After one year of blogging on economic, corporate, social and political issues, I thought I would try to make sense out of trends:
- The rule of law has taken a major hit in the United States. Some examples of this phenomenon are the unlimited guarantees to Fannie Mae and Freddie Mac, guarantees to banks and favored companies, and Federal Reserve purchases of mortgage backed securities. See Shredding the Social Fabric
- We have exposed monetarist and Keynesian economic solutions as intellectually bankrupt. Amazingly, the decision makers who believe in these theories have not been fired. More amazingly, with all the evidence that we are still mired in a deep recession, we keep trying the same tired strategies.
- Obama’s economic acumen and performance has been disappointing. His monomaniacal focus on a health care bill that the country cannot afford hampers new hiring. Worse, it enriches the insurers and big pharmaceutical companies. And worst, he has wasted important political capital. Further, with his tepid financial reform bill he missed a real opportunity to address citizens’ concerns about the excessive power of Wall Street.
- Congress should be tried for malpractice. Members of Congress did not read the financial reform or the health care bill. Nancy Pelosi had the temerity to implore Congress to pass these bills so she and the public could find out what is inside.
- The Executive Branch and Congress appear to be for sale to the highest corporate bidder. Industry lobbyists essentially control Congress and the executive branch.
- Where has leadership gone? Congress used to produce real leaders: Everett Dirksen, Hubert Humphrey, Robert Taft, William Fulbright, Sam Nunn, Henry Jackson and others. We may not have agreed with their views, but they were serious, well-respected, independent minded individuals. We never doubted that these leaders put the country’s interests first. The Executive Branch also produced great leaders. Compare past Secretaries of the Treasury– Andrew Mellon, Douglas Dillon and Lloyd Bentsen– to the flawed and unworthy Timothy Geithner.
- Political clout, not reason and merit, determine current policy. GM, GE, the banks, municipalities and others were saved from extinction because of campaign contributions and union ties. Picking winners and losers based on political considerations generates cynicism and undermines the guarantee of equal protection under our laws.
- Zero interest rate policies encapsulate everything that is wrong with our current system. We have impoverished the thrifty and the prudent and rewarded the profligate and the incompetent. On the backs of savers, we have bailed out the banks. This is particularly heinous because the victims of this policy are the retired and elderly who have watched their savings dwindle and their retirement lifestyles vanish. An economic policy which encourages savers to speculate in the stock market or buy junk bonds is unconscionable.
- Promises of better corporate behavior after passage of Sarbanes-Oxley have been false. Congressional pressure on the Financial Accounting Standards Board to suspend mark to market accounting has created the “extend and pretend” economy. We no longer properly recognize losses; banks know this and refuse to lend knowing they can obfuscate the true state of their balance sheets. More damaging, the true financial condition of the banks leads investors to purchase equities essentially under false pretenses. Many of the bank stocks have declined significantly from their peaks.
- Culturally, extend and pretend has permeated beyond our financial culture. BP and the government hid many facts about the Gulf oil spill. Even now we probably do not know the full extent of the damage and independent researchers have been denied access to information.
- Corporate Boards of Directors are still not paying attention. In the case of Mark Hurd the violation of corporate financial policies was rewarded with a generous severance package. (Trust in a corporation is predicated on the integrity of their financial policies.) His unemployment did not last very long, as Oracle recently named him co-president. Did character matter to Oracle or its Board? Does anyone have any shame anymore? Was the HP Board afraid to fire Hurd for cause?
- We are becoming a divided country. The government protects the rich and the poor. The middle class is being economically squeezed by inflation in basic goods, unemployment or the threat of it, rising health care and education costs and diminished retirement savings. All these things plant the seeds of political upheaval.
- Finally, blogging serves an important purpose in presenting an alternative viewpoint to mainstream media. Blogging is the antidote to endless economic cheerleading by paid media and government officials. Blogging has become the new millennium’s populist forum. For example, bloggers steadfastly maintained that we have not emerged from the recession/depression and there were never any “green shoots” of recovery. The mainstream media now feigns surprise at reports of economic weakness and prognostications of a double dip recession.
Watching the passing parade of economic and political folly is both depressing and exhilarating. Depressing because we believed there would be a change in business-as-usual Washington. Exhilarating because the public is awakening to the fact that they have been misled. And that augers a change in the status quo and perhaps a better tomorrow.
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