Swirlies, Part II

What’s left after the purge?

© Bryan Zepp Jamieson
http://www.zeppscommentaries.com/Sociology/swirliesII.htm
7/1/08

There’s several other factors at work in the ongoing dissolution of the American economy.

The credit crisis hasn’t gone away; yes, the Fed is moving aggressively to prevent bank collapses, and will do so no matter how many inflationary fiat greeenbacks they have to print in order to do so. But the credit crisis is now feeding off the housing crisis, as people thrown into economic turmoil by the collapse in equity on their homes, or the costs associated with losing their homes to unscrupulous lenders, seek to increase the limits on already maxed-out credit cards. Those that can will be paying 20, 25 percent a year on those balances, which means that someone owing $10,000 could find themselves paying $200 a month just on the interest. That’s not a tenable situation.

Those that can’t get a credit extension will find that they are paying ever higher rates on their own vig, because constantly maxed out cards sets off red flags at the credit bureaus, who then lower the credit ratings, making the lendees targets of higher interest rates.

One problem that feeds into this is what I call job deflation. This is something that has been going on for some time, but with the auto industry in a state of virtual collapse, construction slowing to a near standstill because of the housing crunch, and everyone cutting back as much as they can on metals and other manufacturing essentials due to a combination of global inflation and dollar devaluation, that means the few remaining good-paying manufacturing jobs with high pay and health benefits will vanish. If you were making $35 an hour and had a $500 deductible on a million dollar health policy paid for by your employer, you didn’t mind several hundred a month in credit card bills and gas at $4.50 a gallon. But if you lose that job and are lucky enough to get a job slinging hamburgers for $10/hour, you’re suddenly in a hell of a fix, even though your good fortune means the administration can still brag that unemployment is under control. It is, if you don’t count the millions of able-bodied people in prison and the millions more who have given up looking for work and are living on welfare, family assistance, or the local church. Underemployment, on the other hand, wildfired out of control beginning in the Reagan years, and only gets worse and worse. At the start of the year, 45 million people didn’t have medical coverage. By year’s end, that number could skyrocket to 60 million as jobs with bennies evaporate. And even with the tougher, pro-banking industry rules governing personal bankruptcies, those are expected to soar, as well.

That, in turn, will increase the pressure on banks, already reeling from the fallout of the Enronization of the mortgage industry and the big slowdowns in manufacturing and construction.

That comes at a time when the banks must provide liquidity. It was their failure to do so after the market crash of 1929 that led to the Great Depression; what was then called “tight money.”

At a time when the administration is cutting funding yet again for Amtrak and other forms of public transportation, the airlines are in a death spiral, brought about by hyper-competitiveness running smack into fuel prices that have doubled and the oldest fleet of planes in the developed world. By summer’s end, the US might be lucky if a half dozen nationwide airlines are still running, and they will probably be doing so well below capacity. Business travel will take a big hit as corporations learn that a lot of business can be conducted “face to face” via the internet. And most families simply won’t be able to afford fares that are triple what they are now.

The auto industry might survive, in part because corporations are buying the bulk of new autos, particularly the behemoth SUVs and pickup trucks, enough so that the big three emerge from this in something recognizable. Ford will still be Ford, and GM will still be GM, even though you won’t see country and western singers moaning about how only real Americans drive those big trucks.

The administration (next year’s administration, anyway) will need to put trillions into the infrastructure and into research and development of more efficient ways of moving people around the country. This will create jobs (and if the admin doesn’t want all that money to vanish the way it did in Iraq, they’ll be thinking in terms of public projects, since only a fool or a libertarian believes the private sector will see it as anything other than an opportunity to feather its own nest), and might save the US from becoming a third world nation.

It’s no mistake that both India and China are throwing a significant chunk of their GNP into public works. Both realize that without a solid nationwide infrastructure, they have no future in the 21st century. China, which privatized its medical system in the 1980s (with predictably ghastly results) is already realizing that they must find a way to switch back, and the sooner the better. The role of a society is to share risks; private enterprise simply turns a society into a dog fight.

Global warming is clearly no longer some environmental thing that might happen in the 22nd century. It’s here, it’s now, and in one of those wonderful ironies with which the universe amuses itself, the country that stands to lose the most from it is the United States. While the wild weather that has afflicted the US this spring isn’t, in itself, an indicator, the fact that there is more and more such weather is an indicator of major problems to come, and sooner, rather than later.

Global warming might leave Canada as the only superpower in North America. That is something Americans need to consider when they dismiss climate change as being anti-American propaganda. The people warning most strenuously of climate change recognize that if it is unaddressed, America will take the brunt. The Pentagon realized it several years ago, in a risk assessment report in which it called climate change “the greatest threat to American security” – ahead of terrorism, ahead of war with Russia or China, ahead of economic collapse.

This hapless administration, evil minions to an idiotic and self-destructive plunderocracy that is pleased to call itself, without apparent irony, the “free market,” is singularly unequipped to deal with any of these items, save through further efforts to shore up the same entities that have already failed America, and hysterical threats of war and terror to try and keep the population docile and afraid.

You have a simple choice. The GOP offers fear and poverty. Even if the Democrats offer nothing at all, that’s an improvement. And there are enough real Democrats left in the party that they might rise above themselves like they did in 1932 and again in 1960, and step forward to save America from itself.