Economic Sense: the Heyday of the 1990´s and the Present Economic Chasm
Rauf Naqishbendi
May 21, 2008
The decade of the 1990s marked a heyday in our country´s chronicles; we were on a spree fueled by cheap energy. American ingenuity was revealed as we embarked on the electronic technology revolution. We celebrated the disintegration of our long-time rival, the Soviet Union. It was a peaceful time as we enjoyed the dividends of peace and were disburdened from the fear of nuclear holocaust. Not long thereafter, at the turn of the millennium, our achievements were vitiated. The heart of America´s financial center was invaded by diabolical forces that will be reckoned with for the foreseeable future. In the wake of the 9-11 calamity we invaded Iraq and Afghanistan, enmeshing ourselves in two wars with unpredictable destinies that are becoming the predicament of our times since our continuing engagement is as perilous as our disengagement.
Now most of the factors that nurtured the 90s´ economic prosperity and national security are reversed. At the present time our nation is about to enter an economic recession triggered by a financial crisis that could bring about the worst of times since the Great Depression. The fiscal and monetary remedies being employed by high authorities foster transient relief and target symptoms, merely deferring suffering to be endured in greater measure in the future. The current and previous White House administrations cemented us in a global economy and free trade, selling the American livelihood to foreign countries and auctioning our industry on the world market. Thus India and China are thriving while our standard of living is lowered. The glory of the1990s with all its hopes and promises is gone, turning the American dream into a nightmare for millions of Americans. They have our leaders to thank for it, as they have ignored the wellbeing of commonwealth and abused the rights of the same citizens who voted them into office.
The sanguine scenario that warranted political stability and economic prosperity in the 1990s was the disintegration of Soviet Union. As a result, the American military downsized, the dividends of peace were soon reaped, and the federal deficit was dwindling. But all that was negated in the wake of 9-11. We invaded Iraq and Afghanistan, initiating two wars that have not seen considerable success. Both are burdensome in terms of human casualties and monetary costs. Regardless of whether we remain steadfast in Iraq and Afghanistan or if we egress, we are in the war against terrorism for the long haul, fighting enemies without uniforms, borders, address or country - a war unprecedented in the history of the world superpowers.
The economic prosperity we were blessed with in the 1990s can partially be contributed to the abundance of commodities at meager prices (crude oil was priced between $10-20 a barrel). Thereafter, due to the simple economic supply and demand principle, commodity prices rose significantly. Oil prices reached the $100 level, eating into American household incomes. This difficult situation, mirrored in the supply and demand equation, was all created by our government. China and India would never be where they are without our corrupt politicians, who eased the exportation of American jobs and industries to these countries, bringing about their prosperity and leaving the American economy unable to create enough well-paying jobs for its citizens. This is just the down payment, the full repercussions are yet to be realized.
Aside from supply and demand, commodity prices are teetering with the fluctuation of the dollar on the currency market. Twenty years ago America was the super-industrial country of the world with the largest industrial production while today we are principally consuming what others are manufacturing; our government is living on borrowed money. Most of our manufacturing and IT jobs are outsourced offshore, and with that employment, taxation, and raw materials usages departed America. This phenomenon started in the 80s, gained momentum in President Clinton´s time and heightened during President Bush´s administration as 3.7 million manufacturing jobs left America. Besides manufacturing jobs, millions of IT jobs were bestowed on India, and the remaining jobs left in America are in-sourced to Hindus. Nowadays American corporate IT departments resemble India more than America, obscuring American employment opportunities.
For more than a decade, the Federal Reserve Bank has been forcing artificially low interest rates, relaxing lending regulations leaving unscrupulous speculators and irresponsible borrowers to gang up on the lending institutions leaving the biggest financial mess behind. Wall Street profiteers reaped their profits and left taxpayers with the corporate bailout bills. During this era many Americans have not earned their income in traditional ways, meaning by working and earning a stipend, instead they have refinanced their houses, taking money out to satisfy their extravagant appetites. The capitalists´ demand that the government step out of the way by reducing regulations so that business can regulate themselves was met.
Hearken not to the unscrupulous Wall Street cheerleaders, for they are just after making their money in a hurry. Aren´t these the same Wall Street leaders who have been telling us outsourcing is good for America and for American consumers? Isn´t this the same crowd that embraces selling out corporate America to foreign entities in the name of obtaining "cash infusions" into our troubled financial institutions? Our financial institutions are in dire condition because of Wall Street´s greed.
Perhaps a recession by definition will not materialize, for a recession technically is a negative GDP growth for two consecutive quarters. However, notwithstanding technicalities, Americans feel the bite of it. What makes recovery from this recession difficult are all the aforesaid reasons: high energy prices, being at war, the lack of well-paying jobs, and the disappearance of refinancing and therefore the ability for people to easily take money out to support our economy. Another noteworthy problem is the deficit, whether it be federal, consumer, trade account or most certainly that of leadership. As Warren Buffet told CNBC recently, this recession will be deeper and longer than expected. Well, at some point the recession will hit bottom, and it may stay there for much longer than the Wall Street cheerleaders are now predicting. The economic soft spots are well known - what will exasperate our economic predicament further will be the unknowns, such as the opening of another war frontier or a natural disaster, may God forbid.
Now most of the factors that nurtured the 90s´ economic prosperity and national security are reversed. At the present time our nation is about to enter an economic recession triggered by a financial crisis that could bring about the worst of times since the Great Depression. The fiscal and monetary remedies being employed by high authorities foster transient relief and target symptoms, merely deferring suffering to be endured in greater measure in the future. The current and previous White House administrations cemented us in a global economy and free trade, selling the American livelihood to foreign countries and auctioning our industry on the world market. Thus India and China are thriving while our standard of living is lowered. The glory of the1990s with all its hopes and promises is gone, turning the American dream into a nightmare for millions of Americans. They have our leaders to thank for it, as they have ignored the wellbeing of commonwealth and abused the rights of the same citizens who voted them into office.
The sanguine scenario that warranted political stability and economic prosperity in the 1990s was the disintegration of Soviet Union. As a result, the American military downsized, the dividends of peace were soon reaped, and the federal deficit was dwindling. But all that was negated in the wake of 9-11. We invaded Iraq and Afghanistan, initiating two wars that have not seen considerable success. Both are burdensome in terms of human casualties and monetary costs. Regardless of whether we remain steadfast in Iraq and Afghanistan or if we egress, we are in the war against terrorism for the long haul, fighting enemies without uniforms, borders, address or country - a war unprecedented in the history of the world superpowers.
The economic prosperity we were blessed with in the 1990s can partially be contributed to the abundance of commodities at meager prices (crude oil was priced between $10-20 a barrel). Thereafter, due to the simple economic supply and demand principle, commodity prices rose significantly. Oil prices reached the $100 level, eating into American household incomes. This difficult situation, mirrored in the supply and demand equation, was all created by our government. China and India would never be where they are without our corrupt politicians, who eased the exportation of American jobs and industries to these countries, bringing about their prosperity and leaving the American economy unable to create enough well-paying jobs for its citizens. This is just the down payment, the full repercussions are yet to be realized.
Aside from supply and demand, commodity prices are teetering with the fluctuation of the dollar on the currency market. Twenty years ago America was the super-industrial country of the world with the largest industrial production while today we are principally consuming what others are manufacturing; our government is living on borrowed money. Most of our manufacturing and IT jobs are outsourced offshore, and with that employment, taxation, and raw materials usages departed America. This phenomenon started in the 80s, gained momentum in President Clinton´s time and heightened during President Bush´s administration as 3.7 million manufacturing jobs left America. Besides manufacturing jobs, millions of IT jobs were bestowed on India, and the remaining jobs left in America are in-sourced to Hindus. Nowadays American corporate IT departments resemble India more than America, obscuring American employment opportunities.
For more than a decade, the Federal Reserve Bank has been forcing artificially low interest rates, relaxing lending regulations leaving unscrupulous speculators and irresponsible borrowers to gang up on the lending institutions leaving the biggest financial mess behind. Wall Street profiteers reaped their profits and left taxpayers with the corporate bailout bills. During this era many Americans have not earned their income in traditional ways, meaning by working and earning a stipend, instead they have refinanced their houses, taking money out to satisfy their extravagant appetites. The capitalists´ demand that the government step out of the way by reducing regulations so that business can regulate themselves was met.
Hearken not to the unscrupulous Wall Street cheerleaders, for they are just after making their money in a hurry. Aren´t these the same Wall Street leaders who have been telling us outsourcing is good for America and for American consumers? Isn´t this the same crowd that embraces selling out corporate America to foreign entities in the name of obtaining "cash infusions" into our troubled financial institutions? Our financial institutions are in dire condition because of Wall Street´s greed.
Perhaps a recession by definition will not materialize, for a recession technically is a negative GDP growth for two consecutive quarters. However, notwithstanding technicalities, Americans feel the bite of it. What makes recovery from this recession difficult are all the aforesaid reasons: high energy prices, being at war, the lack of well-paying jobs, and the disappearance of refinancing and therefore the ability for people to easily take money out to support our economy. Another noteworthy problem is the deficit, whether it be federal, consumer, trade account or most certainly that of leadership. As Warren Buffet told CNBC recently, this recession will be deeper and longer than expected. Well, at some point the recession will hit bottom, and it may stay there for much longer than the Wall Street cheerleaders are now predicting. The economic soft spots are well known - what will exasperate our economic predicament further will be the unknowns, such as the opening of another war frontier or a natural disaster, may God forbid.
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