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After Monday’s devastation on Wall Street, I think it’s finally safe to use the “R” word when describing the current state of the U.S. economy. “R” meaning recession, that is.
At one point in late afternoon trading on Monday, the tech-heavy Nasdaq fell below 2000 — to around 1,960 — for the first time in 27 months. Now I don’t know about you, but since this index is now just 60 percent of its all-time high close of 5,048.62, reached on March 10, 2000, it sure looks like “recession” time to me. At least on Wall Street.
The Dow Jones, Standard & Poor’s, and the Russell indices also took a beating yesterday. Losses were more or less severe than those on the Nasdaq, depending on which stock you personally hold.
Some would say no, it’s not really a recession because the Nasdaq and, to some degree, the Dow — were “overvalued” anyway and due for a “correction.” So since this was more or less expected, you can’t really say we’re in a recession.
Yeah, well, tell it to the millions of Americans who have already lost billions of dollars over the past year. You might find many of them atop your office building’s highest balcony, nervously peering over the edge at the street below and contemplating “the big dive.” Pitiful.
As just one example, my wife’s 401K has lost about 60 percent of its value since the first of the year. Damn good thing we’re not depending on that dough for our golden years.
But our investment is a pittance comparably speaking, which tells me that with each passing day, more and more Americans with a whole lot more money invested on Wall Street are doing much worse than we are.
The thing is, Federal Reserve Chairman Alan Greenspan — “Mr. Unaccountable,” you might say — saw this coming months ago.
Oh, yeah. You remember his now-infamous “irrational exuberance” comment he used to describe the over-valuation of many stocks — mostly tech stocks, ironically enough — several months ago? I remember it well; it was basically the beginning of the end of the tech stock value in this country.
Why blame Greenspan, you ask?
Simple: No one else knows this system better than he does because no one controls more of it than he does. Instead of talking in code — “irrational exuberance”? — why couldn’t he have just come out and said, “Look, this index is becoming overvalued; slow down, people; you’re paying too much for these stocks.”
But no. Instead he has to talk out of the side of his mouth, use expressions most people cannot understand, and say everything but, “Look out!” when it comes to discussing financial trends and conditions in this country.
In effect, Greenspan — nay, the entire Federal Reserve — is a system that has, well, “overstayed” its non-welcome. It’s time for this unaccountable, unanswerable, and unintelligible entity to go away.
Bring back the gold standard, I say. Bring back “real” money, based on “real,” tangible assets. That way, we know what we have, what we don’t have, and what we can or can’t spend nationally.
The fact that we have this unaccountable “agency” running our nation’s economy is un-American in the first place. I cannot imagine our founding fathers supporting this; indeed, they spoke and wrote against the concept of a “central bank” because they knew what kind of dangers awaited all of us if one single, uncontrollable entity dictated our monetary policy.
Defenders of the status quo have argued that we can’t ditch the central bank concept because it is so necessary to prevent the “ups and downs” in the market, such as that which occurred in 1929 and sparked the “Great Depression.”
Well, gee whiz, judging by the market’s performances since late last year, I’d say the “central bank” concept isn’t working, boys and girls. Seems to me like those ups and downs are coming anyway. But what makes it worse this time is that those who manage our financial “system” didn’t have the guts, loyalty, or honor to warn anyone.
And if Greenspan says, “Hey, wait, I didn’t know,” then that’s a de facto admission that he should be replaced because he’s supposed to know, isn’t he? He’s the “manager,” right?
This current economic downturn is suspicious to me because throughout Bill Clinton’s tenure, just look at the huge growth of the markets and the economy. Suddenly, however, as Clinton’s tenure comes to an end, now we have this rotten economic situation.
That makes no sense if you believe Clinton; he says he created the “best economy in years.” If that’s so, then why is it tanking? Because he’s gone? Wrong; our economy is huge, and changes don’t ripple through it that fast.
It can’t be because of the Bush administration; the economy began to tank before Bush rolled into town. And, Bush hasn’t been in power long enough to screw up the economy.
Plus, this makes me wonder if things would have gotten this bad by now had Gore won in November. Not that I wanted Gore to win, but clearly something is amiss here.
In fact, it’s downright weird, if you ask me.
What’s going on? Is anyone going to explain the billions of dollars lost by Americans in the past six months? More importantly, who’s going to make good on those losses?
It’s amazing to me that anyone on Capitol Hill would even consider discussing reparations for blacks or denying Americans a tax cut now, when they need it most, when perhaps hundreds of billions of dollars have been lost in the private sector in the past half-year alone.
And as my wife’s 401K plan represents, most of this loss hasn’t been lost by “the rich”; it’s been lost by working men and women — black, white, yellow, brown and purple, of all political persuasions — who put good money into a market on the promise of decent returns during “the best economy in history.”
Somebody’s lying to us. Somebody has some explaining to do. It ought to start at the top — with Bush or with Greenspan — but regardless of where it starts, it needs to start pronto.
Is there “a conspiracy” at work here? Beats me, but I do know that the major reason why we supposedly went to this central bank concept was to prevent the “crashes” of yesteryear.
And since crashes are occurring anyway, I figure that means this whole central bank thing is either bumpkiss or corrupt or, more likely, both.