But people in difficult circumstances do crazy things. And i REALLY do think circumstances ARE difficult, and are going to get increasingly difficult over the next few years (in the U.S. in particular, but in Europe as well --- and maybe most seriously in China). And therefore the potential for scary things will increase dramatically.
Who would've thought that the assasination of an Austrian prince wouldve caused WWI, or that a well-educated 20th-century nation like Germany would become capable of the atrocities it committed under Naziism, or that Stalin could eradicate 20 million people, or that Mao's revolution, including the famine it caused, would lead to the deaths of 40 million, or that in the first centuries after Europeans' discovery of the Americas, that the combination of mass genocide and disease would lead to the extermination of up to 90% of the indigenous populations, or that Ireland's population could drop by 25% due to the Famine, or that about half of Europe's population would die in the Black Death
Who would've thought the Roman Empire would collapse the way it did --- leading to just a short little period called the Dark Ages; or that the Mayan civilization would go from thriving to nonexistent as fast as it did, or that the collapse of the civilization situated in the Tigris-Euphrates valley area would be so quick, etc etc etc.... examples of either imperial over-reach and/or of civilizations outstripping the capacity of their environments to support them and/or of significant climatic events (floods, droughts, ice age, temperature rises) rendering existing modes of living untenable
Well, the problems in the U.S. that it has to deal with seems to me like a potential combination of all of the above, and perhaps then some (as what we have coming is, unlike those other examples, not regional, but global).
to wit:
- Americans are getting sick of its govt allowing financial companies to keep their profits private (and pay big bonuses) but socialize the losses (keep the bankrupt (morally, as well as financially) companies in business by sucking off the middle-class taxpayer)
- those banks are still insolvent and have been for all of the last two years --- but have been allowed to make good trading revenues to pay big bonuses by borrowing money from the govt at virtually 0% interest and investing in the markets, basically trading with each other in a shell game of pushing markets higher --- meanwhile, their balance sheets are still big black holes, and theyve only not gone out of business b/c the govt changed the acctg rules to allow them to do 2 things that make them still look solvent (a) keep a bunch of stuff they own off their official books (off-balance-sheet acctg) and, (b) instead of marking their "assets" (mainly loans to businesses and consumers, like mortgages, home equity lines of credit, and commercial real estate loans) to market (i.e. actually valuing them at what they're worth), they can mark them to model (i.e. keep those assets at inflated values --- e.g. keep a loan on its books at par value even if they're no long receiving interest on the loan and even if the property securing the loan is only worth half the value of the outstanding loan)
- gigantically under-funded pensions, both at the state and corporate levels
- according to official govt report, entitlement programs and paying interest on the public debt will cost 100% of govt revenues within ten years
-municipalities and states with gargantuan budget deficits, causing them to slash public employment and services (e.g. Kansas City closing 29 of its 61 schools; Detroit closing 45 schools; Hawaii has gone to a 4-day school week; New York is trying to cut $1 billion from its budget, L.A., Chicago etc etc are broke)
- U.S. delinquencies and foreclosures are still rising (mortgage delinquencies are 14%; i.e. one in 7 homeowners with a mortgage is behind on his/her payments)
- meanwhile, mortgage rates are going up b/c interest rates have gone up generally
- and a bunch of option-ARM mortgages issued at the height of the housing boom are coming due to reset this year and next
- meaning those foreclosure and delinquency stats are going higher for longer
- and also meaning that the huge shadow inventory of unsold homes (current, on bank books, due to past foreclosures, plus pending, due to under-water mortgagees finally deciding to walk away from their homes rather than be debt-slaves forever) will keep downward pressure on house prices for some time
- U.S. unemployment still officially near 10%, unofficially nearer to 20%, with unemployment claim recipients having been unemployed so long they're falling off the rolls and no longer eligible for benefits (despite the emergency extensions of those benefits)
- and though there were nominally jobs added to the U.S. economy last month, the # includes some temporary jobs just for the census, plus was inflated by seasonal adjustment effects for weather patterns, and for "assumed" job growth due to the assumed normal course of births and deaths of small businesses during the business cycle, so, the real # of jobs added to the economy was trivial, and not of any statistical significance relative to the size of the population
- there are 35 million Americans on food stamps, including 1 in 4 kids
- the odds of an African American male getting into college are smaller than the odds of getting into prison
- Americans have kept their spending up (have to fuel up the gas tanks) though their average incomes, on an inflation-adjusted basis, have been flat for over a decade, and, unlike in the past when they financed their profligacy by taking equity out of their homes and going further into debt, the banks have shut off the flow of credit, so now consumers seem to be doing it by selling financial assets (and by defaulting on some of their debt)
- and those financial assets (stocks and houses) are worth a lot less than they were a few years ago
- and baby boomers are soon entering retirement years but dont have anyting near enough to retire on (to support the lifestyle to which theyve become accustomed)
- meanwhile, climate change will continue to cause volatile weather incidents, with greater risks down the road
- and a very-much oil-dependent world economy has past the point of peak oil --- oil demand will keep going up as more and more Chinese and Indians enter the middle class, but oil supply has peaked (more here)
- so oil and gas prices will go up and current oil consumption rates, causing line-ups and road rage at the gas pumps, and, when gas goes north of $4 a gallon in the U.S. again, slowing down the economy into a double-dip recession
- 64% of Americans are considered overweight, including 26% that are obese, and these people are going to have significant health problems
- while the # of people that dont have health insurance in the U.S. is often exaggerated (many of those that don't are either riche enough to buy it if they really wanted it, or are too young to think they need it), nonetheless, at least 10% of the population does not; and, in any case, healthcare costs keep going up faster than any other prices in the U.S.
- and gun-happy America is seeing big increases in the number of militia groups and of group members
- etc etc
there is a historically very long list of rebellions and revolutions precipitated by any # of things
I don't consider it outside the realm of possibility that there will be more and that they will be in our neighbourhood
Igor Panarin, for one, got a lot of press about a year ago for publicizing his predictions about civil war and dissolution of the good ole U.S. of A.
He's a Russian academic/professor/intelligence analyst/strategic forecaster --- and whether or not thats sufficient to establish his bona fides,or one can simply call him a crackpot, he's not the only one to have made similar predictions. Bob Prechter, Harry Dent and Russell Napier all come from different perspectives but have similar views. And Gerald Celente too.
Chris Hedges is no right-wing lunatic, he's a serious intellectual who was once a seminarian before becoming an award-winning journalist covering wars around the globe, and then writing books, first against atheist dogmatists, then, as if to be fair and balanced, against the fundamentalist Christian right, then against America's foreign occupations.
Here's what he had to say recently, first Calling All Rebels, and more recently in Is America "Yearning for Facism"?
The language of violence always presages violence. I watched it in war after war from Latin America to the Balkans. The impoverishment of a working class and the snuffing out of hope and opportunity always produce angry mobs ready to kill and be killed. A bankrupt, liberal elite, which proves ineffectual agains the rich and the criminal, always gets swept aside, in times of economic collapse, before thugs and demagogues emerge to play to the passions of the crowd. I have seen this drama. I know each act. I know how it ends. I have heard it in other tongues in other lands. I recognize the same stock characters, the buffoons, charlatans and fools, the same confused crowds and the same impotent and despised liberal class that deserves the hatred it engenders.
"We are ruled not by two parties but one party." Cynthia McKinney, who ran for president on the Green Party ticket, told me. "It is the party of money and war. Our country has been hijacked. And we have to take the country away from those who have hijacked it. The only question now is whose revolution gets funded."
The Democrats and their liberal apologists are so oblivious to the profound personal and economic despair sweeping through this country that they think offering unemployed people the right to keep their unemployed children on their nonexistent health care policies is a step forward. They think that passing a jobs bill that will give tax credits to corporations is a rational response to an unemployment rate that is, in real terms, close to 20 percent. they think that making ordinary Americans, one in eight of whom depends on food stamps to eat, fork over trillions in taxpayer dollars to pay for the crimes of Wall Street and war is acceptable. They think that the refusal to save the estimated 2.4 million people who will be forced out of their homes by foreclosure this year is justified by the bloodless language of fiscal austerity. The message is clear. Laws do not apply to the power elite. Our government does not work. And the longer we stand by and do nothing, the longer we refuse to embrace and recognize the legitimate rage of the working class, the faster we will see our anemic democracy die.
The unraveling of America mirrors the unraveling of Yugoslavia. The Balkan war was not caused by ancient ethnic hatreds. It was caused by the economic collapse of Yugoslavia. The petty criminals and goons who took power harnessed the anger and despair of the unemployed and the desparate. They singled out convenient scapegoats from ethnic Croats to Muslims to Albanians to Gypsies. They set in motion movements that unleashed a feeding frenzy leading to war and self-immolation. ther is little difference between the ludicrous would-be poet Radovan Karadzic, who was a fgure of ridicule in Sarajevo before the war, and the moronic Glenn Beck or Sarah Palin. There is little difference between the Oath Keepers and the Serbian militias. We can laugh at these people, but they are not the fools. We are.
The longer we appeal to the Democrats, who are servants of corporate interests, the more stupid and ineffectual we become. Sixty-one percent of Americans believe the country is in decline, according to a recent NBC News/Wall Street Journal poll, and they are right. Only 25 percent of those polled said the government can be trusted to protect the interests of the American people. If we do not embrace this outrage and distrust as our own, it will be expressed through a terrifying right-wing backlash.
“It is time for us to stop talking about right and left,” McKinney told me. “The old political paradigm that serves the interests of the people who put us in this predicament will not be the paradigm that gets us out of this. I am a child of the South. Janet Napolitano tells me I need to be afraid of people who are labeled white supremacists but I was raised around white supremacists. I am not afraid of white supremacists. I am concerned about my own government. The Patriot Act did not come from the white supremacists, it came from the White House and Congress. Citizens United did not come from white supremacists, it came from the Supreme Court. Our problem is a problem of governance. I am willing to reach across traditional barriers that have been skillfully constructed by people who benefit from the way the system is organized.”
We are bound to a party that has betrayed every principle we claim to espouse, from universal health care to an end to our permanent war economy, to a demand for quality and affordable public education, to a concern for the jobs of the working class. And the hatred expressed within right-wing movements for the college-educated elite, who created or at least did nothing to halt the financial debacle, is not misplaced. Our educated elite, wallowing in self-righteousness, wasted its time in the boutique activism of political correctness as tens of millions of workers lost their jobs. The shouting of racist and bigoted words at black and gay members of Congress, the spitting on a black member of the House, the tossing of bricks through the windows of legislators’ offices, are part of the language of rebellion. It is as much a revolt against the educated elite as it is against the government. The blame lies with us. We created the monster.
When someone like Palin posts a map with cross hairs on the districts of Democrats, when she says “Don’t Retreat, Instead—RELOAD!” there are desperate people cleaning their weapons who listen. When Christian fascists stand in the pulpits of megachurches and denounce Barack Obama as the Antichrist, there are messianic believers who listen. When a Republican lawmaker shouts “baby killer” at Michigan Democrat Bart Stupak, there are violent extremists who see the mission of saving the unborn as a sacred duty. They have little left to lose. We made sure of that. And the violence they inflict is an expression of the violence they endure.
These movements are not yet full-blown fascist movements. They do not openly call for the extermination of ethnic or religious groups. They do not openly advocate violence. But, as I was told by Fritz Stern, a scholar of fascism who has written about the origins of Nazism, “In Germany there was a yearning for fascism before fascism was invented.” It is the yearning that we now see, and it is dangerous. If we do not immediately reincorporate the unemployed and the poor back into the economy, giving them jobs and relief from crippling debt, then the nascent racism and violence that are leaping up around the edges of American society will become a full-blown conflagration.
Left unchecked, the hatred for radical Islam will transform itself into a hatred for Muslims. The hatred for undocumented workers will become a hatred for Mexicans and Central Americans. The hatred for those not defined by this largely white movement as American patriots will become a hatred for African-Americans. The hatred for liberals will morph into a hatred for all democratic institutions, from universities to government agencies to the press. Our continued impotence and cowardice, our refusal to articulate this anger and stand up in open defiance to the Democrats and the Republicans, will see us swept aside for an age of terror and blood.
Now, if you think Hedges is too alarmist, and that I'm too influenced by his views, consider again those of Prechter and Celente, of Harry Dent, of Russ Napier, of Igor Panarin --- and of Mark Fisher, in his article on Bloomberg and in BusinessWeek, U.S. Decline, Sloth Look a Lot Like End of Rome.
Historians cite the late second century as the turning point of the Roman Empire, when the once- proud, feared society began its descent into infamy.
As the ruling class was undermined by civil wars and attacks by outsiders, the Romans’ respect for law and social institutions began to erode. In the end, a combination of political and economic mistakes led to the empire’s downfall.
The U.S. today is a mirror image of the Roman Empire as it tipped into chaos. Whether we blame our bloated government, a greedy elite or a lethargic population, the similarities between the two foreshadow a gruesome future.
The Roman economy grew fat from the plunder of conquered territories and the added productivity offered by new lands. The waning of expansionism didn’t bode well for the empire.
While the U.S. ascended quite differently, it also used its position as a superpower to fuel economic expansion. Because the country had the strongest military and economy in the post-World War II era, the U.S. dollar became the de facto global reserve currency, ensuring endless competitive advantages -- which have vanished in the last decade.
Americans have become less productive while relying more on social safety-net programs such as Medicare, Medicaid and Social Security -- and now expanded health-care insurance. Worse, like the ancient Romans, a sense of entitlement has replaced the drive and motivation we once championed. With easy access to abundant government handouts, it’s no wonder so many jobless people have stopped looking for work.
Bread and Circuses
In the fifth century, the Roman political elite began searching for ways to distract its population from the hopelessness at hand. Bread and circuses postponed the ultimate fall. The tactic stopped working when people realized their bread tasted stale and sensed the true scope of the impending disaster.
The U.S. government’s version of bread offerings proliferated throughout the fiscal crisis, in which collapse was averted only by a massive financial bailout and an endless supply of paper money, along with the rest of the seemingly endless sustenance being shoved down America’s throat.
Meanwhile, the administration hasn’t yet tackled the most pressing issue: job creation. Given the current state of the labor market, American workers can’t possibly provide enough tax revenue to support the government’s swelling debt.
Even more unsettling is the government’s inability to fix the financial crisis. After a stream of stimulus programs and bailouts, the Federal Reserve continues to print enormous quantities of dollars and buy the nation’s debt.
California Like Greece
Many state governments are in even worse shape. With California’s 10-year debt currently yielding about 4.5 percent (municipal debt typically yields less than 10-year Treasuries, which now yield about 3.9 percent), the state poses the same sort of danger to the U.S. that Greece does to the European Union. If the federal government decides to bail out California, what happens when Michigan and New York start demanding the same treatment?
The burden of underfunded pension liabilities will cause states’ budget deficits to further balloon. Since defined state benefit plans assume an unrealistic 8 percent rate of return -- zero percent, at best, is more likely -- we can only imagine the catastrophe to come once states have to make good on their obligations.
As our society becomes increasingly immobile and sits on the couch doing nothing but surfing the Internet, using iPhones and watching “Jersey Shore,” the hopelessness of the situation becomes clear.
Fear Mounts
Unless the government creates a massive jobs program, cuts spending and taxes, and gains control of the national budget and the balance of payments crises, we should fear for our future. Unless our fellow Americans relearn the value of hard work, no government plan stands a chance.
Once the world realizes that the U.S. is the new Rome, the traditional tenets governing asset correlations will no longer hold, and we can expect a breakdown in traditional stock-bond portfolio theories.
Since paper assets are ultimately shoved down to zero, expect hard assets to benefit -- especially gold, energy and grains -- along with commodity-related equities.
The name of the game going forward -- let’s say the next five years -- will be buying ahead of whatever China and other developing nations are trying to accumulate and diversifying away from the U.S.
The China Factor
Consider the trading relationship between the U.S. and China. When the U.S. funnels its unfinished products to China, the Asian nation is able to send back manufactured goods -- thanks to its abundant supply of cheap labor -- in return for dollars. While the American people are busy tinkering with their newly manufactured playthings, the Chinese continue to use their new wealth to buy energy and commodity assets.
Thus, China and the other developing countries that are amassing dollars, euros and pounds basically play a game of global hot potato, trying to pass the potato -- worthless paper currencies -- to others in exchange for energy, water and valuable food assets.
As China continues to thrust its dollars at all things commodity-related, it’s hard not to laugh when hearing President Barack Obama speak about trying to identify “environmentally sound” opportunities in energy.
Meltdown Ahead
It’s only a matter of time before the mechanism that has allowed the government to sustain its trade deficit for longer than it should have -- similar to the Asian dollar peg of the 1990s -- causes a simultaneous decline in the U.S. currency, asset prices and the economy.
Once people begin to realize that their paper currencies, stocks and bonds are all garbage, we can expect a meltdown.
Although it may be too early to predict an impending collapse in paper assets and an immediate need to acquire hard assets, it’s clear that we’ve reached a turning point. The ship has begun to sink. As I await a global re-set of asset values and prices, I will continue to monitor the swelling federal and state tax revenue levels, the rising animosity between Main Street and Wall Street and the progress made by commodity-hungry nations as they continue to eat our lunch.
While I continue to hope for the best, it’s far wiser to prepare for the worst.
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