Today’s selloff on Wall Street is only the beginning of what we should expect from September. The global economy is slowing. The American economy is close to a double-dip recession or is still in one, the old-fashioned metrics no longer useful. Europe is a mess: Behind the so-called sovereign debt crisis are big banks that made bad bets (sound familiar?), and a monetary union on the brink. As the nest-eggs of average Americans evaporate, there’s only so far they can max out the credit cards to keep the vaunted consumer economy going.
Austerity will only make things worse, as has been happening in Europe. Nobody expects a bold move on jobs from President Obama, who is looking more and more like a one-termer no matter what outrageous things are said by the GOP field, especially the front-runners. Obama, a creature of Wall Street and Robert Rubin’s obsession with pleasing the bond playerz, will only add to the rolls of jobless as public-sector jobs continue to be eliminated.
None of these issues can be addressed quickly anyway. That is, even if our leaders were speaking truth to the American people and taking serious measures.
Some readers argue that the Federal Reserve, whose Federal Open Market Committee begins a two-day meeting Tuesday, will be forced into another round of easing. I’m not so sure. Ben Bernanke lacks consensus on the board and is under pressure from politicians such as Rick Perry. And would it do any good, other than to inject more hot money into the system, distorting investments but not creating new jobs?
Hang on. It’s going to be a rough ride.
Today’s Econ Haiku:
Burning in a tall bonfire
The hedge funds went short