TheMillerCircle.org

It pained me to see Pelosi, Reid and Bush standing side by side yesterday to announce a budget cut to stimulate the economy and help steer us through a recession avoidance pathway. First, the agreement is pathetic. For most middle class wage earners, the so called stimulus package will amount to about $12.00 a week for the average consumer and it provides no assistance to the states, who need to have a balanced budget each year and will face a large share of the burden of unemployment and decreased economic activity. It is a paltry gesture by any standards, but that image alone points out how closely aligned the two parties are with respect to economic policies and how far apart they are from people like me and a growing number of others, as well as a large number of economists who believe that the purpose of government is to prevent financial calamities and not be the cause of them.

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A few days ago Chalmers Johnson’s book “Nemesis: the last days of the American Republic“ was published in paperback. This is the final book of Johnson’s trilogy which began just before 9/11 with his first book “Blowback.” I read all three books and I strongly recommend them to provide you with some sense of what it means for a country with 47 million of its citizens lacking health care, with a failing infrastructure and in the midst of the most gilded of gilded ages, to claim to be the most powerful nation in the world with a military budget that is completely out of control. But, if you don’t have the time to read his books, you might want to read his most recent TomDispatch article as sort of an update since the publication of his third book last year.

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The Feds have managed to stave off a free-fall in the American stock market, with less success in manipulating foreign markets. But their dramatic lowering of the interest rate and the promise of further reductions to follow, will do little to re-activate the housing market if the lending institutions do not follow suit and loosen their now very tight lending practices. Borrowing maybe cheap, but can you get a loan? I assume the institutions will follow and attempt to re-ignite the housing market, but we will not see a return to the crazy days of sub-priming a loan to anyone with a normal body temperature. By lowering interest rates in such dramatic fashion, in the face of inflationary pressure from huge oil costs and the sub-prime fiasco, we are admitting to ourselves, even if the political/economic pundits are unwilling to tell the public, that the housing market is really the last log we have to put on the fire to keep the economy warm; re-igniting even a reduced housing market frenzy is about all we have left.

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