I began with a tactic proposed by Grover Norquist called "Starving the Beast". I've been writing about it for four years. The idea is that if the US government spends itself into debt so far that it can't grow the economy enough to get out, the only outcome can be major cuts in government spending. Combine this with Globalization, the pressure on the wages of the average American will continue to decrease relative to the cost of living. The end result is we have a major counter-revolution, a return to pre-New Deal times where the rich were richer and the worker was too busy to pay attention to anything but paying for food and shelter.
If you don't believe me, read on:
AlterNet
The recession of 2001 never ended.
At least not for ordinary Americans.
Ordinary Americans found that their income was declining. From 2001 to 2007, median family income declined - depending on where you get your figures from - by somewhere between $500 and $1,000. Median individual income went down by at least $1,000.
The yearly average number of new private sector jobs created from 2001-2008 was just 369,000, not even keeping up with the growth in population. It should be compared to the average number of new private sector jobs created from '92 to 2,000: 1,760,000 per year. The number of people in manufacturing jobs decreased by over 3 million. The number who got health care at work went down, from 64.2 million to 59.7 million. The number of people without health care went up from 38.4 to 46.9 million. The number of people in poverty increased from 31.6 million to 36.5 million.
The value of America's businesses, at least as measured by the stock market, did not go up. An astonishing thing in what was called a boom. Meantime, the cost of living went up. Home heating oil went up about 150 percent. Gas at the pump at least doubled. The cost of health insurance went up about 50 percent. The cost of college went up about 30 percent. Now food is going up.
[..] The key fact is this: during the Bush administration the US economy "grew" by 37 percent. Give or take, plus or minus, but something around there. What has been ignored is what that growth consists of. And even more, what it cost. The middle class has shrunk and is less well off. So the growth isn't there. The stock market is flat, so it's not in business. Manufacturing jobs have been dramatically reduced, so it's not there.
The "growth" in the US economy is a bubble. It consists entirely of debt. Can it be true that the growth in the US economy in the last seven years, such as it is, consists entirely of debt?
Here are the numbers:
The US economy grew by about $4 trillion.
-- The national debt in Jan. 2008: $9.2 trillion
-- The national debt in 2001: $5.7 trillion
An increase of $3.5 trillion
-- Total consumer credit debt in 2008: $12.8 trillion
-- Total consumer credit debt in 2001: $7.65 trillion
An increase of $5.25 trillion
In the course of achieving growth of $4 trillion, we took on $8.75 trillion in debt, combining what we owe as a nation and as individuals.
[..] The government pumped out lots of money by increased spending, much of it going to the military industrial complex, the pharmaceutical and insurance industry, and, of course, a special big chunk on the wars.
They also cut taxes. Mostly for the very rich. So rich people suddenly had lots of money on hand. They didn't go out and open new businesses, they simply sold the money. That is, they put it in "the financial sector," banks, investment companies, brokerages, insurance companies, real estate funds, hedge funds and the like. The financial sector suddenly had an influx of money. So they went out and sold it. That is, they went out aggressively to make loans, both to businesses and consumers. The government was hand in glove with them, keeping interest rates low and deregulating or ignoring regulations.
There was a real estate bubble. That should have been a warning sign. Real estate is a passive investment. It is a signal that there is a lot of money around with no productive place to go. No businesses expanding. No hot new industries. No genuine growth. The real estate bubble is now routinely described as the root of our current economic problems. That's not true. It's merely a symptom.
The problem is that the government, the nation, and the individuals in our country have all taken on massive amounts of new debt. Without investing it anything productive. Even our conquests of Afghanistan and Iraq are not profitable (except for specific war profiteers), they are drains, endlessly creating more debts. Debts which are, bizarrely, kept off the books the way Enron used to do it, or more pertinently, the way George Bush used to do it when he was at Harken Energy. This is quite accurately reflected in the fall of the dollar against such currencies as the Euro. The dollar is now worth one third less than it was in 2001, pretty much the size of the bubble, one third of the economy. It is also the primary cause of half of the increase in the price of oil. Since oil is priced in dollars, oil producers have had to raise their prices by fifty percent just to keep even. As our energy policy has been to just keep using oil, that makes the problem self-perpetuating, sending more and more money out of the country.
Here's another statistic to make things scarier still: Amount more Americans earned than spent in 2001: +2.3 percent Amount less Americans are earning than spending in 2008: -0.5 percent (State of the Union 2008: By the Numbers, Reuters, 1/28/2008 the source of many of the statistics included here.) The beat goes on.
The solutions that have been proposed so far are more of what has created the problem. A check sent to every American, paid for by .... debt. Support for failing financial institutions and for defaulting mortgage holders, paid for by .... debt. Artificially low interest rates, so there will be more lending, creating more debt. All to keep the big bubble from bursting. All in the service of denying the big bubble is actually a bubble.
If America is going to get out of this, we will probably have to do it the old fashioned way, work for it. The way to encourage work, is to make doing business - making things, inventing things, providing services - more attractive and profitable than simply lending money.
No comments:
Post a Comment