This is a continuation of a rant from before, if you haven't suffered through that yet, check it out here. Or, start at the beginning here.
So, after S&P downgraded US debt, the vaunted "markets" tanked. In fact, they had been tanking all week. They knew it was coming. But they really tanked the following Monday. Was it because S&P is so awesome, and can bring down world economies with just one report?
No, it is because our economy sucks, and because those in power have no inclination or incentive to fix it. Take this fact into account: Corporations in America are sitting on TWO TRILLION DOLLARS in cash. That's right...cash. Now, we could be taxing them, and paying down the debt, but as I said in the last post, this seems to be politically impossible right now. But you have to consider the fact that sitting on cash doesn't make you much money. If they thought they could make profit by investing the cash, even in their own stock, they would do it. They see America as a dry well.
They are not investing this cash because not enough Americans have money. With real unemployment at near 20%, not enough people have the money for their products. Without jobs, people can't buy their shit! And this is not seen by corporations as a short-term problem, or they would invest at least some of the cash. Nope, they see American as a long-term project, one that they have little interest in at the moment, if at all.
Since 2007, we have lost nearly SEVEN TRILLION dollars in home values! These are the homes that we were using as ATMs not too long ago. Those ATMs are shut down. Since our economy is based on consumer spending, at least 60% of it, anyway, we miss that equity dearly. Several economists are saying that the housing market is already in a "double-dip" recession, and it is leading the way, like last time. And if that's not bad enough, about a quarter of the nation's homes (I've heard as much as a third) are under water. That means they are worth less than what is owed on them. Unless there is real help from the government, hundreds of thousands of Americans will lose these homes, many just walking away from them. This also means that the banks, which have these loans on their current balance sheets as "okey-dokey," are dangerously undercapitalized (but still gambling in derivatives markets). This is a disaster that we are only part of the way through.
Finally, we are tapped out on just about every level. We have stretched the limit of our credit. We have lost ground in manufacturing - we don't make shit anymore, which means we can't export shit. And we are at the limit of our productivity. Since 1980, the average American man works an additional 100 hours per year. The average American woman - 200 hours. We work extremely hard as a people, and we can't work much harder. And since 1980 our earning power has stagnated, as wages have barely kept pace with inflation. And, since energy and food are not counted (comically, and sadly) in that index, we have lost ground tremendously. Especially in the last 10 years. Add in the crushing weight of medical costs, especially when compared to rival economies, and we are tapped. There are just not any extra dollars that can be squeezed out of working families any more.
As an economy - right now, and for the foreseeable future - we suck! We have a corrupted governmental system, an unbalanced economy run by corporate oligarchs, and a populace that is stretched to its limits. The private cash needed to fuel a consumer economy is largely gone from the system.
And this is why there is now a push to "reform" so many government programs. Government programs, like Social Security, Medicare and education are where there are still large pools of cash. So, when this latest deal over the debt ceiling had proposals that cut programs for the people, and also cut corporate taxes...well, that is a straight-up transfer of wealth from us to the top. And that is what's coming in the Grand Bargain that the Super Congress will bring you in November. It is the final raiding of the cupboards. The thieves have all your nice shit in their sacks already, now they are taking the canned food and six-packs as they leave through the back door.
This is why some people are shorting the USA. We are in bad shape, and it doesn't look like we are getting better soon. So why would anyone want to invest in treasuries here?
Our best friend right now is Europe and the rest of the world. Asia, right now, is the future of growth and stability. But their rapid growth, and mitigating factors like huge populations in dire poverty, make them currently less stable than the USA. And Europe is as fucked as we are in how corrupt their banking system is. The business with Greece, as an example, is a textbook case in greed, corruption and stupidity. (By the way, US banks, namely Goldman Sachs, were involved in the Greek financial catastrophe too!) Just yesterday France and Germany met to discuss how they were going to, and even if they were able to, prop up Ireland, Portugal, possibly Spain and parts of Italy too. And the Greek intervention of a couple of weeks ago may just forestall what many consider the inevitable - the bankruptcy of Greece. This could start a chain of European dominos that crash through Asia and the US too.
Get ready for a rough decade. It is already being called the "lost decade," similar to what Japan has faced since the late 1990s. Too bad we didn't elect a Democratic president, one who would fight for the working people and...
...oh yeah...never mind.
No comments:
Post a Comment