Tale of Two Economies Continues
This morning we had two major headlines: the absolute insane profit of Goldman Sachs (GS) and the unexpected increase in jobless claims. This highlights one thing and one thing only. That is that our economy continues to diverge into two separate worlds.
The first world is that those who benefit from bailouts (namely the financial system along with a few others like GM) will continue to prosper in the name of “stability”. The Wall Street firms are bigger than ever and making billions upon billions of profit in an otherwise diaster of an economy.
Meanwhile, unemployment continues to be a major negative. People are struggling bad. I continue to say that this is not your typical business cycle driven recession, but is something bigger, something worse.
This is situation has been caused by one thing and one thing only: bailouts. If you let the free market work, if you let people fail, and you let businesses fail no matter how big, then you will have a more cohesive economy. The politicians will tell you that they bailed out companies to support the economy and thus support the little guy. This is crap. They bailed out businesses because of special interests, because of campaign contributions and because of their elite connections.
In an attempt to regain some political credibility, the Obama administration is ramping up its anti-Wall Street rhetoric. The problem is that the people pissed at Wall St. are the same people who created the situation (No, that is not an attack at Democrats – both parties are responsible). Extra taxation and fees won’t solve this situation.
What a mess. If you aren’t pissed off at where these people have taken this country, I’m not sure you’ll ever be pissed off. My distrust of everything is increasing.