11 March 2008

Unanticipated Consequences II

The Cheney-Bush Administration has consistently failed to reign in businesses whether it be on product safety standards, food purity inspections, market manipulation, or, notably, predatory lending practices. So we have seen lead-contaminated toys, ethylene glycol-contaminated toothpaste, downer cow school lunches, Enron's manipulation of energy markets, and, most recently, the sub-prime mortgage debacle.

The impact on businesses, on tax revenues, on jobs, and on the lives of Americans has been incalculable, but devastating.

Similarly, the resistance against any form of attempt to rein in the profligate use of energy, particularly gasoline, has seen steady growth in our carbon footprint, increasing pollution, the outflow of petro dollars, and a concomitant inflationary impact across all sectors of the economy--this at a time of economic exigency with the economy in recession and heading for a depression?

The Fed and its Chairman Ben Bernanke have attempted to ameliorate the smothering impact of the subprime debacle by cutting interest rates in hopes of kicking the flywheel of the economy back into motion even at the risk of adding inflationary pressure. This despite the ubiquitous inflationary pressure of oil prices in every sector of the economy.

It seems that one (possibly) unanticipated consequence of this monetarist attempt to rescue the economy from the quick sand by a series of rate cuts is that these rate cuts have become the whiphand of stagflation by providing cheap capital for oil speculators who are driving up the price of a barrel of oil inexorably day by day.

One of the real basics of the problem is that workers' wages have lagged further and further behind (unlike those of senior managers) and our consumer econmy is grinding to a halt as more and more discretionary spending is diverted to energy costs causing slow downs and job losses across all consumption sectors leading to a downward spiral.

The administration's Iraq misadventure continues to gobble up unimaginable amounts of Federal income (and borrowing which leads to increasing debt service and decreasing government discretionary spending--the beast being deliberately starved according to the Neocon design to kill spending for social issues). This leaves the Federal government and the next administration little leeway to resolve these problems and now the US is is even suffering a technology trade deficit!

That is why I foresee a Depression in the offing.

1 comment:

Geoffrey said...

Thankfully, the dollar is now worthless in the world markets, meaning we'll all be able to get by off of all the manufactured goods we export. Oh wait, we don't manufacture anything anymore. So I guess that's bad, too.