Financial Frankenstein

Here we go again:  We find ourselves on the brink of an economic catastrophe and once again, it's of our own making.  How is this even remotely possible?

The clock is ticking on the Sequestration Bomb, a breathtaking little bit of insanity that was created not by some vengeful, pissed-off god, nor by some diabolical cabal of fundamentalist Islamists, nor by a gaggle of Chinese cyber-terrorists, but by our very own Congress.  Back in 2011 when Congress was bickering over the debt-ceiling crisis, our very rational, courageous and forward-thinking representatives decided it would be a good idea to force themselves into taking some action on deficit reduction by coming up with a poison pill so onerous that enacting it would be unthinkable.

Congress has become so good at deferring action on critical issues.  Their philosophy seems to be, let's kick the can down the road and worry about it some other day.  Out of sight - out of mind, they think, but their short-sightedness cannot comprehend the fact that someday the piper will have to be paid and they will have to face the issue again, after it's had a chance to fester and grow and metastasize into something truly scary.

On Friday, March 1st, some $85 billion in budget cuts will be imposed across the board.  Everything is going to be hit, even the sacred cow of defense spending.  There are many dire, horrific, sky-is-falling predictions of all the teachers who will be laid off and the hours-long lines at airport security when TSA agents are sent packing.  $85 billion is quite a chunk of change, but it's less than 3% of the national budget.  How so much pain and disruption could happen at such a relatively small bump in the budget is hard to understand.

The Democrats and the Obama administration have been fanning the flames and doing whatever they can to put pressure on Republicans to get a grip and compromise on a debt reduction deal.  Republicans are refusing to consider any increased tax revenues, thinking instead that the President has gotten all the new taxes he's going to get, and are holding out for big-time spending cuts.  Both sides have dug in their heels and the rest of us have to sit on our hands and slide helplessly into Friday when the Frankenstein monster Congress created comes to life, goes on a rampage and eats the economy for lunch.

It's astonishing how myopic Congress can be, and how it can separate itself from the monster it created and disavow any responsibility for it.  They're acting like they had nothing to do with the impending apocalypse, and throw up their hands as if they are completely powerless to do anything to solve the problem THEY created.

All this is eerily reminiscent of another faux-crisis we all endured, the so-called "fiscal cliff" back on December 31st of last year.  This also was a manufactured event, created not by economic forces but by design, by intention.  I suppose we could glean some comfort in the fact that we survived the fiscal cliff, and we will survive the upcoming sequestration.  Leading economists, such as the always erudite Robert Reich, say that most people probably won't directly feel the results of sequestration for weeks or months or maybe never.


But the economy always seems to be teetering on the brink of "another recession."  The recovery from the financial collapse of 2009-2010 has been anemic at best, and even though the stock market has been flirting with record high levels, there's the very real feeling that it's all a house of cards that can come crashing down any minute.  It wasn't that long ago that the Dow Jones Industrial Average was in the 6,000 range, instead of occasionally peeking over the 14,000 mark as it does these days.

Congress seems to have effectively isolated itself from the effects of these cliffs and crises, and somehow deflects the blame away from itself.  More ominiously, there's the chance that this has become the new "normal" - already the next two "crises" are being teed up:  another possible government shutdown coming on March 27th and more debt-ceiling churn in April.  Instead of governing for the long term, it appears Congress has chosen to merely jump from crisis to manufactured crisis, like a flat rock skipping over the surface of the water, accomplishing very little, and pushing as much as they can down the road, over and over again.

View From A Cliff

It's been nearly two weeks since the 2012 elections and they are still reverberating through the nation.  Conservative nut-jobs are getting back into their normal mode of slowly-simmering hateful insanity after an extended period of unbridled paranoid schizophrenia when Obama won a second term (I have to admit I did not help the situation much when I went into full troll mode on a number of news sites, rubbing their noses in their ignominious defeat, and I don't mind telling you I had a really good time doing it).

One thing that has become quite apparent recently is that defeated, disgraced Mitt Romney is definitely on some sort of kick-ass anti-depressant/anti-psychotic drugs.  On a recent conference call to his duped and defrauded donors, Romney placed the blame for his decisive, unequivocal loss everywhere except where it really needed to be placed, on himself.  It was weirdly pathetic but not really surprising, given his innate cowardice and total lack of integrity, to hear him blame minorities and women for voting overwhelmingly Democratic, and only because they received "gifts" from the Obama campaign.  Hispanics received the Dream Act, which Romney called an "amnesty program," college-aged women received free contraception and blacks got more food stamps and welfare.  I voted for Obama and I didn't get a single damned present, other than the joy of seeing him re-elected.  Where is my gift, god damn it?

It's hard to believe that someone would be so oblivious to the offensive racism and sexism of such remarks, but apparently Romney is that someone.  The fact that he thinks the vote of college-aged women can be bought with some free contraception is breathtaking in its arrogant stupidity.  Because we know, the only thing young college women care about is contraception.  Same thing with the Hispanics only caring about the Dream Act, and as for food stamps I guess it doesn't make a difference to him that the majority of people who get food stamps are white, and a great many of them vote Republican.

The Republicans are STILL doubling-down on their ridiculous trickle-down theory (and it's a testament to the blinding stupidity of their supporters that anyone is even talking about that anymore) and have transmuted that disgraced, discredited ideology into the "makers and takers" line, in which they divide the country into those who supposedly make wealth and those who take it.  This is just another toxic permutation of the "us and them" dichotomy that the Republicans have been flogging for decades, to demonize a significant segment of their fellow American citizens by turning them into "the enemy," someone to blame for everything that has ever gone wrong.

Romney also made some other completely incredulous remarks about Bill Clinton calling him up after the election and commiserating with him, and doing everything but come out and say that Romney should have won.  It was the weirdest thing ever, and beyond any rational belief.  Clinton worked extremely hard for Obama and campaigned tirelessly for him.  To think that he would call Romney and tell him that he was the better candidate, is completely insane and batshit-crazy.  I've always considered Romney to be incredibly awkward, weird and creepy but his post-election blatherings show with little doubt that he has some serious mental health issues and delusional fantasies which desperately need to be addressed by qualified mental health professionals.  What a horrible, infinitely dangerous President he would have been.

So now we're moving away from elections and into the fun-house world of the "fiscal cliff."  That is the Congress-made line in the sand that was a product of the debt ceiling fiasco in 2010.  Congress and the president couldn't come together to act on the national debt so they created this "poison pill" situation which presumably would force the government into some sort of corrective action on the debt or face horrible, dire consequences as the Bush-era tax cuts go away on December 31, 2012, and everyone wakes up on New Years day with a hangover and a huge extra tax burden.

For some reason the fiscal cliff is being cast as a sort of natural, organic and unavoidable catastrophe, like a 10.0 earthquake or an asteroid collision, and not something completely man-made and artificial.  Congress created the fiscal cliff, and is now cowering in fear in front of it as if it was a Frankenstein monster gone wild.  Oh what a surprise - imagine creating a financial Armageddon scenario and then actually having to deal with it at some point!  Who in Congress ever thought that they would be held responsible for things that they do?

So, both sides are hunkering down in their usual positions: the Obama administration pushing for increased revenue (i.e. taxes) on the ultra-wealthy, and the Republicans screaming that taxing rich people is worse than child molestation and will kill the millions of jobs that those wealthy "job-creators" somehow forgot to create over the last two years.  The Republican mantra is that rich people create jobs - something that is definitively and repeatedly refuted by financial experts of every kind, like here, here and here.  The middle class creates those jobs, by creating "demand" for products and services and having the money to pay for them.  More demand means more jobs - plain and simple.  Seriously, how hard is that to understand?

The Obama people have an election triumph and the accompanying political capital on their side, and have shrewdly boxed the Republicans in by saying that they will keep the tax breaks in place for 98% of wage-earners in this country, but allow them to rise back to Clinton-era levels for the upper 2%.  If the Republicans push back on that, they will be seen as sacrificing tax breaks for middle class to finance more tax relief for the very wealthy, who already have so much.  It will be very interesting to see who blinks first, and my bet is that it will be the Republicans.  Obama learned his lesson about caving in to Republicans two years ago, and I will bet any amount of money that now, at the start of his second term, he has nothing to lose by staring the Republicans down and holding their butts to the fire.

So, it promises to be an eventful end to the year, which has been one of the most tumultuous years in recent memory.  Between the primaries and the election, and now the fiscal cliff and the upcoming end of the Mayan calendar in December, we can be sure the bullet trains to Crazy Town will be running 24/7 through the end of 2012.