Benson's Economic & Market Trends
August 11, 2008
Over the last eight years, we have watched in horror as a two-term Republican administration furthered programmes that have effectively thrown lit sticks of dynamite into our American factories. These programmes have dismantled entire industries in the United States and encouraged their growth in China and elsewhere in Asia because of cheap labour. Also, during this time the illusion of prosperity was maintained by a Greenspan Fed as interest rates were cut to record lows, and a disastrous housing bubble was created. Americans were so seduced by home ownership that they bought houses in a frenzy that they couldn't afford, and then borrowed against them. In addition, under the administration's policies, the value of the dollar has been trashed, and commodity inflation has robbed workers lucky enough to still have jobs.
As the unprecedented credit crisis continues into its second year, it's becoming crystal clear that the American economy is slipping into the worst post-WWII recession on record. It's even beginning to dawn on third- and fourth-generation Wall Street Republicans that if the average American doesn't have a good job (much less any job), they won't be able to pay their mortgage, auto loan or credit card.
For now, Fannie Mae and Freddie Mac have been essentially nationalised and the Federal Reserve has been turned into a dumping ground for toxic-waste mortgage securities beginning with the Bear Stearns bail-out.