American jitters

Between paralysis and nervous breakdown
By EDITORIAL  |  October 6, 2010


Are you confused about the economy? Concerned about the safety of your job? Worried about the future? You would have to be delusional not to be anxious, perhaps even fearful. Unless you are a child of the Great Depression, these are the worst economic times of our lives. The knowledge that the slump, the recession, the depression (call it what you will) is worldwide only intensifies the unease. In a global, interdependent economy, not only can you not hide, you have trouble running.

Experts disagree about whether the economy is heading for inflation, which eats away at the buying power of paychecks and steadily devalues savings, or deflation, which brings with it less consumer demand, even higher unemployment, and lower valuations for assets such as houses and condominiums.

In really bad times, when uncertainty is equivalent to pessimism, gold is considered the last bulwark against Armageddon. Here the news is also vexing. Gold recently hit an historic high of $1320 an ounce. To meet the demand for bullion, JPMorgan Chase, the blue-chip bank favored by many of the worlds wealthiest, has reopened its underground vault in Manhattan and has built another in Singapore. Other money-center banks are following suit in London. At the moment, gold in private hands outweighs the combined holdings of the world's central banks.

Not enough rescue
It has been two years since Washington bailed out Wall Street and almost as long since it, in effect, nationalized General Motors. In execution, both moves were less than perfect. But they worked. Without government intervention, a worldwide economic meltdown would have occurred. Unemployment would now be higher, even more families would have lost their homes, and the bleak economic picture would be much, much darker. The GM rescue was very tough love. At the point of a gun, bond holders and unions made substantial concessions. The pain — and it was considerable — was shared.

What about the much-maligned stimulus, everybody's favorite whipping boy? The truth is that it was not big enough, but it was all President Barack Obama could get. Republicans were at their most perverse in opposing the stimulus, and conservative Democrats were at their most spineless in compromising it. As a result, the nation suffers more than it needs to. Progressive Democrats were on target to want more. A very large degree of the widespread fear and general sense of hopelessness that envelops America can be laid at the feet of the Republicans and their Blue Dog Democratic allies.

These are truths that need to be spoken plain. The Republican Party and its co-conspirators at Fox News and talk radio have foisted a filthy lie possibly even bigger than the-Saddam-has-weapons-of-mass-destruction canard on the American people by obscuring the role that the Bush-era tax cuts played in energizing the already huge deficit Obama inherited. America voted for Bush not once but twice, and is paying for it under Obama. Dante would have to invent another circle of hell to give the GOP its just punishment.

One reason Americans are so confused and conflicted about the economy is that, in order to recognize the roots of the problem, we would have to recognize our own complicity. Nobody wants to lay in their own grave, but to deny that you helped dig the hole will not make it go away.

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