(Original Photo: NYT; Courtesy Mongo Network)
Federal Reserve Chairman Benjamin S. Bernanke, in a strongly anticipated speech to
What Bernanke means is, any actual Recovery has to be led by regular people, buying things, and businesses investing in capital purchases. The problem is, consumer spending between The Crash (September, 2008) and today actually peaked in the Third Quarter of 2009 and has declined ever since.
Without jobs, no one can buy anything. People will not be able to pay their mortgage loans and car loans and credit card debt. As people don't buy things Businesses lose revenue. They will fire more employees. Unemployment rises, and the cycle continues. I mean, it actually is just that simple.
Helicopter Ben! Look Behind You! (Photo: Mongo, And Adobe)
However, the focus of the Obama administration, the Fed, Secretary Timmeh, and all the other Shape-Shifting Reptoids has not been to reduce unemployment. The Republican's TARP program went directly to the banks and investment houses. The majority of the $787 Billion-dollar "stimulus" package (which Obama and the Democrats moved heaven and earth to get through Congress) also went to the banking and investment industry.
The theory was, if banks and brokerage firms were stabilized, banks would begin to lend money to businesses, and everything would be just as it was. Only, the banking and investment industry doesn't give two fucks what happens to the rest of America, and so has not made loans available as expected...
... because the banking and investment industry is also holding billions (possibly trillions) in bad, mortgage-backed securities, sold to them by other investment houses. The government gave money to the banks to counterbalance those losses -- but all the TARP money under Bush, and the bulk of the $787 Billion under Obama, isn't enough to cover all the bad paper the Banksters are holding.
And here's the, uh, "money shot"; pay attention: The entire Derivatives industry depended upon creating mortgage-backed securities with no independently-established value. Banks, pension plans; investment houses which purchased these CDO's count them as part of their paper assets (as in, "Fifty billion dollars strong!"). But what they paid for them was based on an industry estimate which was overstated, and benefited the originators of those securities.
Someone, uh..."made bank" on all this. A relatively low number of middle-aged and older white males, to be precise.
If the "financial industry" were to do a solid analysis and re-value these securities at their true worth, the banks and investment houses, hedge funds, pension plans... all would lose billions, each, in assets. No one knows how much, but it's likely that many institutions would fail overnight, and that would start a global financial firestorm.
That couldn't be allowed to happen, so attempts by the Federal government to reverse damage done by the Banksters, has gone to the Financial industry. It has not been to help People. As long as helping the Banksters, and not Citizens, is the focus of government, this crisis will drag on for years, perhaps decades -- because the overvalued securities created a mountain of debt -- like intensely radioactive waste that can't be destroyed, only stored.
Obligatory Cute Animal Photo In Middle Of Blog Rant
Japan still is being affected by its "Lost Decade" (which really began with its own Real Estate bubble in the late 1980's); and the Great Depression, for America, lasted from 1929 until 1942 -- it took the Second World War to bring it to a close.
And, whether anyone wants to acknowledge it or not, This is not over. We are still in economic free-fall. Nearly a half-million people each month lose their jobs, and nothing is going to be the way it was, again, ever.
However, the entertainment industry, the teevee, media on the Intertubes, has been working overtime helping us deny the reality of our circumstances (I'm not suggesting we stop listening to Lady Gaga because there's an economic crisis; heaven forfend). And, the financial 'reforms' being discussed are all of the
The teevee isn't reality, and the crap being spewed by politicians isn't reform. It's Chinatown, Jake.
As Paul Krugman noted ahead of Benny's speech, "... we can safely predict what [Bernanke] and other officials will say about where we are right now: That the economy is continuing to recover, albeit more slowly than they would like. Unfortunately, that’s not true: this isn’t a recovery, in any sense that matters."