A Decade of Rough Sledding

CNN has an article called "Face it, tough times are ahead".

President Obama has repeatedly stated, "We are tougher than the times we live in." Although the president may not have intended to signal a whole new approach to our future, the line has Churchillian implications. Speaking of tough times, he could call on Americans to recognize we face at least a decade of rough sledding, ask us to face the challenges and express confidence that we shall prevail.

The problem with asking Americans to suck it up is that the government is really asking the weak, poor, and least connected to suck it up, shoving the burden of the crimes and mistakes of the financial elite onto everyone else. It won't work. This is not an external enemy that bombed us at Pearl Harbor. These are the white collar confidence men running the banks, insurance companies, and the Federal Reserve. Today, I watched Bernanke give the nod to usurious 30% interest rates charged by banks when asked point blank by the Honorable Senator Bernie Sanders. He doesn't see any problem loaning banks money at 0.25% so they can turn around and lend it to consumers at 30%.

Harvard economist Kenneth Rogoff argues that intentionally inflating the dollar is the "the only practical way to shorten the coming period of painful deleveraging and slow growth."

If only it were so easy. Inflation is a disjointed, asymmetric process. Those with first access to new money spend it at full value. Then it cheapens all existing money as moves through the system. That's the way it works unless you drop it equally and on everyone at once.

I am hardly the only one who foresees a "lost decade." A recent Atlantic magazine article argues that even by 2011, 2012, even 2014, the employment rate may decline very little and describes the current economic climate as "a trauma that will remain heavy for quite some time."

Foresee? I see a lost decade looking back to 2000. I also foresee our second lost decade going forward. And maybe a third if we keep kicking the can.

We've avoided the violent demonstrations seen in Greece, the massive demonstrations against inequality seen in Tel Aviv and the random torching of cars common in riots in Germany, France or Britain. If Obama can speak candidly about the coming tough times and the shortfalls we all will have to accept as part of the cure, he may do better; we most assuredly will.

I disagree that Obama can charm the masses by speaking candidly. Obama either doesn't understand what happened, or more likely does understand, but up to now hasn't wanted to confront the money trust the way Andrew Jackson did. He is an insider, groomed to maintain the status quo. He would not have packed his administration with cronies like Geithner and Summers if wanted to address the real issues.