What the below-linked article by Steph Jasky boils down to is that the government is lying to us (some think Bush and Obama both lied – well, maybe they were just naive) about the magnitude of the bank crisis. They also neglected to tell us (because they believed their lying advisors — who were not naive) that the banks needed restructuring if we are to ever emerge from this crisis. The banks don’t have the assets to do business as usual and need to shrink in size.
BTW, I am proud to say my part of this column is intentionally written from both a conservative and a progressive viewpoint. It should not be offensive to either group. Or more correctly, it should be equally offensive to both.
To read the article, most readers will need some help with terms that by now, all Americans should know.
QE, Quantitative Easing: I am not an economist, but the definition for dummies is that the government fires up the printing press and prints gobs of money. This has the advantage that they can temporarily hold off the townspeople with the lanterns and pitch forks this way. It has the disadvantage that our money loses its value and inflation gets worse. And then we grab for the pitch forks anyway. (BTW, when you hear a politician talking about quantitative easing, he means “bend over and grab your ankles, Sucker.”)
Structural Deficit: Essentially, this is a deficit in public (government) spending that arises not through cyclical (short-term) events but rather through the implementation of bad spending policies. Unless these policies are changed, it is in fact a permanent deficit. We now have such a deficit and unless someone in power grows the backbone to admit that and rewrite our spending policies accordingly, jobs will keep going away. Why does it take backbone to do that, you ask?
OK, have you watched the news and seen those rioters in Greece a while back and the ones in France more recently? I wouldn’t want to be in Sarkozy’s shoes right now. The rioters set fire to things and sometimes to people, and break things. They’re mad because the government cut their pensions, salaries, vacations, etc. They thought they were entitled to be paid money that is not there. C’est stupide, non?
FASB: Financial Accounting Standards Board. These people write the standards for reporting what banks are making and spending and how much they hold in assets. They are being forced by government to write new standards making bad books look good.
Now you should be intellectually ready to read and understand the below-linked article. If you’re like me, though, you will never be emotionally ready. Reading it can cause anxiety, anger and anguish and may raise your blood pressure. (Where did I put that aspirin?).
On the other hand, if enough of you read it and act upon it, we may eventually stop electing spineless idiots to public offices and start approaching economic issues, such as job creation and capital growth, like adults again. (“Stimulus” is definitely kid stuff. Anyone with 2 eyes can see that by now.) In fact, what about this idea: We elect people who have run a business and understand finance?
Having said that, I now turn to my leftwing readers with this caveat:
Just kidding. I know that would never work. We need Chicago style breaka-you-leg gangsters and slick fast-talking politicians steeped in Marxist lore who can tell us about sharing the wealth and make us feel proud to be useful idiots again.
Here’s Steph’s article:
Graphics added by Gulag Bound, source unknown