Recession Under Herbert Hoover Bush Regime Gets Even Worse
The US is in a recession, no if's, and's or but's about it. Most regular hardworking Americans have know that for a couple of years. This economic catastrophe was caused by help from a Herbert Hoover like Bush administration.
This country has become a debtor nation, and the economic debacle, a hallmark of 19th and 20th century Republican administrations, has added to the suffering and woes of typical Americans while the rich get richer.
A recent article in AsiaTimes shows just how bad the economic picture has become under the Bush regime.
"When Henry Paulson agreed to leave his Wall Street job as chairman of investment bank Goldman Sachs to go to Washington as Treasury secretary in 2006, he demanded extraordinary powers as de facto economic czar. He got them.
"Paulson is also head of the President's Working Group on Financial Markets - composed of the secretary of the Treasury and the chairmen of the Federal Reserve Board, theSecurities and Exchange Commission and the Commodity Futures Trading Commission. The working group is the financial world's equivalent of the Pentagon war room. Paulson, not Fed chairman Ben Bernanke, is the person running the administration's crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi-government mortgage companies Freddie Mac and Fannie Mae to the collapse of themulti-trillion dollar market in asset-backed securities (ABS) to the real economy are compounding into the worst crisis since the 1930s Great Depression.
"In an eerie echo of president Herbert Hoover in 1930 during a presidential campaign against F D Roosevelt following the stock market crash and collapse of numerous smaller banks, Paulson recently appeared on national TV to declare "our banking system is a safe and sound one".
"He added that the list of "troubled" banks "is a very manageable situation". What he did not say was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers 90. Not included on that list are banks such as Citigroup, until recently the largest bank in the world.
"Paulson is also head of the President's Working Group on Financial Markets - composed of the secretary of the Treasury and the chairmen of the Federal Reserve Board, theSecurities and Exchange Commission and the Commodity Futures Trading Commission. The working group is the financial world's equivalent of the Pentagon war room. Paulson, not Fed chairman Ben Bernanke, is the person running the administration's crisis management. And his recent actions indicate he has lost control as the snowballing problems from the semi-government mortgage companies Freddie Mac and Fannie Mae to the collapse of themulti-trillion dollar market in asset-backed securities (ABS) to the real economy are compounding into the worst crisis since the 1930s Great Depression.
"In an eerie echo of president Herbert Hoover in 1930 during a presidential campaign against F D Roosevelt following the stock market crash and collapse of numerous smaller banks, Paulson recently appeared on national TV to declare "our banking system is a safe and sound one".
"He added that the list of "troubled" banks "is a very manageable situation". What he did not say was that the US bank deposit insurance fund, the Federal Deposit Insurance Corporation (FDIC) has a list of problem banks that numbers 90. Not included on that list are banks such as Citigroup, until recently the largest bank in the world.
"The names Citigroup, Lehman Bros, Morgan Stanley, even Paulson's old firm Goldman Sachs and of course the inventor of subprime mortgage securitization, Merrill Lynch, all hold a huge percentage of what are called Level Three assets, these being assets where no-one is willing to buy but the bank declares their worth based on "fantasy".
"In short, the value of those core financial institutions of the US financial system is massively overvalued compared with their value were they forced to sell into the open market today.
"In short, the value of those core financial institutions of the US financial system is massively overvalued compared with their value were they forced to sell into the open market today.
"Economist John Williams of California has meticulously tracked such "data revisions" for more than 25 years and found the manipulation of reality so alarming that he founded an independent subscriber service titled Shadow Government Statistics, where he makes best estimate calculations of the reality, not the official mythology.
"By Williams' calculations, the US economy first entered recession, defined as two consecutive quarters of negative GDP growth, at the end of 2006. Ever since, the recession has deepened, dramatically so in the past 12 months. Little known is the fact that the Labor Department also publishes six different unemployment statistics from U1, U2 through to U6, this last being the most comprehensive. The reported "official unemployment" is the very narrowly defined U3, which stands at 5.5%. However, as Williams notes, U6 is the real measure and that officially shows 9.7% unemployed. His calculations put the figure at 13.7% actually unemployed and seeking work.
"By Williams' calculations, the US economy first entered recession, defined as two consecutive quarters of negative GDP growth, at the end of 2006. Ever since, the recession has deepened, dramatically so in the past 12 months. Little known is the fact that the Labor Department also publishes six different unemployment statistics from U1, U2 through to U6, this last being the most comprehensive. The reported "official unemployment" is the very narrowly defined U3, which stands at 5.5%. However, as Williams notes, U6 is the real measure and that officially shows 9.7% unemployed. His calculations put the figure at 13.7% actually unemployed and seeking work.
"McCain depends on the traditional money contributions of the Republican Party, which demands permanent tax reform for highest-income earners and a pro-bank laissez faire treatment of millions of homeowners facing home foreclosure and asset seizure by banks.
"In a sobering aside, readers should not expect any serious economic remedies for the crisis from a president Barack Obama. Obama's national campaign finance chairman is Chicago real estate billionaire Penny Pritzker, who is heir to among other things the Hyatt Hotels. It was Pritzker together with Merrill Lynch 10 years ago who first developed the model for securitizing "subprime" real estate, the trigger for the current financial tsunami crisis."
You can read the rest here.
Unfortunately, after Hoover and Reagan, for example, Democrats had to clean up those Republicans' economic disasters. It will be deja vu all over again, but this time, because of the caliber of Democrats, some of whom are Republican lite and many millionaires, a clean up may not be successful.
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