National Unemployment and the Economic Status

July 23, 2009

By Padmini Arhant

The ravenous economy has absorbed about $3.7 trillion dollars via bailouts and stimulus plans, (please refer to individual stimulus package topics for breakdown) yet the nation’s jobless rate rising like a tidal wave rather than settling along the shores. Several arguments mounting regarding the precarious job situation across the nation with some fifteen states like California, Michigan, Indiana, Ohio and others experiencing double digit in job losses accumulated over a period of time.

Not surprisingly, criticisms with an ominous prediction such as a possible return of the ‘Great Depression’ from various political and economic factions pouring against the current administration’s level of action and apparent inaction in averting the precipitous decline of the job market.

The irony being, President Obama’s opponents and fierce critics expressing deep concerns over the present generation’s children and grandchildren burdened with the burgeoning multi-trillion dollars national deficit from the ‘supposedly’ bizarre and revolutionary health care reform.

Unfortunately, the pervasive selective memory among the cynics forbids anyone from reminding the junkyard legacy by the previous administration. Nevertheless, it’s important to revisit the situation in order to find a pragmatic and an effective cure for the epidemic unlike a band-aid treatment tactic by the prior administration.

As detailed earlier on many occasions, the wild adventures in the past eight years eroded the fundamentals of the capitalist system. Immediately following the 9/11 attacks, the widespread panic about the United States economic and national security surely had an impact on the American investments ranging from housing to stock market including the exodus of some expatriates selling homes combined with the withdrawal of their investments.

The Bush-Cheney administration laid out the extravagant scheme to trump the situation with yet another war by invading Iraq when the mission in Afghanistan had barely begun. Conservative ideology dictates that wars promote prosperity. Actually, the notion might not be far-fetched because wars are highly beneficial to the nexus group gambling with others’ life and nation’s wealth.

When the administration inheriting a surplus economy engaged in a dubious agenda at the most improper and inconvenient time, the market conditions in 2002 and onwards became more volatile due to enormous speculations surrounding the United States affordability to wage another war.

The Bush-Cheney administration sailed through the storm with false assurances and blatant lies that Iraq war would be self-funded through oil revenues expected to be reaped exclusively by the United States in return for the establishment of democracy.

One must also not forget the administrations’ prophesy on the premature valentine’s day celebration by the cheering Iraqis handing out rose bouquets to the U.S. occupying forces at the expense of their blood and national treasury.

The excessive borrowing commenced at the dawn of the Iraq war with the fiscal conservatives now objecting to their constituents’ health care benefits, then turning a blind eye and signing a blank check to an unarguably a corrupt administration.

Funding two simultaneous wars converted the national surplus to national deficit adversely affecting the Treasury Notes and subsequently the U.S. currency in the international market. In the backdrop of the weakening Bond market, the stock market performance accelerated with investors’ confidence in the growth of different sectors specifically the oil and defense stocks due to the on-going wars, technology sector and the financial sector with hyperbolic balance sheets.

Above all, during that time the Federal Reserve and the Treasury’s overly cautious inflationary measure by reducing the interest rates beyond market conditions and unleashing the free market from necessary regulations in an utter conflict of interest essentially provided a fertile ground for the financial sector to exploit the unique opportunity in the lending activity.

In addition, the conglomerate like AIG and major investment banks extending towards the commercial bank’s activities risking long-term investments for short-term gains induced further competition for the traditional banking sector adopting strategies detrimental to the key components of the economy viz. the housing market, retail and commercial lending.

The financial sector’s unethical and unscrupulous practices in every aspect of lending targeting the nerve of the economic system i.e. the consumer, exacerbated the economic recession.

From the notorious sub-prime mortgages in the housing market now appropriately defined as ‘toxic assets’ bundled into the mortgage backed securities exchanged through international trading, to teaser rates offered on credit card later escalating to atrocious interest rates exceeding market affordability…are primarily responsible for the chronic ailments of the current real estate and the liquidity crisis.

Unequivocally the present woes of the economy are attributable to the overwhelming greed by the financial sector and the defiance for any rule of law until date. As clarified by President Obama during the press conference on date, the financial regulatory reforms are in order.

Since some prominent economists have been recently pushing for more stimulus over and above the total $3.7 trillion dollars, it’s necessary to obtain the facts and details on earlier investments to evaluate the methods applied as a result of the negative economic growth and dismal unemployment rate.

Please refer to stimulus package details followed by careful analysis in the subsequent segments.

Meanwhile, it’s imperative and incumbent on all bailout recipients and the previous administration officials regardless of hierarchy to come forward, testify under oath to Congress as the representatives of the American electorate, and explain exactly where and how the trillions of dollars have been invested.

Is it a coincidence that Goldman Sachs after being assisted by the former Treasury Secretary Henry Paulson in gobbling Bear Stearns and Lehman Brothers, emerges with a bumper profit rewarding its every employee with a despicable amount $700,000 bonus the past week ? – Absolutely not.

It’s about time the criminals of the financial world are brought to justice in order to avoid a twenty first century revolution in the world’s modern democracy.

Congress must act in the interest of the people and abide by the constitutional rule of law with an honest and thorough investigation of the massive bailouts carried out at the expense of the hard working American taxpayers.

Thank you.

Padmini Arhant


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