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Double Bubble
By David Glenn Cox
My son is in the auto salvage business, he buys and sells wrecked Honda’s. He either strips them down for parts or rebuilds them swapping engine and transmissions from the wrecked cars into cars with blown motors. We were discussing the proposed tax rebate and I explained that since he is unmarried he will only get half the rebate that I will. He laughed and said, “Yeah but hell, I’ll be getting lots of them!”
He’s right of course, the economic stimulus will help his business by helping his customers. That said, every time the government gives the taxpayer a nickel they have to give big business a dollar. The rebates are tied to corporate incentives and tax breaks, the stimulus package had barely been announced when Republican pundits screamed, “Make the Bush tax cuts for the wealthiest 5% permanent! The plan however was for immediate stimulus and the Bush tax cuts don’t expire for 3 more years.
Besides, the Bush tax cuts were supposed to bring us wealth and prosperity and jobs jobs jobs! The record has been one of income growth only at the top and anemic job growth overall, a failure rivaling only jallepeno hemorrhoid cream. The Republicans wedded as they are to a failed ideology, let me stop here and explain. If you are a Republican making over 400K a year it is not a failed ideology, if however if you happen to reside with the other 300 million of us it is. The Bush Tax cuts created a bubble of wealth for those at the top and created the Marie Antoinette syndrome as a byproduct.
When times are good they call for tax cuts for the rich to keep it going, when times are hard tax cuts for the rich will get it moving again. Besides they argue, if you tax the rich they won’t have capital to invest to create new jobs! You’re punishing the rich for being successful! Excuse me, but speaking for the 300 million that did not enjoy the windfall of the Bush tax cuts, the rich are not the ones that are being punished here, we are! The country bought into the Bush Bullshit Bamboozle of $300.00 for you $50,000 for Dick Cheney
The program created jobs all right, however most of them weren’t in this country but in the third world. It created jobs for investment brokers and hedge fund managers and only by creating the bubble of cheap interest rates could they create the illusion of prosperity for the man on the street. “Go ahead,” they said, refinance your house, the sky’s the limit. The man on the street is expected to know better while the paid financial representative is but an innocent babe in the woods. The President now calls for a program to educate you stupid consumers in financial matters, well let me save you the trouble. “Face it you fucked up! You trusted us!” That’s what John Belushi told Flounder after the Delta's had wrecked his brothers car in Animal House, that’s what this is, a financial Animal House and now President Belushi is going to educate us.
Every effort is being used to keep the toga party going, Benanke’s cut interest rates to keep the banks solvent. Bush is giving away money to keep the consumer solvent, but wait, are they doing too much or doing too little? Every time Bernanke cuts rates the value of the dollar over seas falls, every time Bush prints money in massive amounts the value of the dollar falls. But Bernanke’s 75 basis point cut in January was designed to prop up a stock market that was in free fall. The 50 basis point cut 9 days later was just serendipity.
The cuts drove bond yields through the floor, below the rate of inflation, in fact below the rate of return on many checking accounts. Money managers had no choice but to go back into the stock market, they don’t get paid to supply a return less than inflation. Back in the good old days they’d have bought Real Estate but not anymore. Then there were always insurance companies they were always a safe bet, but not any more. The Europeans declined to cut interest rates sighting inflation as their primary concern you see they aren’t six trillion dollars in debt, they have a choice. The European central banks have worked diligently to prop up the dollar to hedge off European inflation but the beer kegs through the window and into the front yard now.
Bush’s stimulus package is no less the cry of, “Party on dudes!” Explaining, that if we stop what we’re doing we’re in for one hell of a hang over. In August the pundits called it the sub primes crises and wondered would it spill over and affect the economy at large? Today, they candidly call it a housing depression while publicly they call it a slow down. New home construction is at half the level of 2 years ago yet the construction workers don’t show up on unemployment rolls, now why is that? Let’s call roll, Juan? Jorge? Jesus? That’s right undocumented workers have built in advantage over the locals, paid as day laborers they aren’t counted among the ranks of the employed so they can’t be counted in the ranks of the unemployed.
The new homes sales report showed a nine and half-month supply of news homes on the market, sales declined 5% from abysmal November sales. The Jobs report showed a loss of 18,000 in an economy that needs to generate 150,000 new jobs a month just to break even but the markets up! Microsoft is going to buy Yahoo for 44 billion dollars, it’s a new keg but solves nothing. They are grasping at wreckage and calling it success, singing Louie Louie and ignoring the hard work that the European central banks have done in keeping the dollar solvent.
The double bubble of a tax rebate for you is more money for them plus their own rebate. Four million homes in foreclosure is considered the purchaser’s own fault they need education but now bond insurer’s Ambac and MBIA face mounting loses and the banks rally together to form a consortium to bail them out from their bad investments. Sounds logical, doesn’t it? The banks bailing out the bond insurers who insure the bonds issued by the banks. Or as Tony Soprano would explain, “They’re just business associates.”
We face a financial crises unrivalled in the political life of this nation, Fiat dollars, fiat currency, fiat industry, fiat citizens. Are there two America’s? One for the rich and one for everyone else? The patriotism of a poor kid from Chicago fighting for his country while trying to get an education verses the patriotism of someone who offshore’s a profitable company to make more profits and glean tax advantages. What of the politicians who make such a venture profitable? Is that the God bless America yellow ribbon on the bumper patriotism that we are sold on a daily basis?
Patriotism has become a sales campaign, “Keep buying suckers.” Wal-Mart recently announced that they would cut prices on their top 33 items in an effort to help stimulate the economy. Please! Wal-Mart’s only interest is in Wal-Mart their same store sales for their Chinese made slave labor products are flat. But they want to disguise it as patriotism; they’ve squeezed the golden goose until the eggs have stopped coming. Through 25 years of Republican leadership we have financial markets in tatters, a middle class insolvent, an industrial base noncompetitive, a crumbling infrastructure and a failing public school system.
It is not a tweak or and adjustment that is needed but an 180 degree about face. The 25 years of Republican leadership and conservative political leadership have been a disaster for the vast majority of Americans. It is time to tell the politicians as Dean Wormer told Delta house, “Fat, drunk and stupid is no way to go through life.” That if capitalism can only bring prosperity to a minority at the expense of the majority then it has failed and we must find something else. That we are one nation and not two and if there is a bubble to be popped it should be the bubble of the wealthy. A government that favors the few at the expense of the many is a tyranny. It is unworthy to exist let alone preach to others.
We face dark days ahead, but only in difficult times can difficult changes be made. Only by the failure of one ideology can a new one come into being, offering us a place at the table and not crumbs from the table. That it is we, the American people who allow the rich to exist at our pleasure and not the rich who allow us to exist at theirs. That this system, this government will serve all the people or it will perish. The failure of Soviet communism was caused by its overspending on military hardware and it’s inability to provide a decent standard of living for its people. Are American capitalists so arrogant as to believe that they are immune from this disease? Do they believe that hard times wears a coat of ideology? Or hunger is a political flavor? Do they not remember what Madame Antoinette was herself served for desert?
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