Disparity In Economic Recovery: Unfair Or Unhealthy?
One of the puppetmasters of our broken economy over the years has been Timothy Geithner. He now serves as Treasury Secretary, but don’t be mistaken, he’s been one of the masters pulling the strings for some time as he used to work for the New York Fed. He’s in the news this week saying that the disparity in the economic recovery is unfair. At least he acknowledges that there IS a disparity. What he doesn’t acknowledge is that he is at fault for it.
I’ve been preaching for some time that there is a massive disparity in the economy…
Due to government intervention, namely propping up failed banks and businesses, those at the top continue to be doing fine while the “real economy” or “main street” continues to crumble. This is easy to see. Contrast record profits at Wall St. firms while unemployment and foreclosures remain high. Contrast falling consumer credit and rising public debt.
The economic recovery is simple. If you’re in government, Wall St. or a Fortune 500 company, you’re doing fine. Everyone else is S.O.L.
So back to Geithner… why did he cause it? Because the major coprorations and banks have a massive influence on public policy. Geithner used to work at Goldman Sachs as does almost all Treasury Secretaries. They protect their own. Through the Federal Reserve and the policy of too big to fail, the Wall St. banks can do whatever they want knowing that they will never go down, because Geithner and his boys have their backs. This is reality and we’ve seen it as clear as ever over the last couple years. Meanwhile, Main St. crumbles.
Let’s get to the main question here, unfair or unhealthy. Well, it’s certainly unfair, but unfair only gets us so far. Lots of things are unfair. Here’s why it’s also unhealthy. While Wall St. banks essentially printing money from trading profits or other high finance strategies is good I guess for the economy, the only thing that will bring a real recovery is for regular Americans to become more financially healthy. Notice I didn’t say we need average Americans to start consuming more.
If average Americans become financially healthy, they will be able to save, invest in new companies, and responsibly spend money – all will grow the economy.
The problem is that Americans are as far as ever from being financially healthy, which is why I’m so skeptical of this so-called economic recovery. Foreclosures are at record highs, unemployment is extremely high (higher than official government numbers), debt levels are high, etc. So much needs to happen just to get people have to square one where debt is gone (or at least manageable) and people have some extra money in the bank. We’re not even close.
Until this happens, I will be skeptical of any sustained economic recovery. Census jobs, Wall St. profits, and government stimuli do not equate to a healthy economy. Sorry folks.