of the notes' collateral. Foreign investors are now seeking more profitable opportunities until the US economy stabilizes.
It doesn't get any better soon. The Federal Reserve's "Beige Book" report noted that the U.S. economy nearly ground to a halt in the fourth quarter of 2007 and that all of its districts reported decelerating economic growth in early 2008 as prices increased almost everywhere in the United States.
Throwing the effort to contain inflation overboard, the Fed has now clearly shifted its meager efforts to keeping the economic furnace of the ship of state stoked. Large banks are reporting tens of billion in losses, and expect more losses to emerge soon. The Fed is easing interest rates for large bank borrowing among themselves to deal with their short-term cash flow difficulties. This move does not change conditions for anyone else.
One move that will change conditions for the rest of us is the order from on high to increase the money supply by $100 billion in March. Allegedly, this is a move that will increase employment, but I expect to hear soon that the dollar is rapidly inflating and causing exchange rate slippage. Two dollar euros, anyone?
But even with all of these openly discussed difficulties, some CEOs still think they can party like there is no tomorrow. Countrywide Financial Corp. CEO Angelo Mozilo told a U.S. House panel that credit tightening has "gone too far", but he's only thinking of the poor homeowner who "can't take advantage of lower home prices".
Male. Bovine. Excrement.
After far too long, the Congress is beginning to look into the exorbitant remuneration executives receive even though their companies have gone in the tank. Angelo Mozilo is himself just one of the persons of interest to the House Committee on Oversight and Government Reform chaired by Rep. Henry Waxman.
Things should get even more interesting now that the Bush Family's Carlyle Group subsidiary Carlyle Capital Corp. couldn't meet several of the margin calls placed by investors concerned with saving at least a portion of their investment from that political slush fund. This indicates a loss of investor confidence in the Bush style of business management, but is not the only clue. For example, one of the largest corporate sector beneficiaries of Bush economic policy and tax cutting is now backing Democratic presidential candidates more than they are Lame John McCain.
I'm sure that this support is intended to act as a rear-guard defense as these same companies leave the United States – and the high-wage jobs they offer American citizens – in search of more profitable venues elsewhere in the world. Care for some lead in your Lipitor? You'll be getting it soon enough!
Having destroyed our national regulatory capability, the mad scramble is now on in the corporatist sector of our society to retain as much of the wealth they acquired, whether by fair means or foul, and move it offshore. This alone is a sign that the party is over, and the piper is coming up the walk to demand payment. Those who have the assets, such as Pfizer, will relocate out of the United States before the offal obstructs the aerodynamic obdurator. Others, like General Electric's GE Money, already have, removing itself – and all of its top executives – to London.
That way, these companies won't have to settle accounts for their share of the mess.
We, the People of the United States, have this penalty coming. We believed Ronald Reagan's Morning in America lies despite much evidence to the contrary, not to mention PATCO. We accepted George HW Bush's excuses for suppressing investigation of the economic and international treasons committed under his watch as both VP and president. We failed to recognize that Bill Clinton was selling us out with NAFTA and GATT, and we didn't life a finger to limit the predations allowed under George W. Bush. We aren't going to escape the consequences of our 30-year inaction, for the sheriff is coming to reclaim the homestead we can no longer afford.
He has no choice — he doesn't want to lose his.