The Economy is Sound

When Wall St. is in trouble, we are always reassured with the statement that the “fundamentals are sound”. We hear it repeatedly on the financial channels of our TV. We need to recognize the spin for what it is. Obviously there is nothing fundamentally sound about our current economic crisis.

So we need to point out repeatedly that billions of dollars for the Pentagon and the armaments industry are really not intended for “national security” but rather to keep the economy from collapsing. The present economic crisis is an indication of possible over-all collapse because some of the huge Wall St. investment banks that had over-leveraged for outrageous profit needed injections of cash to prevent their collapse. So the Secty of Treasury, Hank Paulsen, appointed by Bush, came up with a scam known as the TARP. He himself was former head of Citi bank and it was in deep yogurt. He needed a cash injection for that bank. But since it would not be appropriate to just save that bank, he proposed to Congress that he needed 700 billion dollars to save all the banks. And Congress bought it. Well, it happens that all the banks did not need saving, only a greedy few on Wall St.

Now some banks are giving back the money because it isn’t needed and as long as they keep it, since it is our money, they are required to accept regulations that they do not want. We are still out 200-300 billion dollars that were gifts to banks. On top of that 2-3 trillion dollars is being spent on the military and it is all borrowed money. A number of pundits believe that this cannot continue and it is an economic crisis that will lead eventually to bankruptcy. It could be the end of the capitalist system as we know it.

The neocons may revel in the power of an “American Empire” But the empire is no longer supportable. We are hugely in debt; we cannot raise sufficient taxes and we cannot pay for the troops required to maintain the empire. Japan and China are keeping our economy functioning by lending huge amounts to our Treasury. In addition we spend outrageous sums on war and the military in order to maintain the growth of the economy.

There is no question that the Defense budget is a jobs program and military research that develops new weapons systems and new military technologies produce billions of dollars for corporations and their lobbyists. In this way does the military-industrial complex encourage militarism and the need for continuing wars. It is true that there have been some technological advances derived from military research that have become civilian industries. However, weapons spending far out weighs any other expenditures in the Pentagon budget. Furthermore, it is politically very difficult to trim munitions spending once the program is entrenched. There are far too many politicians and their constituents benefiting from the program.


References:

Johnson, Chalmers. Nemesis. 2006
Galbraith, John Kenneth. The Great Crash 1929. 1997.
Wikipedia