National Commentary

The Summer of No Recovery

bentonmugAs we come to the end of the Summer of No Recovery, one overriding reality is sinking in: America’s corporate and financial ruling class has become, from the standpoint of rationality or even just common sense, insane.

bentonmugAs we come to the end of the Summer of No Recovery, one overriding reality is sinking in: America’s corporate and financial ruling class has become, from the standpoint of rationality or even just common sense, insane.

It insists on holding tight to the wheel of the jumbo jet known as the U.S. economy that it already set into a tailspin, and the outcome of this collective corporate madness is going to be catastrophic.

The parameters of the economic crisis are now appearing to loom even worse than the Great Depression because they’re defined by decades of mismanaged corporate and financial policy since the 1980s, driven by wild, anarchistic obsessions with greed and an accompanying unprecedented rage against anyone standing in the way.

By obstructing meaningful reform, the Republican Party is sealing the doom of the American dream, done with unprecedented, disingenuous lying in the name of protecting the revered right of the corporate boardrooms to act out their madness. They’re accompanied by the major media, the Glenn Beck rabble, and the legions of radical libertarian think tanks who provide the pseudo-scientific arguments for perpetuating the worst policies from the Bush administration days.

No wonder the response from the Democrats, and those economists and other scientists looking with horror at the impending crisis, has continued to be tepid.  They’re unable to gain a foothold on the American consciousness in the face of such an onslaught.

Nobel Prize winning economist Paul Krugman has already “called” the current recession a “depression,” and when he was interviewed on national TV Monday about what kinds of steps are needed at this stage, he repeated his insistence that a massive new government stimulus package is needed to create jobs.

As rational as his argument was, even in the minds of his interviewers, it concluded with one of the TV commentators saying, “Well, that’s very interesting,” but then, shrugging his shoulders, adding, “That will never happen.”

Krugman made the simple argument that, in essence, spending and investing are not the same thing. It is likened to the individual household, where there is a difference between spending money at the race track or on paying for a child’s education.

In one case, the money is simply squandered (as in Iraq). In the other, it is invested in a brighter future for everyone, with the payback greater, many times over, than the cost of the initial investment.

So it would be with a massive new stimulus that would create jobs and new opportunities, putting people back on the track of getting their lives, and their futures, in order.

But the Republicans insist that adding to the deficit worries Americans more than the lack of jobs. It may worry corporate boardrooms, but not the American people. The Republicans also contend that extending the Bush tax cuts to the rich are what working people want.

“It would be a waste of money,” Krugman said, noting that corporate America is already awash in cash that it is not spending to create jobs.

Most ominous, in this context, is the fact that the nation, without a rational and aggressive approach to fixing the crisis, is careening toward deflation, something being signaled, like canaries in a mine shaft, both by the corporate hoarding of cash and by the stampede toward fixed interest yields on government treasuries.

Deflation has been triggered by the continued steep decline in real estate values, followed by a massive pull back in the level of spending by average households. A nasty, escalating self-feeding spiral to the bottom will soon set in as prices and inventories dip sharply and scarcity turns a once proud nation into a veritable dust bowl.

But corporate America’s grip on this steering wheel will not relent. It is madness. Without regard for the overall consequences such an outcome will present them, they think, with new opportunities to acquire everything really, really cheap.

It is reminiscent of the treacherous Gollum character in the “Lord of the Rings” whose twisted, foul appearance reflects his mad obsession with possessing the ring. Such is the mental and moral state of those who are today obstructing any relevant turn away from the slide into the greatest economic disintegration in the nation’s history.


Nicholas Benton may be emailed at nfbenton@fcnp.com

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