The Fundamentals of the Economy are Strong! The Crisis is over!?!

Wow, I decided to write about the Border Patrol Agent killed by Undocumented Workers and the financial crisis is over. All of the economic problems of the United States have been solved. The financial institutions declared victory today and even told the EU FED that he had to get with the program and reduce rates in the EU. As one international analyst put it, “They are behind the curve.” This is another way of saying, “THEY KNOW NOTHING!”

Arrogance and Stupidity usually walk hand in hand. Most people believe that the US economy is the largest in the world. Different than what most Americans believe the US is no longer the world’s largest economy. The EU dwarfs the US in both GDP and Population. The EU has intelligently mandated that their FED has one job. Their job is to fight inflation. Yet when our Analysts and Experts talk about what the EU must do they are thinking that the EU political system is similar to that of the US. Fortunately for the world, Corporatism was banned in most Western European countries after WWII.

The collusion between government and Corporate America is a bad thing. The FED panicked following the drop in world markets on Martin Luther King day. They believed that the the smoke and mirrors financial structure of the US had spread into the rest of the world. They cut rates by ¾ % in an emergency action. Their reasoning was that the drop in the markets, in itself, became a economic factor. In other words the loss of value on the US stock market is as important as the loss of equity in housing. The obvious solution is to create excess liquidity (drop FED rates) and not worry about rampant inflation. They also promised additional cuts at the upcoming meeting.

The politicians are also preparing a tax rebate plan. The idea is that by putting money into the economy that money will be spent keeping GDP above zero. They are targetting negative growth instead of understanding why the economy is contracting. That is like wiping the forhead of a soldier shot in the stomach. He feels comforted but will most likely die in any case.

These programs are bad. Not only will they not produce the desired results, they increase public debt and accelerate inflation. I do not think we have taken on the structural problems in our economy. Perhaps we can find another area to create a bubble that will carry us on for another couple of years but sooner or later we must pay the piper.

More importantly after the FED ran to save the financial institutions, Societe’ Generale announced that it had sold positions due to fraudulant trading by a broker. The stock markets tanked because of a rogue trader.

Government should never be beholding to business or financial institutions. This must be a priority if we want to return the US to a position of strength.