We have been thinking about some of the reasoning which goes into the Party of Washington’s approach to this crisis and what their approach says about you.
From what we can tell by our admittedly superficial reading of the most recent economic literature – we are not fans of economists and rate them on the food chain somewhere just above fungi and lawyers, and considerably below plankton – surprisingly, Barack and his economic team think their approach will work because you are most probably destitute, impoverished, lacking any significant means of subsistence – such as food and shelter – and all resources which might be used to acquire or produce those means – insolvent.
Of course, you don’t think of yourself this way: You likely hang that meaningless label on your social status, middle class, but, were you to lose your job today, in a matter of months you would be a resident of some homeless shelter, and subsisting entirely on charity.
Were you to receive a tax cut from Washington, you would likely blow it in a month or two.
Whatever increase in your income you receive from your paltry wages quickly gets spent on basic necessities of life, or, servicing the mountain of debt gathered as unpaid bills on your kitchen table.
While your more successful peers have worked diligently and honestly – adding to the wealth bequeathed to them by their millionaire grandparents (who acquired those means from their millionaire slave-owning grandparents – its wonderful what centuries of unpaid labor can do for a portfolio) – you can’t touch a dollar without immediately trying to spend it on the latest gadget – like food, cell phones or 42 inch, high-definition, wide screen, plasma televisions, which, interestingly enough, began rolling out just as Washington mandated digital television to replace the old analog system, and which new technology promises amazing video images of the best reruns cable has to offer.
You are, in a phrase, dirt poor, by any useful definition of that term. If you looked up the term, penniless uneducated fucking hillbilly, in a dictionary, the definition would not only include your picture, but also your social security number, address, and phone number.
In economic theory, the term, penniless uneducated fucking hillbilly, goes by the more obfuscating term, rule of thumb consumer – a concept introduced into economic literature in a paper N. Gregory Mankiw prepared for the American Economic Association, in January 2000.
Greg, citing earlier research, concluded:
If we exclude home equity on the grounds that it is not always liquid, the mean [net worth] for this group falls to a negative $10,600, indicating that debts such as credit cards balances exceed financial assets. Net worth is zero or negative for 18.5 percent of households; excluding home equity, the number of households in the red rises to 28.7 percent.
Stated in ordinary American, Greg concludes a good 28 percent of American families don’t have a pot to piss in, nor a window to throw it out. They, like you, probably, are devoid of any resources to survive the loss of their jobs, or the slightest reduction in their wages. And. like you, they stand on the edge of financial disaster, hoping the wind doesn’t blow the wrong way.
And, boy did the wind blow the wrong way in 2008: 2.6 million jobs lost and counting, manufacturing employment falling for 23 months in a row, even service jobs getting swallowed up in the financial implosion on Wall Street.
(We might note: Greg’s insight, significant as it is, did not so much add to the body of human knowledge , as it did simply concede to Karl Marx what he had asserted some 150 years ago, when he wrote that capitalism would produce a, “mass of propertyless workers – the utterly precarious position of labour – power on a mass scale cut off from capital or from even a limited satisfaction and, therefore, no longer merely temporarily deprived of work itself as a secure source of life…,” however, we might simply be accused of nitpicking.)
The upshot of Greg’s insight into you as an economic category, is that you are completely reliant on selling yourself into slavery in order to eat, and feed your family.
If your wages fell, you would likely respond by working harder, longer – even taking on a second or third job – and, it is pretty unlikely you would ever see a wage increase which would allow you to work less – you are tied to your job by the constant threat of starvation.
And, from what we can see, there is nothing which says you have to be completely penniless: just that you should be so relatively hard up that you might, for example, be inclined to work longer hours whenever the opportunity presented itself, or, when you hit that credit card to repair your transmission, or, are suddenly faced with balloon payments on your alt-A mortgage.
Washington knows this about you, and, they know they can pretty much manipulate economic events which compel you to work longer hours, for less pay, as you drown in debt.
Hence, when Barack declares,
And above all, I will ask you join in the work of remaking this nation the only way its been done in America for two-hundred and twenty-one years – block by block, brick by brick, calloused hand by calloused hand.
He knows he really doesn’t have to ask: it is not exactly like you have a choice in the matter.
In addition to unnecessarily extending the work week in the United States, and locking most of the world’s population in poverty, Washington’s inflationary policies have placed the nation in a state of technical insolvency.
Insolvency, because there is no plan to repay the debt, and no means to available to repay it, even if there was a plan; and, technical, because as long as international creditors continue to supply the United States with goods, despite its inability to earn sufficient means to repay them, Washington can blithely pretend it is not insolvent.
This is the current essential feature of the US national debt, ultimately it will not be repaid, and repayment of it will not be demanded. It is a feature subject to to sudden and somewhat catastrophically violent change.
There is, however, a problem with this convenient fiction – and convenient it is, because were China to demand repayment on the credit it has extended to the US, the global impact would be clearly unthinkable.
The problem: US inflationary economic policies require an ever increasing flow of new credit to Washington. In addition to normal deficit spending, which has become routine, the Iraq War continues, and continues to demand means to effect it.
Additionally, in case you were sleeping for the past two years, the financial system collapsed – which required a significant amount of very expensive government intervention to forestall a global meltdown.
The Real News Network has an interesting breakout of the financial bailout costs below:
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Finally, the burden of stagnating wages and income on working families, combined with a flood of new credit to those same families (as if debt were a substitute for income) has resulted in the actual insolvency of a significant number of American households to such an extent families in general have been compelled slow their spending.
So, just as baby boomer have begun to reach the age where they will be drawing down on the Social Security promise made to them for the last sixty years, Washington finds itself not only needing to raise the funds which it collected for such an event, but spent on its inflationary economic policies, but also to fund about $2 trillion to $3 trillion dollar of obligations arising from the war, an overnight doubling of the national debt resulting from the collapse of the financial sector, and the means to reflate economic activity in face of the worst economic downturn since the Great Depression.
This is the great flaw in the Washington’s inflationary economic policies. It is forced to borrow money from wherever to fund its deficit spending, and, accrues a mounting volume of debt in the wake.
After WWII, when the US was the industrial superpower as a result of the carnage, US deficit spending was paid for out of its trade surplus. But, that went away by 1971 or so. Since then this spending, and the growing US debt, has been funded, for a significant part, from recycled dollars of US imports – an additional share of this debt is “funded” by the sleight of hand created when the US “lends” itself our Social Security benefits.
People have become accustomed to the idea Washington can create goods out of thin air – toss a billion here and there, and 42 inch high-definition wide-screen plasma televisions just appear. What most of us don’t realize is the US doesn’t make those televisions – they are imported from Taiwan Province, and the mainland of the People’s Republic of China.
Which means the money the US is spending – to the extent it purchases real goods – ultimately comes from those areas, not the Treasury. And, only as long as China is willing to accept the dollars.
Which brings us to the great conclusion of this CNBC article:
“‘Nobody really knows how these policies will work out,’ Stoeferle said. ‘If it were another country, the U.S. should probably declare bankruptcy.'”
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The Moron and his Wall Street crew thought it might be a good idea to inject trillions of dollars into the failing financial system to stimulate new lending, so they handed out billions to every banker they could find – forced them to accept the money, by some reports.
They stuffed hundreds of billions more into the pockets of central bankers from virtually every nation and on almost every continent – Africa, of course, seems to have been bypassed on this astonishing and unprecedented act of charity.
The financial markets responded by immediately shedding trillions of dollars of wealth.
As fast as the U.S Treasury and Federal Reserve could shovel money out the door, investors’ shoveled it right back in. The withdrawal of liquidity from every market proceeded apace as every market player with the means at hand sought the safest form of investment possible: US treasury bonds.
By last week, Hank Paulson threw up his hands and finally surrendered to the obvious: Mr. Market hates money! And, the wealth destruction we are witnessing results not from too little money in circulation, but too much.
Sisyphean efforts notwithstanding, Mr. Market has made clear society is no longer bound by the laws of scarcity and any interventions made on the premise that such scarcity exists will be rebuffed.
Time to wake up, people!
This is not the economy of the Founding Fathers. In about the same time one of that generation of Americans could travel from Boston to England – three months – China will bring 13 new power generating plants online. The productive capacity at our fingertips is of several orders of magnitude greater than that even enjoyed by mid-Twentieth Century Americans.
Now the Messiah has stepped forward to try his hand at the tasks which bedevil his predecessor. Saturday, Barack Obama announced his intention to spend perhaps as much as $600 billion on a stimulus package with a goal of creating 2.5 million new jobs through the start of 2011, according to the Huffington Post:
“These aren’t just steps to pull ourselves out of this immediate crisis; these are the long-term investments in our economic future that have been ignored for far too long,” Obama said in the weekly Democratic radio address. The economic recovery plan being developed by his staff aims to create 2.5 million jobs by January 2011, and he wants to get it through Congress quickly and sign it soon after taking office.
He called the plan “big enough to meet the challenges we face” and said that it will jump-start job creation but also “lay the foundation for a strong and growing economy.
If the Moron and his band of Wall Street predators imagined fixing a financial system choking on bloated bonuses, record profits and years of easy credit with even more trillions of dollars proffered on the easiest of terms, the Messiah and his Clintonite apostles have now decided the fix for an economy predicted to shed millions of jobs and hundreds billion of dollars in government revenue is to “create” more jobs, and run bigger deficits to do it.
Perhaps, we are incredibly dense, but Mr. Market seems to be saying we need less government, less capital, and less work. But, you keep electing people who seem determined to increase all three!
Give us a clue, people: What the fuck are we missing here?
What the fuck is so difficult about having a society where people spend less of their life immersed in the soul destroying filth of labor, greed and, faceless bureaucracy?
What the fuck is so horrifying about devoting less of your time to the mad scramble to pay bills, balance budgets, and find childcare for your own neglected latchkey children, that you would fight so strenuously to increase the very things that makes these things more onerous?
It is clear to us what Donald Trump gets out of this: he couldn’t find a date if he didn’t own a modeling agency.
And, we know what the Moron and Messiah get out of it: Its great to have everyone stand when you walk into a room; its great to glad hand all your class mates who now lead other nations, and know, deep down inside, you won the biggest prize of all – seven fleets prowling the world’s waters, and enough nukes to burnish the surface of the earth with glass, and precipitate a new glacier age.
But just what the fuck do you get out of it?
How is it improving your sex life?
How does it boost your bragging rights at state dinners?
The Messiah has now embarked on culmination of the very disaster begun by his predecessor. Instead of grasping the fundamental logic of this crisis – that working hours must be reduced; and, that government must be reduced along with this – he has chosen to intensify that crisis.
Resolution of this crisis will now likely be imposed in the harshest and most chaotic form possible, with all the incalculably catastrophic unfolding of events that this implies: The default and bankruptcy of the United States government, and subsequent collapse of global economic activity.
Just wanted to give you the heads up on a likely ideological bent of the policies you will have to defend as the CHANGE for which you voted not yet two weeks past.
From Willem Buiter – who we instantly came to love when we read his defense of his blog – a spicy survey of the Obama economic team, whom he labels “too old, too uninspiring and too much part of the problem to deliver the change America needs and to keep alive the hope that Obama may have inspired through his election. A wasted opportunity.”
Barack Obama is clearly making himself at home in Washington. Soon, all he will need is a bag of pork rinds. We will diligently tick off Barack’s disappointments, lies, half truths, reversals, and, wholesale betrayals as they unfold in the remaining 70-odd days until January 20, 2009.
So, let us begin with his unconscionable, filthy, and unfathomable choice for Chief of Staff:
David Swanson: Rahm Emanuel has been the amazing early bad news following the past two elections.