depression v. "slow recovery" ?

It's going to take a while to bring Wall St. under heel

Mainly, the legislation gives government regulators explicit authority to take tougher measures to curb Wall Street's dangerous behavior, but only if the Fed and Treasury decide it's a good idea. Don't hold your breath. These same agencies failed massively to confront the rampant recklessness that led to collapse (many of them claimed not to have seen the trouble coming).

Once again, the risk-taking is assigned to unwitting citizens and the economy. Washington saved big-dog bankers from failure, but it has not saved the rest of us from the bankers. Some reformers want to make the best of mixed results. The Consumer Federation of America says the banks "won a few battles; they lost the war." I would say it is the other way around: reform won some battles but lost the war.

Some valuable improvements, like the Consumer Financial Protection Agency, can lead to tougher rules, but even such worthy accomplishments were diluted in the fine print. The supposedly "independent" consumer agency is to be a "bureau" within the Federal Reserve, where hostile central bankers can find ways to smother the infant in its crib.

Messrs. Barack Obama, Benjamin Bernanke and Timothy Geithner do not understand the real cause of this debt crisis. They are politicians first and economists or students of the market second--if at all. Therefore, it is not wise to count on them to tell us when the Great Recession is over, or to provide a plan to prevent another one in the future.

The cause of the Great Depression in the 1930s, and the Great Recession beginning in 2007, was one and the same: an overleveraged economy. Excessive debt levels are the direct result of the central bank providing artificially low interest rates and of superfluous lending on the part of commercial banks.

The easy money provided by banks eventually brings debt in the economy to an unsustainable level. At that point, the only real and viable solution is for the public and private sectors to undergo a protracted period of deleveraging. The ensuing depression is, in actuality, the healing process at work, which is marked by the selling of assets and the paying down of debt.

Unfortunately, our politicians today are focused on fighting this natural healing process by promoting the accumulation of more debt.

“Make no mistake,” he declared, “we are headed in the right direction.” He added that “we are not headed there fast enough for most Americans.”

This statement is a direct falsification of the economic reality, intended to deceive and politically disarm the population. It echoes Vice President Joseph Biden’s declaration last month that this is the “Recovery Summer.”

The jobs report indicates that the economy is headed in the wrong direction, and may be slipping back to negative growth. To talk of the “right direction” under the present circumstances—with unemployment, home foreclosures and personal bankruptcies at post-war record levels, and wages, home values and retirement savings being decimated—is an insult to the intelligence of the American people.

For those social layers whose interests Obama serves, however, things are going not at all badly. The banks are making near-record profits and rewarding their CEOs with multi-million-dollar pay packages, and corporations across the board are using mass unemployment to drive down wages and drive up labor productivity.