In 2008 the bubble burst and the greatest economy in the world found itself completely exposed. Unlike what the so-called experts and late-night comedians tell us, financial greed did not cause the meltdown. On the contrary, the political aspirations of vote-seeking politicians forced private banks to kowtow to demands that would give loans to low-income families who in turn were unable to repay the loans. Politicians are often ill-informed about the dynamics of the marketplace and seldom understand how the economy works.
Today we are witnessing a similar trend. Instead of letting companies that are deemed too-big-to-fail to actually fail, politicians are concocting a twisted reality which may eventually come and haunt them. Fortunately for politicians, accountability in a 24/7 news cycle is a fleeting concept and reality usually ends up hurting the middle-class.
Only if the New York Times or the Washington Post deem it worthy to pursue a story, accountability becomes a relevant concept. Nowadays, the nature of American politics demands that the onus of politics is on campaigning, not governing, therefore rhetoric has largely substituted substance.
As the recent New Yorker cartoon satirically reminds us, when a politician opens with a forceful “let me be clear”, what he really means is to say “let me be vague”.
In other words, nothing has changed since 2008. Politicians pushing banks to give cheap loans to poor families are now pushing the government to spend more on social programs and other government gimmicks. It might be overly cynical to suggest that government can only do harm, but if the laws of supply and demand were in place, there would be no need for government to interfere and thus construe the marketplace.
Once again positive numbers articulated by the hopeful Fed chair, Ben Bernanke have fooled many into thinking that we are on the right path. Perhaps we are, but to wish for a different outcome compared to 2008, the policies must be different. Doing the same thing over and over again whilst expecting a different result, is the working definition of madness.
Indeed, it seems that in the US the only economic plan appears to be for Bernanke and his buddies to produce another bubble and hope it will end better than the one before. In Bernanke We Trust?
