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Works and Days

News beneath the news

May 5th, 2010 - 12:19 pm

From the embarrassing to the pathetic

I don’t want to beat the proverbial dead horse, but these media polarities are getting to the point of absurdity. Bush, the lazy golfer while we were at war; Obama the engaged commander-in-chief playing golf for needed relaxation more in one year than in Bush’s eight. Katrina, the emblem of federal inaction and culpable incompetence; the BP slick, either a result of private greed overwhelming noble federal auditors or proof of the Obamian competent response. Bush’s illegal war clearly alienating Muslims and thus creating terrorists daily; laughable excuses from a terrorist that Obama’s stepped-up targeted Predator assassinations “created” would-be killers such as himself. Right wingers in bed with Wall Street oligarchs greedily crafting federal policy for the exploiting class; Obama for some odd reason, no doubt in the end a noble reason, taking more money from the likes of Goldman Sachs and British Petroleum than any politician in history. The Bush-Cheney nexus shredding the Constitution with the Patriot Act, Guantanamo, Predators, and renditions; Obama the civil libertarian reluctantly forced to maintain or expand  such protocols, albeit at last under a watchful liberal eye. Bush’s “lost” war in Iraq miraculously soon to be Obama’s “greatest achievement.”

What is the theory behind all this other than partisanship or cynicism? I think it involves the power of faith and the irrational, in some cases not confined to the left. (e.g., I once got a prominent conservative angry at me when I suggested Reagan embraced large deficits, signed an amnesty bill, wanted nuclear disarmament, and raised payroll taxes). Politics is a religion, never more so than in the case of Obama. And true believers always prefer the saintly explanation rather than the most logical.

An era of zero interest

I went to two banks the other day. The interest rates on interest checking, or short-term savings, or money market accounts (without tying money up for a half year or so) were all below 1%. In my lifetime of some 56 years, I cannot recall lower rates. I just refinanced last fall a loan at 4.8%. Two observations. That is quite a spread of profitability for banks; and, two, given inflation at 2-3%, it seems better to borrow than to save. For conservative, thrifty retirees, worried about the mercurial stock market in the post-2008 days and post-real estate crash age, there is essentially little income to be had from their savings. I don’t follow the inter-workings of either the Federal Reserve or the Treasury Department, but as an historian I note only that we are in a cycle in which debt trumps capital, and we are witnessing an enormous redistribution of wealth far beyond the implications of new tax policies. Interest income on savings simply has ceased to exist for millions — leading to profits for banks, and essentially cheap money (the interest rate minus inflation) for debtors. Was this an artifact of the recession or a planned act, and have we seen anything quite like it in recent memory?

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