Laurence Kotlikoff, an economist at Boston University, wrote a recent piece for Bloomberg News in which he argued persuasively that the USA is utterly, thoroughly, irrevocably bankrupt, with its total liabilities, honestly counted, in the $202 trillion range, or about four times the annual gross world product, and 15 times the annual American GDP. We've reached, he writes, the end of our Keynesian rope and there's simply no way out. We're trapped in zero interest rate paradigms (ZIRP) because the national debt, and the rate of new debt issuance, have become so monumental that the slightest tick upward means that debt service alone will crush the federal budget and cause the country to implode. Kotlikoff is the author of The Coming Generational Storm, a prescient look at the impending war between young and old concerning the attempts of the Baby Boom generation to retire and draw Social Security and Medicare in amounts that the American economy simply cannot support, despite what clowns like Krugman write about "trust funds" and the rest of the illusionary nonsense. Nor will the various governments, federal, state and local, be able to fund, in full, all of the pension promises they have made to former and existing employees. The money is simply not there, and future funding is based on completely unrealistic, quasi-hallucinatory 8% rates of return which haven't been around since the Clinton Administration.
August 19, 2010
While these Depressionary realities continue to roll out, it's only natural that the MSM and the Klown Kollege in D.C. would disport themselves with any distraction at hand, since if one thing has become absolutely, completely obvious, it is that the political system in this country cannot handle any real problem whatsoever. Those days are over. No part of the federal government has the resources, the competence or the good faith to deal honestly with anything, and they are going to ride the Titanic right into the iceberg, stripping the crystal chandeliers and pocketing the sterling silverware while they party on into the night.
So we learned that much, at least, with the election of Barack Obama: nothing is going to help. Good to know. You, me and the cockapoo over there at the corner of the greensward taking a dump - we're all on our own. So what's to report?
Well, we can get excited about whether Muslims will build a new mosque within a few blocks of "hallowed" Ground Zero. Barack calls it "hallowed ground," echoing Lincoln at Gettysburg, as if that makes any sense whatsoever. Gettysburg was hallowed ground, in Abe's estimation, because of the pitched battle which had occurred there not long before his speech at the height of the Civil War, and the deaths of soldiers on both sides, particularly the armies of the North fighting to preserve the Union. That's not the same thing at all as the site of a terrorist attack; it gives way too much credit to the terrorists. But Americans are not deep historians, so who cares.
Obama began his participation in the "controversy" by saying something banal, obvious, almost principled: in America, under the First Amendment, the right to practice religion shall not be abridged, for anyone, and the equation of American Muslims with al-Qaeda or the terrorist cell which attacked on 9/11 is bigotry. So far, so good. Then, as usually happens, he frightened himself with his unguarded candor and began hemming and hawing, in his usual irritating way. What he meant was, see, yeah, we have a First Amendment and everything, I'm not taking that back, but is it such a good idea for Muslims to be building a mosque near Ground Zero, because, you know, those were Muslims who attacked us and everything, and people could get the wrong idea, and...
So then we were back to Louis Gates, the Cambridge cop and the Biergarten moment. Lah dee frickin dah. Where else could we wind up? For the aid of invertebrates everywhere, here are what I think are the two principled positions possible on this issue:
1. We have freedom of religion. Thus, the right to build a place of worship is equally accessible to any religion which applies. Thus, Muslims can build a mosque in Lower Manhattan, and Catholics can build cathedrals near elementary schools.
2. There is something suspect about Islam. They don't make enough noise about anti-Americanism, they won't condemn terrorists, they tend to institute Shariah law whenever they get enough critical mass together to influence politics. We have to start rolling back Islam in this country, as some European countries are doing now, as in France with the anti-head scarf rules, et cetera. What the United States is doing in Afghanistan and Iraq, and probably soon in Iran, really is a crusade against Islam, not a coincidence connected to oil or oil pipelines, and we're taking the war to the new battlefield, right here at home.
Take your pick. Strict Constitutional approach or something different. What's it gonna be? Saying you wonder about whether it's "wise" to build a mosque in Lower Manhattan is not leadership. It's an attempt not to take a position. Not that I'm telling you anything you didn't already know.
August 15, 2010
One approach that has become popular is to write about it. There is a land office business these days in gloom and doom. Its practitioners are now so numerous it's pointless to list them all. Those who become prominent have made a business out of bad news. That is, after all, the American way - maybe the economy is coming apart at the seams, but how can I, personally, make some money out of this deal? There are hundreds of books on the subject, many websites, thousands of blogs. Not all are venally motivated; some, after all, are exercises in pure Schadenfreude, others are the psychological working-through of chronic depressives.
Here at the pond, I must say that I'm clearly not in it for the money. Nor do I consider myself a chronic depressive, and it's bad form to revel too much in misfortune. It's not even in good taste, in fact. I do find it interesting, that's all. It's interesting to understand the reality of a given society and polity. That's what Thoreau was into - how does this whole situation work? Why do people behave the way they do?
One thing I think we can say without being gainsaid (successfully) is that for something around forty years, American society has been on a downward trajectory. That's old news at this point, but certain parameters bear the judgment out. As one example, the breathless analysts at outlets like CNBC and Bloomberg, whose relevance depends on the relevance of the thing they're selling, the ups and downs of the stock market, don't often point out that the S&P 500 and the Dow are at virtually the same level now that they were in 1998; however, there has been at least 25% inflation during that period, so to adjust for constant dollars, one would have to put the S&P in the 750-800 range instead of its nominal 1,100 or so, and the Dow at 7,500, instead of just north of 10,000. So why don't the stock pundits talk about this? It's obviously the reason that Wall Street got into the casino business. Churning the market and creating exotic betting vehicles were the only way to make money once the traditional retail trade dried up and "buy and hold" took its place among our durable illusions.
And then, of course, the illusion-bordering-on-delusion of the globalization movement. Americans are so gullible and so poorly educated about what is in their own best interest that they listened to functional idiots like Tom Friedman of the New York Times, whose only expertise, so far as I can discern, is in clumsy writing. Or Paul Krugman, another Times-sponsored propagandist, who doesn't talk a lot about the fact his Nobel was won for work he did on "patterns of international trade," back in the go-go 1990's, when NAFTA was signed and Perot heard that giant sucking sound of American jobs heading South O' the Border and to Asia. Look, how obvious can something be? If you're the top economic dog, paying high salaries for value added work such as manufacturing complex products like automobiles and electronics, how is it going to benefit the mass populace if you ship all those jobs overseas where the work is performed for pennies on the dollar, and relegate yourselves to retailing and importing the stuff you used to make? Won't water seek its own level? You might ask, well isn't such a process inevitable? No, of course it isn't. Someone not in the thrall of American-based multinational corporations increasing their profit margins by using cheap labor (completely free of environmental considerations) would see what was going on and bring home the reality that the economy needed to be restructured, less on consumerism, more on essential value-added manufacturing, small-scale farming and ecological balance. Essentially, a post-growth economy. The United States has the resources to accomplish this. The crisis in the United States was an act of slow-motion economic suicide.
Well, we don't have central planning, in any rational sense. The current takeover by the federal government of what's left of American industry and finance is simply a salvage operation to keep the game afloat for a little while longer. Bernanke & Co. are attempting to maneuver the American economy into a glide path leading to the softest possible crash landing. There is wisdom in this, as Dmitry Orlov has written. If you ease your way down, then when the final collapse comes it will be more like falling out of a ground floor window than from 85 stories up.