The honeymoon is over and it's time get our commander in chief a much needed time out.
Last night in California President Obama compared AIG to a suicide bomber wearing a bomb laden jacket with his "thumb on the trigger" adding that we don't want to rush the bomber, rather we need to get them to slowly back out of the building and talk it over.
The press, the president, the congress will turn AIG into a goat (errrr a suicide bomber), but that will not fix the economy, because the trouble has nothing to do with bonus payments to banking execs.
While bonuses are an easy target of editorialists we can not let the issue of bonus payments cloud the real trouble in our economy.
In the panic that followed the collapse of the stock market, and the massive federal intervention, Washington has completely lost sight of what caused the calamity in the first place.
So Mr. President a quick recap is in order.
By the way it is a lot simpler than the Federal Reserve has made is out to be.
After years of a sustained housing boom, new home sales started to slow considerably, due mainly to over supply and with a steady rise in interest rates.
The vast middle class of which a solid 17 percent of income comes from non reported sources was suddenly under pressure from adjustable mortgage rates, payday loans, and jacked up credit card rates, hit the wall when gas prices shot into the stratosphere mid summer.
The power of the middle class simply overwhelmed the major banks as overnight credit defaults soared when the working class chose food over making credit card or sky high mortgage payments.
Behind the scenes, the growth of debit card use over cash empowered the major banking players with vast sums of cash and control over the middle class, generating fees from the most insignificant transactions.
That 99 cent Egg McMuffin added one cent to the bottom line of Visa and MasterCard and one cent less to the margin of retailers across the country. Keep in mind the credit card companies get a percentage of even the sales tax.
But the banking gravy train came to sudden and abrupt halt when Americans were confronted with a triple price increase in fuel prices. Over taxed, and tired of paying as much as 29% on credit card debt, unable to adjust to their adjustable mortgages, many in the middle class just couldn't handle the cluster fuck from the major banks and the collapse of middle America was just a matter of time.
The second wave is coming.
The first wave of mortgage resets began in 2007, the second wave is now underway and will peak in 2011.
The soaring gas prices of the summer of 2009 have yet to be addressed by the Obama administration, demand for fuel was nonexistent in June of 2009, yet prices continued to rocket skyward, because of speculation. Speculation driven by the country's major banks and insurance companies looking for another source to gamble their mad money.
While congress passes monster spending bills, to create jobs, and repair infrastructure, and President Obama jumps from one issue to another the underling problem has not been addressed.
What caused the sudden fall of the American economy into the abyss, was the ability of large American Banking Conglomerates to drastically alter the middle class financial landscape.
To avoid a second wave of the financial tsunami, we need controls on food, fuel, banking fees and interest rates. Without stable fuel prices, affordable and predictable food prices, and interest rates and banking fees that remain reasonable regardless of a person's credit, the middle class will not survive.
Bonus payments are of no concern, foremost should be control of the banking industry which has become a financial tape worm of horrific proportions. The greatest threat to our middle class is not a big brother government but big brother banking.
The biggest tax we pay is not to the IRS but to our banks who hit our wallet at every turn, even at McDonald's.
Without control of banking fees and interest rates a middle class America will not survive.
2 comments:
Oh great now CedarPosts is an economics expert!
You "pundits" should give the President a break. Even FOX presented a good 100 day report. He has passed more effective legislation in 100 days than the previous administration.
I am disgusted with all of these Corporate Executives who are whining about cuts in pay and bonuses. In my past career, I reported to board members who were less than honest. I had to earn my pay and bonuses by producing new sales and profits.This generation should take an example from Lee Iaccoca who said that he would earn his salary by creating new sales for Chrysler and he did it.These wusses should grow up and stop their whining. If they want to borrow my tax money, let them earn it or step aside.
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