Tuesday, August 31, 2010

House of Cards Economy

At least as far back as 2004 I was calling the Bushenomic Boom a house of cards and it finally fell in 2008. When Obama took over just after the crash, I had hoped and rather expected that his administration would rebuild with bricks and mortar this time. Sadly, as Ruth explains here, they simply restacked the card house. Do read it all, but the closer is scary because it's true.
Still soaring in its visions, the corporate class still will not see that it has been proved wrong. What was bad for individuals is bad for corporate interests as well, but those diminished profits haven’t hit home with the believers in ‘market efficiencies’ and ‘trickle down’ myth. That your debt is their profit is as far as they can see. That is the lowest and last layer in the total house of cards our economy had become. If they can’t let go, and become part of the functioning, REAL, economy that last layer is on the verge of tumbling.

Believing in myths, and putting a balance on their books that ignores investments in bundled "toxic" mortgages – which include a preponderance of debt that will go unpaid – means that REAL value has been wiped out. Holding tight to a blind faith in outmoded and wrong theories has led to a whole system based on a ground floor that is gone.

"Mark to Market" – the term for accepting actual monetary reckoning on all those bundled bad mortgages – is the sound of that last row of cards beginning to believe in gravity.
A lot of smart people talk about lost decades in terms of economic blunders. I have a growing fear that when it falls this time, we'll be looking at a lost century. But however long it lasts till they finally get it right, it surely won't be pretty.

[More posts daily at the Detroit News.]

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