Viewpoint: Economic fireworks
By Joe Baker
By Joe Baker
Senior Editors Note: This is an effort at getting back into the old routine. As most of you know, I have been on the sidelines for a few weeks since multiple bypass surgery. Recovery is moving well, and I should be in pretty good shape in a few more weeks. When they saw your ribcage in half, it tends to slow you down a little. My sincere thanks to all those who expressed concern.
Much of the focus of the alternate press and some of the national press lately has been on the Bush administration and what advance knowledge of
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9-11 it possessed. That may all be designed to distract public attention from an even more serious and imminent problem.
What might that be? Have you heard any reporting or commentary on the state of the economy lately? The crowd in Washington fervently hopes you wont. A few in the country are aware of whats going on there. Most are blissfully ignorant of the situation.
The so-called smart money most of it Republicanand its owners are slipping out of the country, bailing out before the ship sinks.
The value of the dollar is slipping steadily as compared to the Euro, and our corporate criminals are leading world confidence in our economy into disrepute. Thanks, Enron, Arthur Anderson, Global Crossings, et al.
As someone pointed out to George Howdy Doody Bush on Flag Day, there are 37 million Americans who have lost 50 percent of the equity in their IRAs or 401-K accounts. Theyve learned their pensions arent guaranteed by the U.S. Pension Guarantee Corp. because it is under financed by $3.5 trillion.
Many thousands of U.S. citizens are out of work because of corporate failures, and more are being laid off. Think K-mart. Stocks are dropping, and the value of gold is climbing.
The president pretender didnt like to hear that kind of talk and suggested anyone who questions his voodoo economic policies is unpatriotic. Your needle is stuck, George.
A few things to think about: the huge budget surplus we had before Dubya and company took over has turned into a severe deficit. Federal tax collections are down, and the looming recession is becoming obvious.
Yes, foreign governments are losing confidence in the Bush government and the dollar, which really is just paper, backed by nothing. They also consider our leader a buffoon.
Is a government liquidity crunch coming? Such a thing has happened before. If you are old enough, or know your U.S. history, you are aware that it happened at the beginning of the Franklin Roosevelt administration. Roosevelt responded by declaring a bank holiday and seizing gold from ordinary citizens, but not from the wealthy.
Another crunch came in 1979 during the Carter administration. In that one, gold hit a record high of more than $800 an ounce. And we remember the early 80s very well. Thats when we saw interest rates in excess of 20 percent, even for the best credit risks. Farmers also were going broke.
Then there was the savings and loan scandal. The Federal Savings and Loan Insurance Corp. was nearly broke itself. Papa Bushs son, Neil, was involved in that one, but never went to jail. Millions of dollars found their way to the CIA.
Today, besides the other factors weve listed, there is a scary prospect for homeowners. For those facing foreclosure because they cant make the mortgage payments, there is no federal agency ready to come to their aid. Growing unemployment will exacerbate this problem. If Fannie Mae goes broke, who bails them out?
Note also that the U.S. Treasury has stopped issuing 30-year treasury bonds. The Federal Reserve is preparing to issue new, brightly colored currency for use in this country only. Postal money orders are in that category; they are not valid overseas any longer.
Also watch for increased pressure on the markets clearing houses. If the economy goes into meltdown, they will go, too. Market experts know this, but they are not willing to talk about it.
Comstock Partners, Inc., mutual fund managers and investment analysts, say the country is in the third stage of a bear market, one they christen the Fear and Capitulation Stage.
In its daily commentary, Comstock said: The rallies are getting weaker and weaker and are occurring on tepid volume. As the rallies weaken and the disappointments mount, we are getting closer and closer to the point where investors just give up on the market and throw in the towel as they have done following every other market bubble in history. Currently even the market sectors that have previously been somewhat strong are showing ominous signs of weakness.
In sum, we think that all of the fundamental and technical factors are now in place to engender a severe market decline. Although it is always possible that another rally could intervene, we believe that would be a highly risky bet to make.
A final cheery note: Home Depot, which is mostly foreign-owned, has instructed its numerous U.S. outlets they are not to do business with the U.S. government. Maybe they know something we do not.
As the late Bette Davis once said (more or less): Hold onto your hats. Its going to be a bumpy ride.
Add in the fear factor trumpeted up every day by Bush, Cheney, Rumsfeld, Ashcroft and Ridge with their never-ending War on Terrorism, and make that bumpy ride a scary one. But they dont care; theyre making the world safe for big oil and defense contractors.
Hey, George, do you ever think that all your ill-timed and ill-considered blather about the Axis of Evil might make them want to strike first? Theres an old saying, If you know someones going to punch you, punch them first. Could our economy take another blow like 9-11? Ask your corporate fiends, er, friends about that one, George.
Happy 4th of July.
Editor & Publisher Frank Schier also contributed to this editorial.