Starting To Sound Like Me There

Of the non-economists out there who have been sounding the economic alarm bells, BooMan Tribune's Steven D has been on top of the situation for quite some time now.  Today he has another layman's read of the economic nightmare we're in, and like myself he believes that as bad as 2009 has been out on the front lines, 2010 will be worse.  It's a very sobering analysis, even by my standards.  Emphasis mine:

The Tea Baggers and their talk of a tax revolt and railing against the mythical socialist takeover of America by the Obama administration isn't the problem.

The problem is that we've been scammed by Wall Street financial firms (the megalithic survivors) into juicing their balance sheets while getting less than zero in return for our billions of dollars of bailout expenditures by the Fed and Congress and trillions more for Federal guarantees of Wall Street's toxic junk financial derivatives.

In short, our investment of tax dollars in an essentially opaque, unregulated, subsidized and protected financial sector is proving to be a very, very bad bet for the future of any real economic recovery for the vast majority of Americans who don't work for Goldman Sachs and their ilk. This isn't a rational free market by anyone's definition. It's a con game, one that Obama's economic team has been more than willing to ignore in the interest of helping their friends, even if that means unacceptably high unemployment and lower investment in the real drivers of our economy -- small businesses, workers and manufacturing.

(More after the jump...)

And unless we see a sea change in the economic strategies being pursued by the Obama administration, any talk of a fundamental political realignment in which Democrats benefit from a generational shift in political power is as much a pipe dream as Karl Rove's plan for a one party Republican state. Indeed, if Democrats in the Executive Branch and in Congress continue to ignore the fundamental changes in economic policy necessary to reverse our present course, the likelihood of something far sinister, a fascist or neo-fascist movement or a coup by a right wing military junta is not out of the question. Because when democratic civil governments becomes unable or unwilling to address fundamental issues of economic security they can lose their legitimacy literally overnight.

Just look at the history of the Weimar Republic, or Italy after WWI, if you want an object lesson in democratic governments that failed because their political leaders, operating within a weak, corrupted and gridlocked systems, were more concerned about their political careers and futures than addressing the critical economic issues that had spread misery and despair among millions of their constituents.

Without FDR, America might have gone down that same road to tyranny and dictatorship that bedeviled so many nations in the 20th Century, where income inequality led to ideologically rigid, dictatorial regimes on both the left and the right. The common factor in each instance was massive income inequality and the willingness of demagogues and elites to take advantage of the inability of weak central governments to correct that fundamental flaw to the development of stable economies that gave most, if not of all their citizens, a comfortable middle class life style. That was the true reason why America was so successful following WWII: the tremendous growth of our middle class, which fueled the greatest economic engine of the last century.

Well, now we have reversed the course that made us great, which insured our power and stability. We are flirting with an economic collapse which will lead to a political nightmare, unless we radically change the way business is done "Inside the Beltway." That was the platform on which Democrats ran last year. So far they have failed to live up to the promises of fundamental change that they made to the American Public, and that failure if it continues will hurt not only their electoral future in 2010 and beyond. It will also spread misery and social unrest across America on a scale we have not witnessed in generations.

And Steven is absolutely right.  I've been sending up the alarm bells for quite some time when I was originally posting over at BooMan's place.  A year after Obama's election and we're still facing economic Armageddon.  Far beyond the issue of who controls Congress in 2010 or 2012, the real issue is that America's middle class is on the verge of extinction.  Millions of American families are going to find themselves in dire straits over the next couple of years.  Talk of recovery in Obama's second term seems premature, based solely on the fact nobody factored in the current reinflating housing bubble being popped again.

As far as the stock market and the banks are concerned, 2009 in America means we're having our best year in decades.  Do you feel that 2009 is America's best year in decades?  Do that vast majority of Americans share that view that 2009 is a banner year?

I'm betting on no.  And 2010 will only be worse.  Obama has made his choice on the economy.  He is listening to the men telling him everything will be fine if they just continue to throw trillions at the banks.  "It's the only real option you have" they say.

Will he have any regrets, I wonder?