One of the most common and least truthful, I dare say deliberate lies spread by Republicans these days is that “uncertainty” is stifling the economy. Eric Cantor, a.k.a. Mr. Slime, the House majority leader, is a primary proponent of this favorite Tea Party mantra. Specifically, says Mr. Cantor, “Jobs-destroying regulations have created a cloud of uncertainty that hangs over the business community like a dark cloud.”
Don’t believe it. It’s just not true. Markets, for one, thrive on uncertainty. Investment is inherently akin to legalized gambling. What is a sure-fire sign of trouble is the lack of uncertainty. The right-wing has tried every scapegoat:
- “The government “made banks loan money to people who couldn’t afford the mortgages.”
- “It’s the Feds fault.”
- “Poor people are getting sick and not dying fast enough.”
- “Social Security and Medicare are unsustainable(just please don’t remember that we stole $1 trillion to fight those two wars so Haliburton could get richer).”
Horse hockey. All of the “insiders” knew that the repeal of the Glass-Stegall Act of 1932 by the Graham-Leach-Billey Act, once again allowed bank holding companies to own other financial institutions. The Commodity Futures Modernization Act of 2000 repealed the law that forbade privately-owned companies from insuring publicly-traded companies by calling “insurance” the catchy new “credit default swaps”. These were both repealed provisions that were put in place after The Great Depression in an effort to avoid another such financially calamitous affair from re-occurring. Not coincidentally, Phil Graham, Republican from Texas, was at the heart of both. Both directly led to the housing bubble that burst in the 1930s, and because of Graham and his cronies, again in 2008.
Mortgage companies were springing up on every corner. They were begging any and everybody to take out mortgage loans. The local lender no longer had any risk, they simply sold their thousands of mortgages to the next biggest institution, who sold it to the next, who sold it to the next, all the way up to the major investment banks. The major investment banks even out-swindled themselves. They began to believe their own invulnerability and bought some bundled mortgages of their own, believing that AIG had their back and that they were insured for when the mortgagees started defaulting.
Wrong! Since AIG had spun-off a private company that held all the paper that they were insuring, and since private insurers don’t have to publish their financials, and because the law requiring that only public companies could insure other public companies had been repealed, nobody stopped to look and see if the AIG spin-off actually had reserves to cover what they said they could cover. Guess what? They didn’t!!! As a matter of fact, they only had $1 for every $50 they were insuring. Hence, when the proverbial doo-doo hit the fan, it sprayed everybody.
Now, the reason that large multi-national companies haven’t created any new net jobs in the U.S. is that the globalization of China, Brazil, Russia, etc., has added billions, yes billions, of new people to the global workforce. This, quite naturally, drove down labor costs exponentially. Add to that the increase in computerization and if America doesn’t address this reality, and do it soon, white collar jobs will be dealt an equal, if not greater blow, than the manufacturing segment has experienced. Unless a huge effort is made focusing on education and retraining, what the U.S. has witnessed in job-loss since 2008 will pale in comparison to that which is coming.
But uncertainty is the last thing that has happened to the markets or the business sector. As a matter of fact, it’s downright boring to those in the know. Unfortunately, this makes the manipulation of the unlearned in America that much easier. The simple fact is that it’s now going to be harder for the super-rich to make the money that they are accustomed to making off of other peoples’ money.
So the Republicans, in a desperate effort to retain that flow of money to their campaign coffers continue to re-package and press ever harder for even more de-regulation, more tilting of the playing field in their direction, or face the closing off of the spigot that allows them to propagandize and keep their base believing that they have all the answers. This, in spite of the obvious disconnection that their actions take in relation to their speeches and disingenuous claims. It can be the only logical explanation for their total inability to admit to seeing what the rest of even mediocre financial analysts report on a daily basis.
And that goes to what is actually worrying the markets: the growing gap between reality and political action. We/I know what the fundamental problems are in the lack of balance of United States financial policies. We borrowed and spent too much to keep a bubble expanding well beyond its normal limits for two decades. We spent too much on ill-advised, unnecessary wars, and we allowed Republicans to bamboozle the American public for too long.
There is only one real solution—a combination of austerity and investment in the appropriate areas that will enable us to once again be competitive. Painless? No. Uncertain? Hell no.