News item: June unemployment statistics released, showing that job creation virtually stalled. If not for the convenient elimination from calculation of long-term "losers" whose unemployment benefits have run out, the unemployment rate would be substantially higher than the official 9.2%. As it is, this figure caused a momentary buzz in Washington, causing Obama to cancel a vacation so he could make a public statement. Essentially his message was "don't worry, better days just around the corner" a la President Hoover circa 1930.
So what do we expect the big guy to do about it? With trillions in stimulus already spent, and budget cutting rhetoric heating up, there isn't much ammunition left - at least within the traditional paradigm. Welcome to the depression.
As I've railed upon many times before, the partisan divide is getting deeper, while neither side addresses the problems truthfully or realistically. One realistic solution to intractable debt is to essentially default through inflation, a fix that already may be quietly underway. Unfortunately, we have Chinese, Russians and other major nations having invested their savings deeply in dollars, who are likely to object. If they bail from the dollar en masse, the precipitous rise in import costs will drive another stake or two into the American economic corpse.
One factor keeping the dollar on life support is the exceptional weakness of the Euro, which is haunted by the specter of the "PIIGS" nations ongoing flirtation with default. Still, when outright default occurs. perhaps beginning with Greece and Portugal, the resulting tsunami may swamp the dollar and the rest of the global system.
Here in Minnesota, we have more the the same partisan polarization, this time resulting in actual shutdown of government. It's hard to believe that positions are so hardened that they would let this happen over less than 2 billion out of a 36 billion dollar budget. The Republicans exhibit religious fervor with their "no new taxes" mantra, while the Governor seems bent on poking the opposition in the eye with a class warfare zeal to "soak the rich". Why not simply split the difference and get on with it??
Shame on them all! Shame on them for proposing more gimmicky accounting shifts that already have caused one bond rating agency to downgrade the state's credit rating. School districts are already in hock by several billion from the last shifts. Again I ask the Republicans, why is borrowing better than taxation? They preach living within our means, but this is not what that entails.
Of course the Repubs are correct to question the enormous rate of growth in the state budget, but let them speak openly of where the money is going and who gets hurt if they arbitrarily slash it back. Most of the increase is in social services and health care, but we are in the midst of a DEPRESSION and have an aging population to contend with. There are major public policy decisions to be made in dealing with these trends, but this should be done in open debate. If the answer is to put poor people out in the street and watch idly as "Hoovervilles" spring up once again, then at least get a consensus from the voters. The results will be ugly, and do we really wish to travel down that road?
Of course poll respondents say "cut the budget" when the question is framed in terms of an impersonal. bloated bureaucracy consuming an ever increasing portion of our earnings. Somehow "they" are spending too much of "our" money, but when it's your own parents affected by cuts in nursing home care, or your children facing curtailed opportunities in school, then it takes on a more personal dimension.
The tragedy is that all of the bailout and stimulus spending was blown without much impact to the average citizen. I saw a statistic somewhere that claimed that the trillions spent on bailout of the Banksters could have paid off every distressed mortgage. Imagine the foreclosure problem instantly resolved! Imagine the difference if the average Joe had access to that kind of assistance. But then that is dreaming; in reality the Banksters Rule while the rest of us Drool.