London Fog

From the September 16th edition of The New York Times:

“WASHINGTON – The Federal Reserve chairman Ben S. Bernanke said Tuesday that it was ‘very likely’ that the recession had ended but he warned that it would be many months before unemployment rates would drop significantly.

“‘From a technical perspective, the recession is very likely over at this point,’ he said, adding that ‘it’s still going to feel like a very weak economy for some time, as many people will still find that their job security and their employment status is not what they wish it was.’

“The cautiously optimistic assessment came at the conclusion of a speech by Mr. Bernanke at the Brookings Institution marking the anniversary of the market crisis that was precipitated by the collapse of the investment bank Lehman Brothers.

“Mr. Bernanke said the consensus of forecasters was for moderate growth for the rest of this year and next, particularly as credit markets thaw, consumer confidence takes time to heal, and the federal government begins to unwind a series of federal spending and lending programs intended to mend the economy …

“During his speech, Mr. Bernanke repeated his broad defense of the extraordinary rescue efforts by the central bank, the United States government and other foreign powers over the last year.

“‘Without these speedy and forceful actions, last October’s panic would likely have continued to intensify, or major financial firms would have failed, and the entire global financial system would have been at serious risk,’ Mr. Bernanke said. ‘We cannot know for sure what the economic effects would have been, but what we know about the effects of financial crises suggests that the resulting global downturn could have been extraordinarily deep and protracted.'”

This illusionist gave the same kind of talk at a New England college early this summer. It’s not just gobbledygook – it’s a blend of double-speak and outright falsehood. In assuring the elite at Brookings that a “consensus of forecasters was for moderate growth for the rest of this year”, he registered little concern for the lingering weak economy and the many people without job security, because, as we know, those with no direct connection to the financial sector don’t count.

Also on Tuesday, in his address to union members of the AFL-CIO at the labor federation’s convention in Pittsburgh, President Obama, after saying that his administration is a fierce supporter of workers’ rights and a defender of unions, stated that his administration has “stopped our economic free fall” and is determined to seal a recovery while revitalizing America’s middle class.

According to the Associated Press, the president then challenged union members to stand with him on the hard-fought push to overhaul the health care system.

The President failed to explain to the union members how overhauling the health care system had anything to do with “sealing a recovery and revitalizing America’s middle class”, but it’s fair to say that not many of those union members failed to pick up on this non sequitur. Those trillion dollar “bailout” handouts, they knew, were showered upon the well-heeled, rather than the “middle class”. They also knew that just one day earlier President Obama had taken the time to visit Wall Street to assure his privileged hosts – those recipients of sinful amounts of that “bailout” funding – that “the storms of the past two years are beginning to break.”

In those recent addresses, neither the president nor Mr. Bernanke mentioned the more than 50 million out-of-work Americans and the 200,000+ that are being added to the jobless rolls every month. And job creation?… the issue that should be the administration’s highest priority? They never talk about it. Instead, in order to hide its inability to deal with this catastrophe, the administration deliberately diverts the public’s attention to healthcare reform – a disguised bailout for the insurance industry – and to global warming – an undisguised international hoax.

It’s unfortunate that reports from the United Kingdom are not freely disseminated to U.S. citizens. On the 13th of September, London’s Daily Mail carried a lengthy report about the forced lay up of large segments of the world’s merchant ships – a disclosure that contradicts the deliberately misleading pronouncements of Mr. Obama and Mr. Bernanke.

The London headline reads as follows: “Revealed: The Ghost Fleet of the Recession”

“The biggest and most secretive gathering of ships in maritime history lies at anchor east of Singapore. Never before photographed, it is bigger than the U.S. and British navies combined but has no crew, no cargo and no destination – and that is why your Christmas stocking may be on the light side this year …

“They are a powerful and tangible representation of the hurricanes that have been wrought by the global crisis … The world’s ship owners and government economists would prefer you not see this symbol of the depths of the plague still crippling the world’s economies … and the sickness that has ravaged them began far away – in London, where the industry’s heart beats, and where the plummeting profits and hugely reduced cargo prices are most keenly felt …

“This is why the chilliest financial winds anywhere in the City of London are to be found blowing through its 400-plus shipping brokers. Between them, they manage about half of the world’s chartering business. The bonuses are long gone. The last to feel the tail of the economic whiplash, they – and their insurers and lawyers – await a wave of redundancies and business failures in the next six months. Commerce is contracting, fleets rust away …

“Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia’s leading ship brokers, says, if the world is really pulling itself out of recession, then all these idled ships should be back on the move. This is the time of year when everyone is doing all the Christmas stuff, he points out …

“Some experts believe the ratio of container ships sitting idle could rise to 25 per cent within two years in an extraordinary downturn that shipping giant Maersk has called a ‘crisis of historic dimensions’. Last month the company reported its first half-year loss in its 105-year history …

“As the shipping industry teeters on the brink of collapse … Christopher Palsson, a senior consultant at London-based Lloyd’s Register-Fairplay Research, believes the situation will worsen before it gets better. ‘Some ships will be sold for demolition but the net balance will put even further pressure on the freight rates and the market itself. A lot of ship owners and operators are going to find themselves in a very difficult situation.’

“The current downturn is the worst in living memory, Palsson believes. ‘Today we have almost every aspect of shipping affected – bulk carriers, tankers, container carriers … the lot’.”

Meanwhile, in the same neck of the woods, a talk was being given in Hong Kong by William White, described in the Financial Times as “the highly-respected former chief economist at the bank of International Settlements”. Mr. White, one of the few mainstream economists who predicted the financial crisis, warned that government actions to help the economy in the short run may be sowing the seeds for future crises.

“The only thing that would surprise me,” he said, “is a rapid and sustainable recovery from the position we’re in.” He went on to say that the world has not tackled the problems at the heart of the economic downturn.

And what are “the problems at the heart of the economic downturn”? He didn’t say. Either he hasn’t put two-and-two together or, like Mr. Obama and Mr. Bernanke, he knows the true cause of the world’s economic problems – unemployment – and doesn’t want to admit that he can’t come up with a solution. President Obama, Ben Bernanke, William White – they’re all in the same boat. Adrift. At sea. Becalmed. Lost and useless.

As Bob Herbert of the New York Times points out, “At some point the unemployment crisis in America will have to be confronted head-on. Poverty rates are increasing. Tax revenues are plunging. State and local governments are in a terrible fiscal bind. Unemployment benefits for many are running out. Families are doubling up, and the number of homeless children is rising.

“It’s eerie to me how little attention this crisis is receiving. The poor seem to be completely out of the picture …”

Not really. The poor are also all in the same boat, but they’re not adrift, or at sea, or becalmed. The poor – the unemployed – make up the very heart of the world’s economic problems, and in due time they will effect necessary “change” if government officials fail to do so.

We’ve referred to the steps taken by FDR when the Great Depression had everyone on the ropes. We’re on the ropes again and we need a true “bailout”. This time, instead of giving away trillions of taxpayer dollars to favored but unproductive fat cats, the U.S. should invest a few hundred billion into an Emergency Shipbuilding Program. About 50 million new jobs will come with that territory.