Obama, Fed offer no solutions as capitalism’s crisis deepens

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“ZERO JOB GROWTH LATEST BLEAK SIGN FOR U.S. ECONOMY,” reads the lead headline of the Sept. 3 New York Times. The article expresses the deep pessimism of the U.S. ruling rich that no solutions are in sight.

The government’s new report on hiring—a better term would be “firing”—released the day before, according to The Times, “provided fresh evidence that the recovery has fizzled without gaining momentum, prompting another round of relentless diminution of economic expectations.” The “diminutions” consisted in the president’s estimate that unemployment would remain at the present 9.1 percent rate until at least 2013.

There has been nothing resembling a real recovery for working people since the U.S. and world economic crisis erupted in 2008. Even in the speculative or casino sectors, wherein the financial elite scramble to find ever new devices to make money in the stock market and other Ponzi-type adventures not related to the production of commodities for the market, the recovery has been essentially non-existent.

The stock market’s wild gyrations stunned and perplexed even the most experienced Wall Street pundits when a few weeks ago the market broke all records and experienced four “swings” that daily registered rises and falls in the Dow Jones Industrial averages in excess of 400 points. These were matched in terms of percentage gains and loses by all other U.S. stock exchanges. Down by some 1200 points from the Dow’s April 2 high of 12,400, the markets more generally reflected the panic of big capital.

The official unemployment rate of 9.1 percent announced by the Bureau of Labor Statistics for August squares with the union busting, annihilation of existing contracts, plant closures, speed-up, pay and pension and health-care reductions, mortgage foreclosures, and plant closures imposed by the corporate elite. Last year’s massive layoffs in the nation’s major industries like auto and construction have been matched and exceeded by state layoffs and shredded contracts in the public sectors.

Of course, the official and real unemployment rates are two different matters. Add in those who are no longer counted in the statistics, those who have given up looking for work— discouraged workers—and those who are compelled to live on below subsistence partbe damned. Scott Olson / Getty Images talist functioning. It is employed when interest rates are so low (“cheap money”) that government managers have no other means to prime the pump of a failing economy—supposedly to encourage corporate investment in job-producing endeavors. QE consists of the Federal Reserve essentially creating fake money via electronic transfers to purchase various bonds and other “assets” from banks or from the government directly. The banks turn over these “assets,” whose real value is questionable and therefore difficult to sell, like subprime mortgage-based financial instruments.

The Troubled Asset Relief Program (TARP) was akin to QE, wherein the government bailed out failing banks to the tune of $1 trillion. Similar bailouts to the rich have continued in various forms, totaling some $17 trillion or more since the crisis began.

Last year the Federal Reserve’s QE policy pumped an additional $600 billion into the economy by purchasing U.S. Treasury notes that were used to pay off government debts to nations like China and Japan. All these measures consist of the Federal Reserve or the government essentially printing paper money or bonds, or fake money via electronic transfers, for which there are no commodity equivalents. In truth the process is closely tantamount to an individual writing checks on an account with no funds.

This is illegal in the world of personal finance but the norm in today’s government functioning in the U.S. and around the world.

The British Central Bank has followed the U.S. policy. The weaker capitalist nations, who can’t effectively compete in world markets, are the first to suffer, when their debts eventually exceed their ability to pay. Hence the near bankruptcy of nations like Greece—with Spain, Ireland, and Portugal