Sunday, June 6, 2010

ARE WE IN A RECOVERY OR A BATHTUB?

Have you noticed that your groceries still cost twice as much as they did last year, that people are still moving out of your neighborhood in droves, that you still can’t get a loan at your bank, that many of your friends are still unemployed, that whole countries are now going bankrupt?                     
     So why do news sources and business commentators keep talking about “green shoots”, “signs of recovery”, "we’ve hit bottom” and “the worst is behind us”?   And why do others optimistically suggest that the recovery is reassuringly near and mention “U” shaped, “V” shaped and “W” shaped recoveries?  They’ve been doing this for two years already. 

     Politicians and economists have made no definite statements about a recovery, they talk ever so delicately about the "recession" as though this were just another business cycle, caused by a widespread drop in spending.  Hogwash.  It’s a big fat global crisis created by greedy crooks on Wall Street that continues to cause worldwide suffering.   
  • Federal Reserve Chairman Ben Bernanke says: "Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while ... businesses are likely to be cautious about hiring, implying that the unemployment rate could remain high for a time, even after economic growth resumes."       

  • “It’s going to be a slog,” says Mark Zandi, chief economist at Moody’s Economy.com. “What we have been through is an abyss.”   

  • “Housing is the most affordable it has been in 40 years because of the decline in prices and low mortgage rates”, says Richard DeKaser in Washington, who is an expert on house prices. “The stringency of credit will diminish as lenders become more confident they are not at risk of losing their equity.”           

    You don’t say.  And when exactly will we be able to borrow money from the banks who’ve used our taxpayer’s bailout money to make profits and give fat bonuses to themselves, but who still won’t lend us money to buy a house or a car?    
    More honest prognosticators are talking about a "Bathtub Recovery", where the rapid economic descent is followed by a long, flat period scraping along the bottom before an eventual upturn.  But even this is just another way of saying there are more bad times ahead.
    Is all this pussyfooting around to lull us into a false sense of security?  For fear that we will rise up and riot in the streets, like the Greeks did recently and rightly so?  Do governments think we haven’t noticed the signs all around us that economies are still in trouble?  How long can you keep mentioning “green shoots” without any sign of them?  We recognize a dead cat bounce in a bathtub when we see one.   
    And when I think that Wall Street quants and greedy banksters still have the vast sums of money they made from their global-financial-crisis-causing instruments, while we still struggle with the consequences of what they did, I do want to go and riot in the street.  Why isn’t their bonus money being used to bail out the banks and giant corporations instead of ours?
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