Trust Has Failed

FT has an american economic analysis piece up today that takes some depressing comments by insiders and turns them into a cheerleading chant. As Buddy Larsen at BC said today, things are "just weird" recently.

Alan Greenspan recently said that the US economy hit an "invisible wall". Really? Invisible to who? I see this wall very clearly and apparently others do as well. Let me elaborate.

Most americans are wondering what just happened in the past couple of years. First our economy just implodes on an unimaginable scale. Did government regulators just miss that trillions of dollars were invested in unsecured financial instruments based upon bad loans? Or was something more sinister going on? Who sent McCain and Obama and how did the marxist get elected president? How does a GM go bankrupt? How does a Delphi shed all of GM's salaried pensions and turn them over to the taxpayers? Why would an elected congress ignore the majority of voters and pass legislation that they haven't read and most don't want? Why despite $1T of TARP bailout and another $1T of ARRA stimulus do we still have 20 million un/under-employed americans? How can we borrow more than the nation earns in a year and spend it all without anything to show for it? Why is the president bowing to kings, emperors and communist dictators while apologizing for everything that america has ever done? Why are the borders wide open to invasion and we must embrace the invaders?

No one seems to be able to answer any of these questions. Maybe the average american has lost confidence in the leadership of this country. Perhaps americans are thinking that they have been lied to and cheated. Maybe americans have lost faith in the whole american system and are afraid for their future. Do you think that this might be the invisible wall Alan?

The stores are empty because americans are poorer and just desperately trying to hold on to their piece of the middle class dream. They know that their pensions, savings and social security are in jeopardy and probably lost. Most americans know that they are the rich that our leaders despise and that their leaders are going to take what they have and redistribute it to the poor, who will piss it all away as they are wont to do. Americans know that they will pay more for less for their own healthcare and buy healthcare for someone that they don't even know AND who will not appreciate it. Ordinary americans know that FICA and medicare withholding are just another tax that they will not benefit from as the system is bankrupt and unsustainable.

Americans have lost confidence in leadership and institutions and will not regain confidence until something drastic changes. Even if leadership is changed, confidence in institutions will not rebound because americans will still wonder how our institutions allowed us to get where we are today. Trust has failed and thus the foundation of our society has failed.

This pathetic FT opinion piece makes a feeble attempt at cheerleading for the financial industry. It fails utterly. The summary paragraph says "The US economy is not yet in severe trouble. Rises in equity prices over the past few days have comforted optimists that confidence is returning. But the economy’s sputter over the past month indicates just how fragile the recovery is and how dependent America is on generating its own demand. And if it starts to turn down rather than simply to decelerate, policymakers turning to their arsenal will find it dangerously depleted."

So optimists are comforted. Okey-dokey. Optimists are self-comforting but rarely are able to inspire others with their feelings. Stating that the US economy is not yet in severe trouble will not send shoppers to the realtor, car lot or the mall. This statement will not inspire confidence for generating demand. The only weapons that policymakers have in their arsenal is borrow, spend then raise taxes. And lie. Dangerously depleted indeed!

We are in Depression 2.0 and the american consumer is not going to spend us out of it. When increased healthcare premiums, higher taxes on the middle class and cap-and-trade energy prices kick in next year, consumer spending and business activity will plummet. You'll start seeing more americans living like the poor souls in the photo. Or maybe the more aggressive kind that leave the government middleman out of redistribution and come to your house to personally redistribute your stuff.