Oh well, we’ve committed all of our stimulus/TARP money and created a massive deficit, we’re escalating a war that we can’t win but will cost billions more, but think of the good news: the folks on Wall Street who are still working can buy even more glorious and luxurious condos and second homes at vastly reduced prices with all the extra money they are getting in bonuses. And while that small or medium-sized business has no real access to normal commercial loans, those denizens of the “Street” were able to borrow money from the federal government at close to zero percent interest to use for pure market speculation, and they are able to buy “distressed assets” at bargain rates. Wow, glorious! We definitely bailed out the big guys!
Although more and more Americans are losing their jobs or getting the compensation slashed, we are told that it is good news that each month the number of additional job-losers seems to be declining. The official unemployment percentage dropped slightly in November to 10% (from 10.2%), but so many people fell out of the statistic (those who have given up looking or who could only find part-time or occasional work) that looking at this lower total percentage as if it were a drop would be inaccurate. However one addresses the issue, unemployment is still very high, and the Federal Reserve projects serious unemployment numbers for years to come. Well, when you live in the real world and don’t happen to have one of those glorious Wall Street jobs, why is it remotely surprising that most working Americans are wary of spending and are unlikely to resume their past consumer practices… for the foreseeable future?
“Black Friday”? Hot pre-holiday November sales? Not exactly. The December 3rd New York Times: “Overall, the retailing industry posted a 0.5 percent increase in comparable sales for the month from a year ago, when sales declined 7.8 percent, according to Thomson Reuters. Analysts had expected a 2.1 percent increase for the month.” Not surprisingly, value-retailers did fine, but mid-market department stores showed average mid-single-digit percentage declines, and luxury departments stores, forced into deep discounting, fared the worst with double-digit declines, Saks down by over 26% (same store sales comparing November sales in 2008 and 2009). Retail sales are where consumers, who control 70% of this economy, vote on where they think we are headed. And this vote was, not too surprisingly, negative.
In this environment, the President has summoned about 130 business leaders (from corporate executives to small business owners), union heads and economists to the White House to brainstorm over how to create new jobs… the biggest single “voter” issue facing the Obama administration, in my opinion. But the government has already spent or earmarked all the big bucks it is willing to spend to re-ignite the economy, and so job-creation, well, is simply going to have to happen without significant new federal dollars escalating an already intolerable deficit load.
The factions are lining up. The December 3rd Washington Post: “‘We want to make sure it is not just the public sector doing this in a vacuum,’ said Valerie Jarrett, a senior adviser to Obama. ‘It's important we engage the private sector as well.’ Administration officials, however, have excluded major trade associations from the summit, including the National Association of Manufacturers and the U.S. Chamber of Commerce, which represent many of the country's largest employers… Some of those groups privately complain that their job creation ideas, including enactment of stalled free trade deals that they say would boost exports, are opposed by labor unions, which will be heavily represented at the forum.” Minorities are screaming that the Obama administration is not doing enough for them: “10 members of the Congressional Black Caucus boycotted a House committee markup of a financial regulatory reform bill, a key Obama priority, to protest the administration not doing more to aid minority communities and businesses that are hurting economically.”
Does the White House already have an agenda? Is this “jobs summit” just window-dressing? “It is far from clear that Obama will embrace all the ideas being promoted by his supporters in organized labor, who are making calls for direct funding of federal public works jobs, another round of aid to cash-strapped states and cities, and funding for infrastructure projects... Taken together, those initiatives could cost hundreds of billions of dollars -- a tab Obama seems unwilling to shoulder. The White House has been warmer to ideas to use federal money to leverage private investments. One, dubbed ‘cash for caulkers,’ would offer federal subsidies to people who weatherize their homes. The administration has also expressed interest in expanding financing for export-related businesses, and fast-tracking infrastructure spending.” The Post
In the end, we clearly do not have unlimited resources and the budget deficits are both intolerable and unsustainable at these levels. But at the root of this problem is the seeming violation of the fundamental notion of “fair play” in America. How can we subsidize the mega-wealthy financial firms – who were provided money to restore the credit markets that they destroyed in the first place, and they most certainly opted not make normal credit available as expected – allow their principals to make wild profits generated in significant part by taxpayer dollars, and then tell the rest of American that we used up all the money on these fat cats… and there’s nothing left for the rest of us?!
I’m Peter Dekom, and I approve this message.
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