Sunny Days For The Economy

While Bush and the Republican Party talk up how technically not horrible the economy is, Ben Bernanke spoke just like a whiner on Capitol Hill yesterday.

Warning of the risks of a further slowdown and higher inflation, Ben S. Bernanke, chairman of the Federal Reserve, offered a gloomy assessment of the economy on Tuesday as President Bush, speaking a few blocks away, urged Americans to have faith in the country’s financial foundation.

In testimony before the Senate Banking Committee, Mr. Bernanke avoided the word “recession” in characterizing the current economy, noting instead that consumer spending and exports were keeping growth “at a sluggish pace” while the housing sector “continues to weaken.”

He added that spending for personal goods had “advanced at a modest pace so far this year, generally holding up somewhat better than might have been expected given the array of forces weighing on household finances and attitudes.”

While the risks to the overall economy were still “skewed to the downside,” he said, inflation “seems likely to move temporarily higher in the near term.”

As if on cue, the consumer price index jumped up yesterday at the fastest rate in 17 years, mainly due to rising energy prices. And Bernanke didn't see any hope on that horizon, either:

In his testimony, he was especially pessimistic about any easing of energy prices, dismissing suggestions that they were being driven by speculation in futures markets. Instead, he said high energy costs reflected the markets’ recognition that demand was outstripping supplies.

“Over the past several years, the world economy has expanded at its fastest pace in decades, leading to substantial increases in the demand for oil,” Mr. Bernanke said. “On the supply side, despite sharp increases in prices, the production of oil has risen only slightly in the past few years.”

I think there's a slight amount of speculation in the markets, but we're reaching a fundamental truth about oil, that production either is peaking or has peaked, and that we need an actual plan for getting off the carbon economy instead of cries of "Drill More!" for a product whose supply is diminishing.

The economy is basically everyone's #1 or #2 issue headed into the election. This NPR/Kaiser Foundation poll looking at economic issues in Ohio and Florida shows that 89% of residents in those two states think that the economy is "not so good" or "poor." Can 89% of the people be wrong? Sure, if they're all a bunch of whiners like Phil Gramm keeps saying. Of course, well over 89% of the country didn't buy the porn films he helped produce, so maybe he's just bitter.

The big picture is that the failed conservative policies of socializing risk and privatizing profit has caught up with them. They failed to react to bubbles in the housing market and practically forgot about regulation, and homeowners were screwed. They let insurance companies discriminate against their customers and saw 47 million Americans join the ranks of the uninsured. They sought bailouts for financial institutions who made bad decisions but not the homeowners who bore the greatest impact from them. They didn't respond to rising energy demand and sought only to raise profits for their oil company pals. They ran up huge deficits, borrowed for the future from China, and stratified inequality so much that it looks like a new Gilded Age. And now, they want to elect a man as President who will gladly carry out the same policies and further privatize the economy and tear at the social safety net.

(I'm glad that the DNC is taking on McCain on Social Security, by the way. Here's the video:)



It's time for a change.