Recovery: The New Black
LONDON -- Are the green shoots real or are the government economy-minders taking premature credit, partly to dampen populist anger? That’s one of my questions when I read Ben Bernanke’s latest declaration that the recovery is under way. His evidence: rising consumer spending last month, aided to some extent by Cash for Clunkers. (Bloomberg TV chimes in with a cheery “Credit Default Swaps are back!”)
Obviously, Bernanke has an economics doctorate and I don’t, so I offer my questions with all due humility. But...weren’t we told last October, in the race to approve the TARP program, that as long as the banks had untold numbers of Toxic Assets (the TA in TARP) on their books they could not regain their health? And wasn’t TARP money used for a completely different purpose, leaving those assets (renamed “troubled” a few months later) in those same banks’ portfolios?
Further, as President Obama called Monday for reform of the financial system so this crisis could never be repeated (the same mantra heard when Depression-era reforms were passed that the Clinton Administration repealed), did he fail to mention reform of the relationship between the agencies that rate financial instruments and the clients who pay their bills? After all, it was these agencies’ carefully considered conclusion that the packages of risky mortgages their clients crafted had been somehow transformed into triple-A investments that helped inflate the crappy asset bubble.
So we’re out doing some spending, but the banks’ books remain unrelieved of their toxic, troubled burden, and Moody’s et al remain free to rate their clients’ exotic new financial instruments as their clients would prefer.
And speaking of the banks, taxpayers got into this mess because certain financial institutions were deemed too big to fail. What have we done in the year since? Allowed, encouraged, and forced surviving banks to merge with their weaker brethren. Result: fewer banks, even bigger, posing even more systemic risk. Haven’t the taxpayers now been put in the position of rescuing all the surviving institutions from the effects of their next round of stupid bank tricks?
Aren’t our leaders seeing some dandelions in the lawn and calling it springtime?
Follow Harry Shearer on Twitter: www.twitter.com/letwits
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Here is a quick everyman's guide to economic statistics. Making sense of the figures demands a large measure of skepticism and an eye for misrepresentation and forgery.
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Harry, has anyone ever accused humans of being able to avoid repeating past mistakes? If so, I have yet to hear such a scurrilous accusation.
If there is a painful mistake in our national future our powers that be will joyously embrace the agony and transmit it to those least able to withstand it.
Thus it was and thus it shall be forever and ever amen(Hebrew for "I Believe.")
Ah, well, if life gives you dandelions, make dandelion wine. I've never tried the stuff myself. It sounds sort of romantic, but when I think about actually drinking it, I gag. Well, you can always tronch it (I love bankerspeak) and sell it to the neighbors.
I think, somewhere along the line, folks forgot the difference between wealth and greed. There's nothing wrong with attaining or aspiring to attain wealth. Money, when it is gotten through honest means, is a good thing.
In the last few decades, however, greed has replaced the honest work ethic in far too many of our financial institutions and businesses.
I'm certainly no economic genius, and my bank account proves it, but I don't see much evidence of genius coming from the folks who claim to be in that catagory either.
What I do see is addiction to money, and addictions never turn out well if left uncontrolled. Why did these financial institutions nearly destroy themselves in the persuit of obvious bad deals, and seem poised to do the same again?
You might ask the same question of a gambling addict, or a heroin addict as they return to the card table or needle after losing everything due to their addictions. Addicts pursue their addictions regardless of the consequences.
What we as a society need to do, is put these out of control greed addicts in rehab. Lets return to the strong regulations put in during The Great Depression, and quit enabling these people who simply lust to attain money, ethics be da.mned, rather than working honestly and with a sense of morality to earn it.
Bernanke did not say that the Economy was out of the Recession, He said it was very likely out of the Recession. Very likely is a qualifer which indicates an unsureness and denotes lack of confidence. The day he says we are out of the Recession then maybe I might be willing to believe him. For now all he is doing is hedging his bet, which is no different then the Weatherman saying that we may or may not have rain today. That doesn't build a lot of trust in him as far as I am concerned.
Though you lack a doctorate in economics, you have summed up the problem brilliantly. You are exactly correct and I compliment you for doing it in so few words.
Additonal critical items:
1. We probably don't need new laws as Obama said. the existing ones can do the job, IF enforced. The most pathetic player in this game is the SEC. Cox (under Bush) was pathetic. Frankly, Mary Schapiro may be even worse. She is a wall st insider, has been for years (FINRA) and if any proof is needed, the glaring example is the GE settlement and the BAC settlement, which fortunately is blowing up in her face (aside, Cuomo's investigation will bring in Bernanke, it has to based on legal actions to date).
2. We have not learned our lesson from the financial excesses that hit crisis point one year ago. in fact, the bernancke, geithner, summers group is repeating the same behavior.
3. we cannot recover until we fix the massive consumer, corporate, governmental debt mess.
"we cannot recover until we fix the massive consumer, corporate, governmental debt mess."
How do "we" do that?
Ben Bernanke et all have no idea about the real economy. These people think that pushing money around and getting transaction fees is the economy. These economist, bankers and speculators are the results of decades of trickle down economics and they have successfully placed a trickle down structure on the top of our economy. It's not working, it never did. I suspect much of the economic activity since Reagan has been little more that the movement of wealth to the wealthy with overly available credit replacing wage growth. Now they are reestablishing the trickle down mechanisms but the accrued wealth of the middle class (and the growing impoverished class) no longer exist to sustain it. The money at the top isn't moving, unless you consider life insurance derivatives movement.
I no longer care to be so negative....for awhile anyway...can't we all just let the financial leader give us some good news.....I;ll take the dandelions with bright yellow faces for now.
they're all a bunch of crooks, these wall streeters
It would be interesting to know if there is anything one can say that will be acceptable.
Why do you have to call it black, racist?
Our "leaders" are re-inflating asset prices. There have been no meaningful reforms; in fact, the too big to fail banks are now even larger and even fewer. So, get into the stock market as re-inflated bubble is no where near ready to pop. Of course, you need to get out before its too late.
"Bernanke has an economics doctorate and I don’t"
But you have common sense and so do I and that seems a lot more valuable these days than a PhD. Those freaks on Wall st. are now packaging life insurance policies into derivatives and one doesn't need an overpriced degree to know that's just wrong. O's speech to Wall St. was like telling a group of 6 year olds, sitting in front of a bowl of candy, not to eat the candy and then leaving the room. But President Rahm is happy, he's raking in the lobbyist money and hoping that ensures he still has a job in 2012. I'm beyond disgusted, I'm fearful... there's more to come and it is not going to be pretty.
This is a repost because I don't think first one went through, if it did, sorry for the repeat.
Subliminally WE all know that we are in decline, that is the whole world. All this shrieking is about that, deep down. When there is a deep feeling that things are going wrong we, ALL OF US, attempt to find something/someone to blame. It's frightening, but very simple--we are in decline and there is no answer, let alone a simple one.
Harry with all due respect, I hope you won't mind if I simplify this all for you and your readers.
It's called, Three Card Monty.
For 20 bucks I'll show you how to play ;)
Sorry, you're not a crook at heart. You made Harry an honest offer: for $20 you'll teach him a game. A crook would say "This is an easy game and you're sure to win some money off me." Or, if you chop up crappy loans fine enough, they suddenly become grade-A investments, so good you'd be breaching fiduciary responsibility if you DON'T invest in them.
but I like Harry!
Curses! why oh, why I was raised with a sense of morality and fairness!
"Bernanke has an economics doctorate and I don’t,"
You have common sense and so do I and that seems a lot more valuable these days than a PhD. Those Wall St. freaks are now packaging life insurance policies into credit default swaps. How much of an overpriced degree does one need to know that's just wrong. And O's speech to Wall St. was like telling a group of 6 year olds, sitting in front of a bowl of candy, not to eat the candy and then leaving the room. But President Rahm is happy because he's raking in the lobbyist money, hoping that'll be enough to get to the other side of 2012 and still have a job. I'm beyond disgusted, I'm fearful... there's more to come and it will not be pretty.
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