In 2008-9 our country experienced an unprecedented meltdown of its financial system brought on by the cosy relationships between government regulators, politicians and bureaucrats. In response the Federal Reserve embarked on a program whereby the it stole money from the bank accounts of 98% of the country and shifted it to the wealthiest of American society through depressing interest rates paid to savers on their accounts below the rate of inflation, meaning that for every $1,000 in your bank account you lose $30 every year to inflation. This subsidized those with money by providing them with low borrowing costs, allowing them to leverage their wealth for even greater gains in the stock market. It’s not good enough that a billionaire invests $100 million in the market; no, he must use that $100m as leverage to control a billion dollars worth of stock. The stock market has become a casino where small investors are left to chase nickels in front of steam rollers while the government funds the wealthiest segment of society. Worse, the Cyprus Model has put paid to the idea that bank savings are property and protected by the law. Instead savers have become “speculators” and their savings “investments” to be wiped out whenever banks need a bailout. It must not be forgotten that the initial bank bailout, the first put forward by the European Union, looked to steal 6.7% of guaranteed savings below 100,000 Euro. The European Union isn’t exactly communist China or Soviet Russia yet it completely ignored its own law of guaranteed deposits (the EU FDIC) and took the money. Is such an event possible in the United States? Yes. Unlikely perhaps at this point, but still possible.
To support this stock market bubble the federal reserve has flooded the markets with currency yet denied such actions, euphemistically called “quantitative easing”, are inflationary. Government bureaucracies such as the Bureau of Labor Statistics (BLS) manipulate employment statistics to make it appear as if good times are here to stay by excluding the long-term unemployed and those who have given up on finding a job, meaning that if your wife is working and you’re looking for a job, our economy will improve by you staying at home and watching daytime TV since your household will go from 50% unemployment to 0% unemployment. Similarly the BLS manipulates inflation rates by discounting the volatility of food and fuel, the largest categories all but the very wealthiest people spend their money on besides taxes and housing, and making “qualitative adjustments” that hide inflation. In addition companies are passing on higher production costs to consumer through stealth inflation, providing less product for the same money. The profusion of dollar stores are proof of the success of this strategy since shoppers at these stores believing they are getting a bargain while in reality they are paying more per unit of good than at other stores. 4 loads of Tide for a $1 might seem a deal until one goes to a supermarket and finds a 40 load box of the detergent for $7.
Not one person from the banking crisis has been indicted or prosecuted by the Obama administration or Congress, a fact that spawned a PBS Frontline show “The Untouchables.” Could this be because the federal government would be prosecuting it’s own? Former SEC Chairwoman Mary Schapiro resigned and has taken a position at Promontory Financial Group, a bank consulting group, but promises not to lobby the government she once worked for. That has led to Forbes wondering what other of her qualifications Promontory is willing to bill $1,000 – $10,000 an hour for. She’s among numerous ex-federal employees at her new digs. Check out the nifty graphic at ZeroHedge listing Promontory employees and their former positions in the government. Yet we are supposed to believe this revolving door between regulators and those they regulate is free from moral hazard. In the comments at ZeroHedge someone calls the place a “high end whorehouse.” It it were taxpayers wouldn’t be the ones being screwed.
Banks like JP Morgan-Chase and investment firms like Goldman Sachs are considered too big to fail, taking their “skin” out of the game and replacing it with the American taxpayer’s. If JPMC or Goldman’s risky investments turn out well, it’s “capitalism” and their corporate managers and shareholders are rewarded; if they bomb it’s no big deal. The shareholders or managers are still rewarded as they were in January 2010 when banker bonuses were “bigger than ever” according to the New York Times even after the economic collapse of 2008-9. The American worker will simply work a few hours to provide the taxes the firms need to be bailed out, that is if she has a job. It’s a great system if you are Lloyd Blankfein GS’s CEO who earns upwards of $100 million a year at Goldman Sachs. It benefits Democratic politicians like Hillary Rodham Clinton and President Obama too since Blankfein is a large donor to the Democratic party.
Then there’s the debt. To call it a “mountain of debt” is to betray a shallow awareness of the world’s topography. Here are some neat visualizations of our debt in $100 bills, and an impressive sounding statistic that’s hard to visual: a line of $1 bills would stretch from the Earth to Uranus. We’ve reached a point where analogies lose their meaning, although the current debt being greater than the country’s entire output in 2011 must be at least a bit sobering to even the drunkest Keynesian economist. The best way to consider the debt is by making it personal. Since 2008 the debt has expanded by $26,000 per person. Multiply that number by those in your household and ask yourself if you feel that amount richer over the past 4 years. That would mean an extra $78k for my household, enough to drop the Wife’s med school debt by 40% or replace our aging cars, each with over 150k miles on them, as well as buy a new car for the Kid. If you don’t see that money, where did it go? Ask yourself: are you better off today than you were 4 years ago? Then ask Lloyd whether he is.
The system is corrupt yet we do nothing about it. We are told happy days are here again, that the stockmarket is at record highs, yet those of us who dabbled in the market prior to 2009 have still not recovered from the losses suffered then, leaving us on the sidelines of this rally. Small investors piled into the market and out of the market late back then, proving they were the “greater fools” and some are doing so today as the market skyrockets and smart money looks for the exits. Sure our 401K’s are expanding, but the numbers are meaningless for anyone other than those planning to retire in the coming months before this bubble bursts. Self employed people and contractors like myself don’t have 401K’s, we just have our wits and an ever sharpening skill set that we use to stay employed, but both are slowly being eroded by time as we age and the younger cohorts below us grow hungrier and more competitive. Time will unravel us, and when it does we will be poor and destitute, remembering the hundreds of thousands of dollars of taxes paid that could have gone, should have gone, into our retirement funds but didn’t. At that point we’ll be on the side of the 47% who don’t pay taxes, but by then the government will be completely broke. We shouldn’t expect any sympathy from the generations coming up in our shadows, since both Left and Right are in agreement that theirs will be the first generations to have lower living standards than preceding generations. It doesn’t help that we’ve sent them to substandard schools whose sole purpose seems to be to employ Masters of Education degree holders instead of actually teaching our children the skills they need to succeed in life.
The collapse of our education system is proof of our sick society, one that raids the education budgets for the young to pay for the guaranteed pensions of the old, one in which the only people who treasure marriage these days are gay and everyone else hooks up like a shed-full of feral cats in heat, with an increasing percetage of the products of these unions are on ADHD medication. I’d need to be medicated too if I was forced to sit still with a body full of hormones and brimming with youthful energy, taught by teachers who, like the children of Lake Wobegon, are all above average, all 98% of them. Conversely, Walter Russell Mead points out ”only 78.2 percent of American students graduated high school in 2010. Sixty-seven percent of all fourth graders could not read at grade level in 2009. And only 32 percent of eighth graders and 38 percent of twelfth graders were reading at or above grade level that same year.” Of course if we measured education aptitude by the number of body piercings and tattoos we’d lead the world.
David Stockman, former Reagan budget director, is getting beaten up in the press for his book The Great Deformation: The Corruption of Capitalism in America. Journalists, products of the Masters of Education employment entities described above, look at the highs of the Dow and discount Stockman’s thesis that the system we have today is more akin to the monopolies and crony capitalists that spawned the progressive movement over a century ago rather than some Randist free market anarchic paradise that they instinctively fear. The treatment of Stockman is similar to that shoveled out to Bob Woodward for daring to criticize President Obama game of chicken with the sequester, as J-school graduates leaped in defense of their icon in the White House attacking Woodward with various ad hominems that any of the profs would have failed them for had they used them in class (or rather, a class where failure was an option – evidently a rarity these days where students can pass without actually studying.) Watching Woodward, a man whose politics I disagree with yet whom I respect for helping pull off the greatest journalistic story of the century, being attacked by the likes of Andrew “I’m here, I’m queer, blah blah blah” Sullivan was like watching a fine thoroughbred horse attacked by a swarm of flies fresh from their home in a dung pile. But such is the fate for anyone who dares call “shenanigans” in the current climate where anyone who can’t continue deceiving themselves is lampooned, debased, or in the case of Woodward, threatened.
Our problems aren’t just economic either. The Obama administration has fled the Middle East and attempts to appease Iran by refusing to support the rebellion against the Assad regime in Syria.
“I think that the United States has not taken a more active role in Syria from the beginning because they didn’t want to disturb the possibility, to give them space, to negotiate with Iran,” Javier Solana, the former European Union foreign policy chief, said Monday at a Brookings Institution discussion about this week’s talks. Solana, who was a top negotiator with Tehran in the nuclear program until 2009, added, “They probably knew that getting very engaged against Assad, engaged even militarily, could contribute to a break in the potential negotiations with Tehran.”
As Walter Russell Mead notes this could be a catastrophic mistake.
If Solana is right that this policy has been driving the White House all along, this is Obama’s initial Iran failure—remaining silent during the 2009 Green Revolution—on steroids. Weakness doesn’t win you the friendship of bullies. And if this dispatch is right, we should expect some ugly repercussions from the Sunni Arabs, the Israelis and the Turks. All these powers want to see Iran’s claws clipped and they want Assad to go; all of these powers chiefly view the value of their US ties at the moment in the light of the confrontation with Iran. If they come to feel that the United States is willing to throw the Syrian lamb to the Iranian tiger, their trust and confidence in the United States, and consequentially America’s power to get things done in the region, would go into a deep eclipse.
Things don’t look any better on the other side of Asia with North Korea promising to attack the United States. So far the US response has been mild, yet that hasn’t stopped the press from asking White House spokesman Jay Carney if that hasn’t provoked a communist dictatorship whose people are being starved to death on a steady diet of leftist propaganda and grass. But their carbon footprints are tiny, for now. How much carbon will be released by a nuclear strike on Osaka or Guam? Quite a bit I suppose. In any event we soon might find out if North Korea acts on its threats.
A whole industry is set up to use imagery and fantasy to modify our behavior so that we buy something, yet somehow a related industry employing the same techniques but for entertainment purposes ie exempt from responsibility when an admittedly sick individual dresses up as villain of the violent movie being shown to the audience he then commences to massacre. The Roman Catholic Pope is labeled as an extremist for calling abortion murder while a doctor who performs late term abortions and keeps the tiny feet of his victims in a jar as memento mori is lauded as a hero. The billionaire mayor of New York City makes it his personal mission to rid the city of large soft drinks while the city’s crime rate rises and the city becomes less friendly to all but society’s richest and poorest.
But when all is said and done, who is to blame for this mess that we find ourselves in? We are.
We didn’t demand for the bankers to be tarred and feathered (well, we did but failed to hold our elected leaders accountable for allowing the bankers off scot-free.). We continually vote in the politicians who offer us platitudes instead of common sense and plunder the public purse for the benefit of the monied elite regardless of their party affiliation. We engage in bitter fights over issues that don’t impact us directly (I’m not gay, on medicaid and I can’t get pregnant, so honestly just how worked up can I get about gay marriage, social programs and abortion?), yet ignore the issues that unite us and affect our daily lives. We vilify other Americans for their differences yet are willfully blind to the commonalities. Intellectual laziness encourages us to accept stereotypes and straw men built by those who feed on hatred the way a maggot feeds on the flesh of an open wound instead of putting ourselves in the other’s position, or to use an old cliche, “walking a mile in the other man’s moccasins.” We have Obama himself saying, “It’s not surprising, then, they get bitter, they cling to guns or religion or antipathy to people who aren’t like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations,” accepting a stereotype and succumbing to a form of elitism and intellectual laziness by belittling his opponents instead of attempting to understand them and winning them over. We’ve accepted the low standards of education because we’ve been trained that “fighting city hall” or in this case the school board is futile. So our kids read less than we do, they can text faster and know the special combo to beat the god Zeus in the “God of War” video game. They’ll be alright. Right? We keep our heads down, do what we are told and hope that our dreams come true, the way they do on TV between the ads for drugs to help men get it up and women feel not so down.
We should be ashamed for what we’ve done, or more importantly, not done, expending the effort to fight for accountability from our elected officials and receiving their heads in baskets after they ignored us 4 years ago. Today the problems are even worse, the threats greater, yet we continue on the way we did before the 2008 financial meltdown and on September 10, 2001, fighting among ourselves without giving the other the benefit of the doubt or the dignity our opponent deserves. To paraphrase my late mother-in-law, we chose this path, and we did so because we are idiots.