Editorial: Relief, or Snake Oil?
The US economy is a complex and wonderful thing, an imaginary matrix of theoretical dollars that circulate like blood cells even to society’s extremities, a collective that enables us to swipe debit cards, borrow large sums, cash checks and pay bills over the internet or telephone.
It functions very much like an organism: When it is healthy it prospers and grows; when it takes ill it can wither and weaken. Like an ailing body, disease in a specific area can affect the whole system. And when a body is fighting disease it can no longer grow.
When the economy, as measured by the Gross Domestic Product, not only stagnates but actually begins to decline, we have a recession. The GDP is a number derived from the cash value of all the goods and services produced in the US over a period of time, usually six months. It is the nature of a recession that you don’t know you’re in one until you’re already there.
That’s all the econ 101 you’ll get for the time being, because from this point opinions vary widely as to whether there will be a recession, how long it could last and who will be affected, as well as a healthy contingent who believe we are already in one.
But things put in play last week suggest that surely something is amiss with our economy, and the news doesn’t look good.
Turbulence in US stock markets after international indices take a Monday hit.
A cut in the federal interest rate by 75 basis points, with another 50 rumored in the near future.
And stage whispers of a Bush economic stimulus plan that purports to put about $600 into the pockets of every taxpaying American.
These measures, we are told, will ease recession worries or perhaps allay the occurrence of one. Bush used the phrase “just fine.” And we’re not buying a word of it.
Because these are the same voices – Bush’s and Bernanke’s – that told us that the subprime mortgage crisis would not affect the greater market, that the rising price of oil would not affect inflation and that reducing interest rates could keep the whole mess in check.
They were wrong.
The administration was also wrong back in the scary days after 9-11, when the Dow Jones Industrial Average dropped nearly 700 points in an instant. Go about your business, they said. Go on vacation or take in a Broadway show. Buy a house or a car with easy money and the rest will take care of itself.
Now, it seems, they’re going back to one of the first plays in the playbook by instigating tax cuts and rebates, eerily reminiscent of the Economic Growth and Tax Relief Reconciliation Act of 2001, which was supposed to bring economic relief but was in fact one of the first volleys in the war against the middle class, Alternative Minimum Tax be damned.
We didn’t buy it then and we aren’t buying it now. But we’ll still take the 600 bucks.
YES! Weekly chooses to exercise its right to express editorial opinion in our publication. In fact we cherish it, considering opinion to be a vital component of any publication. The viewpoints expressed represent a consensus of the YES! Weekly editorial staff, achieved through much deliberation and consideration.