Tuesday, June 14, 2011

The Big Picture?

Last week, I was noting the number of movie sequels set to hit the marketplace soon. It turns out I left out a couple. First, there's the continuing saga, which I guess is finally ending, of the Harry Potter movies. I guess our hero will finally be known as "Mr. Potter". And the original movie that introduced Americans to the future governor of California, Arnold Schwarzenegger, "Conan the Barbarian" has been redone and is awaiting release. Maybe it's not a sequel, but it might as well be. "Yaahhh!"

I have a healthy suspicion for anyone who claims to understand economics and the business trends which affect our lives so deeply. Nevertheless, I'm trying to get a handle on this stuff just because it is so important.
I think, for instance, that all Americans should not only know what happened three years ago as the economy was brought to a literal standstill, but why. Following that, we should be able to sort through today's winners and losers, if for no other reason than to know whose statements are less truthful come the real election campaign next year.
The 2008 meltdown was a bit too late to figure much in the election, but we can now look backwards to get an idea of what went wrong. My friends from the Right informed enough to have an opinion will try to claim that certain members of Congress pushed the nation's banks to make loans to less than creditworthy borrowers for home purchases. This is not true.
What is true is that deregulating the financial system allowed commercial banks, investment banks and credit rating agencies to pass extra risk on to unwary institutional customers who had no idea that the mortgages making up their securites were not only subject to default, but sometimes set up in such a way as to make a profit for the investment banks when defaults happened! Yes, it's complex, but informed citizens should come to know just what a credit default swap is, and how this totally unregulated market came to be the cause of the fall of some of the nation's best known investment banks. Sadly, this stuff is unlikely to be in the news again, because the Obama administration has evidently concluded that this debacle had so much guilt spread around that no one will ever be brought to trial. Gee, at least when the much smaller savings and loan scandal hit the fan there were indictments, trials and actual jail terms. I guess it's a case of "the greater the crime, the taller the statue."
I saw a chart today. It measured the relative share of the total business revenue pie taken in wages by employees. The measures started in the late 1940s, a pretty long time back, as my aging body would attest. The shocking part is that right now is the lowest point on the entire chart. In other words, complaints about stagnant wages or jobs shipped overseas are not just union-invented whines. In all that time, being a well-paid boss has never been more attractive, and never has being a working stiff offered less. And the cure for this malaise? In many GOP-controlled states, the answer lies in cutting off unemployment benefits. That's how Arizona voted yesterday, and it was federal money they were declining in order to (I guess) get the unemployed off the couches and into resume writing class. I did not see the GOP presidential candidate debate from New Hampshire last night, but I was told that the term "middle class" was mentioned - not once.


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