Trapped between the Fed and Congress
By Mike Krauss
Despite the never ending assurances of the Federal Reserve that happy days are almost here again — the same tune the Fed has sung for nearly seven long years — there is mounting evidence that the U.S. is headed for another economic crash. It will be more terrible than the last.
The Washington Post headlined, “U.S. economic growth slows to 0.2 percent, grinding nearly to a halt.”
Fox News reported the real story of unemployment: the official, good news government figure of 5.4 percent is a fiction, achieved by not counting the millions who have given up looking for work, and those who can find only part-time work.
Fox was playing catch-up. That story has been out there for years, but ignored by the corporate media and clueless politicians.
Tyler Durden reports in his blog, Zero Hedge, that year-on-year sales at the big retailers have taken a precipitous drop. Most Americans have no disposable income to dispose of, after they pay the food bill, mortgage, rent and utilities.
Wholesale trade has fallen like a stone, dropping more than $100 billion over four months. Wholesalers provide the goods that retailers sell. If retail demand is off, wholesale trade is off. The last time it dropped like that was in 2008-2009. Post crash. Then it took seven months to go from the high to the low; now, only four.
New manufacturing orders indicate the future. Not good. In only one of the last seven months has there been growth in new orders. Things were not that bad during the 18-month-long credit crunch of late 2008 through 2009.
Poverty in the U.S. is off the charts. The number of children living in poverty is nothing less than shocking.
For almost seven years, seniors have seen their savings and pensions eaten alive.
Public and private debt are at record levels.
Durden reports that the median net worth of the American people is down 40 percent from where it was before the last collapse.
Tens of millions of Americans who are far worse off today than they were seven years ago will be brought to their knees in the next crash, while the wealthy will rest easy on an even greater cushion of wealth.
The people who know are running scared.
Former Fed Chairman Ben Bernake — now cashing in as an adviser to a couple of hedge funds — has sounded the alarm which he failed so spectacularly to sound before the last crash. Apparently, Fed chairs may speak the truth only after they have done their bit for Wall Street and the 1 percent.
The root cause of this terrible distress is the failure of Congress to do what everyone in Washington promised to do, talks endlessly about doing, but never gets around to actually doing: creating good paying jobs in the obvious place — infrastructure.
The need was obvious in 2008. It was obvious in 2012. It is obvious today. Jobs at a good wage are everything and infrastructure is the obvious place to start.
This is what the suddenly alert Bernake now urges: “…a well-structured program of public infrastructure development, which would support growth in the near term by creating jobs and in the longer term by making our economy more productive.”
But it is not going to happen. The Fed, which pumped upwards of $20 trillion into Wall Street after the last crash, has steadfastly refused to make even a fraction of that available to state and municipal governments — a move that could have stopped the “Great Recession” in its tracks seven long years ago.
And the GOP Congress will do nothing that might make President Obama and the Democrats look good before the next elections — like improve the lives of more than 300 million Americans by putting the nation back to work..
The American people are trapped between a Fed that works for Wall Street and a GOP Congress that can’t decide who it works for: Wall Street, the American people or itself.