13 months after the crash, we are all singing happy days are here again.
By Daniel at 1 December, 2009, 7:48 am
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So far, our government’s response to the financial crisis has been total denial, lack of transparency, and unwillingness to upset or anger financial power players and corporate elites. Half measures combined with wishful thinking and a wait-and-see attitude is not going to cut it. The U.S.Treasury as well as the Federal Reserve have hammered out backdoor deals and claimed that it was the best that could be done under the circumstances. This administrations outright REFUSAL to deal with the pressing issues at hand will result in continued economic hardship for millions.
It has become obvious (at least to me) that this current administration will continue to pander to their buddies on Wall Street. The essence of the government’s short-term strategy is obviously to continually prop up the (still ailing) financial sector, in order to sustain something close to the current levels of debt in the economy. The fundamentally flawed “stress tests” conducted earlier in the year were overly optimistic. Secretary Geithner’s (a complete JOKE) overall banking policy continues to be problematic, and his broader “re-regulation” effort is hampered by all the free passes he gave to bank CEOs earlier this year.
Banking crisis are not an uncommon occurrence, they happen more than most would like to admit. However, countries that were slow to rebound form a period of economic unrest started by banking crisis ALL relied heavily and excessively on the central bank. Actions include providing liquidity support and medium-term financing. The Obama Administration is going down the same dark and dangerous path that so many other central banks around the world have implemented. Our current regime in power lacks the political will to undertake essential, necessary structural reforms.
Prompt, corrective action is a MUST if we ever want to get the finance industry and the out control “too big/greedy to fail” banks tamed. Such corrective action should happen this year not next! Unless we get real operational reform and restructuring of the mega banks and powerful elites that control these money center banks we will be subject to irrational boom-to-bust cycles of growth. The government’s current “recovery” strategy hinges on continued low interest rates and a continuation of quantitative easing.
The more successful countries to recover from banking crisis MINIMIZED the use of the central bank to finance and thus avoided lending to insolvent, hopeless banks (think C, BAC, & AIG) Cutting out nonperforming loans immediately would improve many of our incompetent banks and improve their balance sheets. Accurate and appropriate accounting systems and a legal system that will prosecute rule breakers and those who take excessive risk is needed. As we have seen 3 trillion pumped into the system the nonperforming loans and assets (banks HOPE to appreciate in price) is dragging down any sort of sustainable economic recovery! Current policy being pushed in Washington prevents the structural imbalances underlying our economy from being corrected.
We no longer have a capitalistic system nor do we have free enterprise. What we have is cronyism and nepotism where Ivy League alums back up other Ivy League alumni and keep wealth concentrate at the top 3% of the U.S. population. Corporate America has hijacked the “American dream” and devalued, defrauded, millions of Americas. Ironic how after the markets were tantalized by the 2008 “crash.” Yet, 13 months later, we are all singing happy days are here again. Investor risk attitudes and risk perceptions are in flux, which may have significant consequences for the future outlook of financial markets. If the ability of the U.S. economy to grow is impeded by substantial corruption and the unregulated financial derivatives (600 trillion out there, off exchanges, off record books), we will be in for a dismal decade. I can really only sit with my fingers crossed and continue to pray for that “light bulb” to click on before it’s too late. No country can survive on paper assets or debt. The sooner this President and his minions (Bernanke , Summers, Geitner) understand this is the sooner we can get REAL recovery underway!
- ImpendingDoom
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