In Washington…. Beware of the Wizards

Pay no attention to man behind the curtain.”

That was the famous line from Wizard of Oz, when Dorothy caught a glimpse of the fake wizard desperately pulling switches and punching buttons in a vain attempt to impress his visitors of his power.

I think about that scene a lot lately. I see that image in my head when I read about of one attempt after another by our leaders, or other leaders around the world, furiously trying every old trick in the book to get things back to “normal.”

So far nothing has worked. Nothing is normal any more, anywhere. If Chicken Little were around today he’d be booked solid on cable talk shows. Hell, he’d probably have his own show.

Theodore Roosevelt said of men such as JP Morgan back in the early 1900s:

“Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. These men combine to bring about as much financial stress as possible, in order to discredit the policy of government and thereby secure a reversal of that policy, so they may enjoy unmolested the fruits of their own evil doings. I regard this contest as one that will determine who shall rule this free country-the people through their chosen representatives, or a few ruthless and domineering men whose wealth makes them formidable because they hide behind the breastworks of corporate organization.”

I’ve felt for some time now that this turmoil we’re experiencing is a horse of an entirely different color — something we’ve never live through before. This is no recession — at least no recession I’ve seen in my years. I hardly noticed any of our previously declared recessions.

I sure as hell notice this one

Whatever the hell this is, it’s no recession. It’s something else.

One of the biggest distinctions between this — let’s just call it a “mess” — and previous recessions is the number of things going wrong all at the same time.

If it were just the banks and bankers getting caught one again with their mitts in the till, we have survived those kind of muggings many times before.

If it were just another cyclical disruption in domestic labor markets, we’ve seen that before too and, after a few lock-outs, some worker protests and strikes, things settled back down and everyone went back to work.

But this time the meltdown of financial markets exposed some breathtaking evidence; an enormous hunk of what had been counted as “wealth” was actually just valueless concoctions, the value of which depended entirely on the current holder finding a greater fool to pay more for it than they did. When we ran out of fools, those assets immediately morphed into liabilities. (As Warren Buffet put it, “You never really know who’s swimming naked until the tide goes out.”) Trillions of dollars in “wealth” vanished at the click of mouse.

Then there’s the job market. Outsourcing — oh it was all great fun until someone lost an eye. In our case that eye was nearly the entire US manufacturing base. With that went jobs.. millions and millions and millions of jobs. America, which less than 70 years earlier had been dubbed “the arsenal of democracy,” for our vast ability to produce, has become instead the arsenal of bickering, bluster and bullshit.

Then there’s the rest of the world.

After the fall of the Soviet Union only one super-power remained standing. So it seemed logical for the rest of the developed world to hitch their wagons to ours and shaping their fiscal policies, economies and policies to accommodate ours. They took short courses in the Chicago School of economics where they learned that the less government interferes with the private sector the better. And they learn the magic of “leverage,” borrowing, and that “deficits don’t matter.”

Some learned our bad habits better than others. And now they’re sharing beds alongside ours in intensive care. (A satirical movie title comes to mind: “Fiscal Jackasses”)

While the wreckage of the world’s free market systems continue their collapse, nearly the entire Arab world picked now to decide this is moment in history to rearrange their own deck chairs — usually at gun point. And, of course, we decided that, rather than deal with our own growing problems at home, to jump right into the Arab world’s business — at gun point.

As I’ve said before– this time it’s different because there are too many disturbances in “the Force”– all at once. The center not only cannot hold, but has not held.

So, pay no attention to that man behind the curtain. We are in for it. And, the man, men, women, World Bank, IMF, the Fed — you see furiously working behind those curtains, can pull those levers and buttons all they want. It won’t do any good this time . Because those levers are no longer connected to anything real. In todays world with all due apologies to Mr Spock line in “The Wrath Of Khan” it seems now the needs of the few outweigh the needs of the many.


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