November 09, 2009

Post-Disillusionment Syndrome

One good thing about writing a blog on current events in the hammock years between the denouement of the Bush Presidency and the ascension of the Obama is that you do get over yourself, in terms of how and what you write. One might begin, as many bloggers probably do, in a "hortatory mood," as if finding this outlet might, in fact, make some sort of a difference. This is of course only symptomatic of the projection-based nature of human psychology. Over time you come to terms with the idea that this diary of ideas (thanks again, Eric Blair) mainly just chronicles your own intellectual journey. And, you know, in the age of disclosure, why not do so in public? (Or in semi-private, most of the time.)

So that your analysis, in modern America, tends to devolve toward the forensic rather than the reformative. It's just an out-loud attempt to understand what is. If nothing else, modern America is very interesting. While we resist the notion that huge changes are occurring, that doesn't stop Reality from moving us in the direction of social evolution anyway. Right now, the American leadership is locked in collective denial about what's going on outside the Village. The idea seems to be that tweaking the interest rate, or emailing money to certain large banks, or recycling tax dollars (augmented by borrowed dollars) from the American citizenry right back to the American citizenry (the stimulus approach) will right the ship of state and restore us to the halcyon days circa 2005.

Like death itself, however, a Big Change was inevitable sometime, and ours began in earnest in 2007. It took a lot of preparation, however, to get America ready for the demolition of its economy. One leading indicator (along with, and related to, the off-shoring of all our good jobs) was the destruction of the American public school system. Under the sway of anti-tax ideologues marching under the banner of Our Patron Saint, Ronald Reagan the Divine, everything government did, including public education, was seen as inefficient and wasteful. It made sense that a man as intellectually limited as Reagan would denigrate education. So we began undereducating an entire generation of Americans, beginning in the 1970's. This worked okay so long as we had a "service economy" to provide jobs for the increasingly deficient products of our school systems. These were the serfs for the Crap Job Economy: the baristas, the fry cooks at McD, the ex-con zombies staggering in the canyons of Home Depot, vast legions of call center phone jockeys. The Crap Job Economy depended on lots of disposable income to keep all the retail outlets open, places where the increasingly rotund American could waddle in and dump some fiat currency. So we allowed everyone to turn their houses into ATMs, either with lines of credit or re-fi, so that we could all participate in the American Debt Orgy.

Then all of that became unhooked. Americans were living way beyond their means and borrowing to a level 30 to 40% above the lifestyle actually supported by their stagnant incomes. There was time for one more Bubble, the Bubble at the End of the Universe, called the mortgage-backed security fraud, which allowed the government-backed Big Boyz to vacuum up all the nation's mortgages, replace them with mortgages too good to be true (and programmed to fail), make a killing on the front end, and then walk away as the explosive charges detonated. There were few other ways for the Business Elite to get obscenely rich at the point when the Great American Mortgage Heist began, and obscenely rich is the only kind that plays in this country. Stocks had been stagnant for 7 or 8 years (even now the Dow is only at the level it attained in 1999). So the hypothecation of America's very land was about the only asset left to play, and the good part was that Wall Street (with the connivance of the government de-regulators, all still on the job) could entice everyone in America, in effect, to play the market (whether they realized it or not), because their mortgage had just been made into a marketable bond. The past was prologue to our present. Then: ka-blooey.

Obama's Administration wants to stimulate the American economy into producing 3.5 million jobs over the next three years. It claims (fraudulently) that it has "created or saved" 640,000 so far, courtesy of the ARRA. Deep inquiries into this number have yielded uncomfortable truths for our smiling leader. Half of this number, or 320,000 jobs, represent government jobs at one level or another. Where a raise is granted by means of the stimulus, this counts as a job "saved," although, of course, this makes no sense. Obama promised that 90% of the 3.5 million jobs would be created in the private sector, which means that he and his advisors originally prognosticated that only 350,000 jobs would be public; thus, Obama only has room left for 30,000 more jobs "created or saved" (or perhaps: "improved") in the public sector before he has to go all-private, all the time, on the balance of 2,860,000 jobs still to go. Hmmm. Well, you shouldn't use all your trumps so early in the hand.

First, of course, the private sector needs to quit firing people, which it's still doing at the rate of 200,000 per month. The current unemployment figure of 10.3% (the one most flattering to the Bureau of Labor Statistics) is already significantly higher than the prediction of Christina Romer, O's head of the Council of Economic Advisors, for the worst case American situation without the stimulus. So the reality (that word again) is that the unemployment rate is worse than the worst-case scenario predictions with and without the stimulus. So what does this tell us about the value of the Council's "predictions?"

I'm not surprised they're so wrong. It's just that, as Villagers, they live in a privileged world. They don't really know what's going on out in the real world, where stores are closing, commercial buildings are empty, strip malls are abandoned, banks are failing, and millions of residences sit empty. They're busy figuring out the Over/Under on Afghan troop deployments. The Japanese see this situation and buy our Treasury bonds, even at their low yield, on the theory that the longer-term (3 to 5 years) will become more valuable as the American economy continues to sink. They see our unemployment going to 13% and things continuing to unravel, and they base their predictions on Japan's own Lost Decade, to which our predicament bears an eerie resemblance.

Fasten your seat belts. It's gonna be a bumpy night.

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