“I supposed you’d all feel better if someone else was in charge.” — Donald Moffat as Garry in “The Thing”
Few things have scared the wits out of me more than seeing the movie “The Thing” 30 years ago. With just six months to go until the election, both President Barack Obama and Republican front-runner Mitt Romney seem to have their own “Thing” that scares them: the economy. Neither candidate has said how he would deal with what could be the hardest challenge America has faced since World War II.
One of these two men will have to lead the Nation for the upcoming four years. We know where they stand on gay marriage, gays in the military or, in Obama’s case, having a gay old time with Hollywood friends.
Supporters of both candidates have weighed in on other issues such as extending low interest rates on student loans, who bullied whom in high school and who had a tougher time growing up.
Is gay marriage important? That depends. For some people it must be, because so many people have weighed in on it. But I have a hunch that those same people won’t really give a rat’s behind about gay marriage if the economy implodes.
If millions of people lose their jobs and cannot feed their children, who among us will even care about gay marriage as an issue?
My mother used to say: “Everyone is principled until the wolf comes knocking at the door.” Having survived the Great Depression, my parents knew all about the wolf. More than anything else, it shaped who they were. I will never forget how my dad used to smoke his cigarettes right down to the filter even after he became successful. There was always a part of him and my mother that remembered how hard it was to put food on the table and pay the rent.
Most of us don’t have a memory of really tough times. And not one in 100 would even believe that times could be that tough again. Yet in many ways the world’s economy is hanging by a thread, and we might be facing something even worse than the Dirty Thirties.
I believe the President’s and Romney’s advisers have told them how bad this “Thing” can get, and that is why neither candidate has a clue as to how to handle this economic crisis. Both Obama and Romney seem worried that anything too negative could start a panic in the investment markets that one of them will have to deal with as President. This explains why we have witnessed the stupidest Presidential campaign in living memory.
If you think economic collapse can’t happen, you should start paying attention to the warning signs.
Four years ago, the financial meltdown that almost turned into a depression began at the doorstep of Lehman Brothers CEO Richard Fuld Jr.
That first domino fell hard, and Fuld could not believe his firm would not be rescued by the Federal government. But it wasn’t. Not until the autumn of 2008 did Congress approve the Troubled Asset Relief Program, which allowed the U.S. Department of the Treasury to purchase up to $700 billion of “troubled assets.”
The acclaimed book Too Big To Fail by Andrew Ross Sorkin explains why Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke believed that without a bailout the Nation was headed for an economic crisis worse than the Great Depression.
It was the largest Federal government economic intervention since the Civil War. There was one huge problem with the solution: The government gave banks hundreds of billions of dollars in taxpayer money but did not require they lend it out or rein in salaries and bonuses. In other words, they gave the banks a clean slate to start all over again. And banks like JPMorgan Chase & Co. have done it in spades.
What Would Harry Truman Say?
This month, JPMorgan Chase announced it made a bad bet that resulted in a $2 billion loss. CEO Jamie Dimon said he was sorry — so sorry, in fact, that he forced Chief Investment Officer Ina Drew to resign. Dimon believes the buck stops with Drew, even though he is at the forefront of what is turning into the second banking crisis in four years.
Dimon even apologized to shareholders, but he isn’t sorry enough to take a cut on his $23 million pay package.
One thing I have learned over the past 30 years is that if one big bank is taking on risk, so are all the others. That was the case in the 1980s with the titanic amount of bad Latin American debt, and it was certainly the case five years ago with the trillions of dollars in bad bets the banks made on derivatives.
Right now, the mainstream media are underplaying the JPMorgan Chase problem. That’s exactly what they did four years ago when Lehman Brothers’ ugly losses were coming to light.
We may soon see a problem far too big to ignore — a problem that can again take down the financial markets and the economy with it.
The Federal government has already shot its ammo. Interest rates charged by the Federal Reserve to banks are close to zero, and the bond market cannot stomach further credit injections into the financial system. And nobody, especially the Presidential candidates, even wants to talk about it.
Who will handle this monster? It will be either a former community organizer or a venture capitalist. We are in a lot of trouble.
Yours in good times and bad,
Editor, Myers’ Energy & Gold Report