The boom’s over. Boom? More like a pop. The artificial high caused by the Bush Administration’s tax decreases coupled with a fortuitous development of markets abroad in which US companies were increasingly vested, gave first the stock exchange a good old heave-ho upwards and with it, the housing market.
Only you can’t build an economy on hot air and promises and soon, the housing bubble burst and the age of “more-people-owning-their-homes-than-ever-before-in-the-USA” as touted by FOX News came to a crashing end. It was followed by an almost 10% correction in the stock market which started just two weeks after Peter Barnes and Jenna Lee also of FOX News fame said:
“We don’t know why everyone’s worried – things are looking great!”
This isn’t about FOX News, but they embody the Bush Administration’s hear, see and speak no evil mentality. Everything is swell all of the time. But it isn’t, as the New York Times reports today:
Credit flowing to American companies is drying up at a pace not seen in decades, threatening the creation of jobs and the expansion of businesses, while intensifying worries that the economy may be headed for recession.
Outstanding commercial and industrial bank loans, and short-term loans are both down by 9% since August. It’s the first time that this source of cash has shrunk so rapidly since – well ever actually, since the Fed started tracking such things back in 1973. Ironically, this development which has alarmed the Fed, caused them to make a statement hinting that interest rates would be cut again in the near future which sent the stock market soaring.
It’s the same sort of superficial nonsense that will cause the spokespersons of this Administration to shrug their shoulders and ask “who’s worried.” But the truth is, we all should be. The consequences of this development will primarily affect small businesses who are already finding it very hard to get a loan form a bank. A year ago banks were throwing money at small companies but those are finding now that they cannot increase their line of credit.
It stops them hiring and stops them from investing and that is a sure sign of bad things to come. All I can do is hope that if the country plunges into a full blown recession, it at least elects a Clinton into the White House in 2008 to clear up the mess that the Republicans have left behind.
Random critical assessments of political events
1 comment:
Economic downturns are always bad news for Republican electoral chances.
2005 is a great example. The economic slowdown was a greater factor in pushing Bush to 40% than Iraq or Katrina, since Bush's tax cuts were supposed to produce a boom.
Two years later, he's stabilised at 30%, but people losing their jobs and homes aren't likely to be impressed by another tax cut. Remarkably, Republican strategists are promoting more tax cuts as the sure fire way to hold on to the White House. People have already seen that federal tax cuts simply lead to higher state and local taxes, and higher "fees".
I'm glad you are looking at the looming fiscal crisis. The Administration is simply offering more smiley-faced assessments. Like Iraq, they have no Plan B. Smiling and crossing your fingers is now defined as leadership these days.
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