When the financing tap is finally shut off by the bond markets, we’ll start making our first interest payments on this new debt. It will come in the form of much higher long term interest rates, a weaker U.S. dollar, an inability to import cheap Chinese goods, and declining living standards. All this will happen because the U.S. will have eaten its seed corn. Its businesses will have been shorn of their retained earnings. Consumers will have depleted the equity in their homes. The ability of the federal government to raise taxes and protect the good faith and credit of the U.S. will be shot.
The equity mining business will have done its work well, having exhausted all the financial resources it could find. The U.S. will be approaching peak oil and water shortages at the very moment it runs out of financial equity and taxing power. It will be an ugly situation, except for the equity miners. They’ll be sitting in their gated communities with the fruits of their labor of the past 25 years. More than likely, the vast American public will never understand what exactly happened.
It's overwhelming. I still don't believe it and I've been watching this for years. I still don't believe that they've stolen all this money. I don't think they'll get their way on eliminating taxes for the rich. I don't think they'll kill social security. And yet they have and they will.
I believe that we'll descend into social unrest and violence and I believe nothing will change. I know we'll all be much poorer for the rest of our lives and I know we will be out of this mess soon. I know the elite will pit us against each other until the violence gets so bad that we finally turn on them and the pretense of American superiority and specialness will be drowned in our own blood, and I am sure that nothing will change, ever.
I hate us for being superstitious and greedy and violent. And I think that if I talk long enough people will realize that if we only learned to accept ourselves and tell the truth to ourselves we could for the first time in human history learn to live in genuine peace and prosperity.
Which way will we go? The suspense is killing me.
2 comments:
I printed this out. Looks like quite the juggernaut article. I'll try to get through it today. I want to learn more about economics, I think us priviledged workers should learn something about this.
Susan,
I finally read through the article. You're right, that's pretty terrifying. "Eating our Seed Corn" has a special aspect of terror for me because I work in the financial sector, and so does much of my family. (Though, not really in one of the exact industries profiled in that article.)
I want to start understanding more about the financial situation. Even if it's useless, as the article seems to suggest. So at least in the future, I'll be able to understand what the hell happened.
Have you read this (The Quiet Coup, by Simon Johnson - The Atlantic, May 2009)? (Strange that it's from the same mag that employs McArdle.) It makes an interesting companion piece to the Agonist article you linked to. Examines the same situation, perhaps in a slightly more optimistic way. What I find interesting about the Johnson article is the way he points out that our current political/economic situation is actually nothing new, is a situation which has occurred again and again around the world in "emerging market" countries.
I have found that, when you are in a situation of crisis, it can be helpful to realize that your crisis is not unique, that it is shared by many others. I don't know why that is exactly, but for me at least, it seems to be the case: when you realize how un-unique, indeed how common your problems are... really how common you are, to put it bluntly... how common we all are, it seems to decrease the suffering a little. I don't know why that is.
Though, of course there is a unique aspect to this economic crisis. According to Johnson, what makes our situation unique is not our economic situation, nor is it even our political situation-- the way our financial elites have captured our government and media, and turned them, respectively, into co-conspirators and cheerleaders. Rather, it's our unique geopolitical situation. The problem is that our nation still has so much power compared to the rest of the world that it will be extremely hard for anyone, including our own government, to force us to take the policy medicine that we desperately need.
So maybe you're right. Maybe nothing short of a collapse will make Americans wake up to the economic reality: their homes, possessions and livelihoods are little more than sustenance for rapacious financial elites, and their own government cannot or will not protect them. Or, maybe even if there is a collapse, the US populace still won't understand this, and will always be easily manipulated by economic elites, as long as our nation-state exists. I guess we'll have to stay tuned.
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