The coming Republican depression
August 12th 2007 23:57
Many have offered different ideas about the American and global economies and what is happening to them. The so-called "sub-prime" mortgage market, the volatility of stock markets, all are the opening symptoms of an economic crash that is more than likely just around the proverbial corner. If action isn't taken very soon, the neo-con idiocy of the past few years will be the undoing of the American economy for years to come. If it does happen, the world on the other side could be very different, with America losing its position at the top of the world economic pecking order. The biggest danger is that when economies sour, leaders tend to look for war as an easy out.
Many of us have been speaking to this for some time. I couldn't see how anyone could have missed the current real estate downturn. As early as two years ago you could see it beginning, if you paid attention. But too many were still making profits for most to see or to care. When buyers are so leveraged that the least little tweak in their personal economic situation can bring disaster, there are concerns. When you add predatory lending practices, you lose another leg of the table. Throw in rampant consumer credit spending stupid tax policies and huge deficit spending, and there is no possibility that the status quo can be sustained.
Just this past week, China made threats against the dollar to counter any attempt to force China to be more responsible in trade or labor practices. Many smart and forward thinking people have been warning of this for years. It is stupid beyond explanation to give massive tax cuts to the rich while mortgaging the future of America to anyone. The biggest "anyone" just happens to be the Chinese. And they are using the vast dollar holdings to finance their economic expansion, which in turn feeds more dollars into the Chinese economy. Think of it this way - if your uncle loans you 50 bucks. Your uncle makes widgets, and you want to buy 20 dollars worth. So you take out a 20 and buy from him. Now imagine that over the term of your 50 dollar loan, you have to pay your uncle 25 bucks in interest, and that it will take five years. Now imagine that every couple of months, you need more widgets. being that you are a patriotic American consumer and need lots of things, you don't have enough money again. But damn, those widgets look nice. And besides, "everybody" has a few. So back to the well you go, and you borrow from your uncle again. Not very smart, eh? Now imagine that your uncle is China and you are the collective American consumer. A little oversimplified, sure - but you get the point.
Still, the Chinese are unlikely to crash the U.S. dollar outright on their own. It would hurt their economy too by making their goods more expensive to American consumers. It gets more problematic, though. The dollar is getting into trouble without the Chinese doing anything. So as the dollar falters, it becomes more likely that the Chinese will start to dump it. Many others countries already are. The dollar is nearing what many analysts see as a breaking point, after which a free-fall could happen. And there are more problems.
The rampant deficit spending, fueled by an irresponsible war for profit in Iraq, threatens to keep credit tight. That will bring more instability into the American housing market. A market that was due for a correction anyway is going to be very difficult for quite some time, no matter what happens with the dollar. And still, we have a president who insists that cutting taxes to the wealthy while throwing hundreds of billions of dollars at the occupation in Iraq. He is throwing fuel on the smoldering fire that the U.S. economy is right now. And he has the nerve to keep preaching on how the economy is so good. Good for him, his family, and his cronies, anyway.
We are on an economic Titanic, but the iceberg is still a few miles away. We can still turn the ship, but it needs a new captain and crew. If you want a secure future for your family, don't just sit and watch. If we stop buying, we reduce the Chinese threat to the dollar. If we stop using credit we don't need, we give some breathing room to the credit market. As the economy does slow, gas prices will ease somewhat. We need to take that breather and use it to reduce total usage. Conserve wherever you can, and pressure leaders to keep seeking alternatives that aren't war conducive. And most importantly, seek change in leadership. The neo-con agenda has proven to be an abject and complete failure. Don't let it push us over a cliff. What we must learn is that to be a real society in a modern world, we need to know that we are all in it together, and act accordingly. It is a shameful abomination that we don't provide full and universal health care for all Americans while the rich grow richer exponentially. Capitalism run amok has caused every major economic crash in American history, including the Great Depression. We can stop it from happening again.
Many of us have been speaking to this for some time. I couldn't see how anyone could have missed the current real estate downturn. As early as two years ago you could see it beginning, if you paid attention. But too many were still making profits for most to see or to care. When buyers are so leveraged that the least little tweak in their personal economic situation can bring disaster, there are concerns. When you add predatory lending practices, you lose another leg of the table. Throw in rampant consumer credit spending stupid tax policies and huge deficit spending, and there is no possibility that the status quo can be sustained.
Just this past week, China made threats against the dollar to counter any attempt to force China to be more responsible in trade or labor practices. Many smart and forward thinking people have been warning of this for years. It is stupid beyond explanation to give massive tax cuts to the rich while mortgaging the future of America to anyone. The biggest "anyone" just happens to be the Chinese. And they are using the vast dollar holdings to finance their economic expansion, which in turn feeds more dollars into the Chinese economy. Think of it this way - if your uncle loans you 50 bucks. Your uncle makes widgets, and you want to buy 20 dollars worth. So you take out a 20 and buy from him. Now imagine that over the term of your 50 dollar loan, you have to pay your uncle 25 bucks in interest, and that it will take five years. Now imagine that every couple of months, you need more widgets. being that you are a patriotic American consumer and need lots of things, you don't have enough money again. But damn, those widgets look nice. And besides, "everybody" has a few. So back to the well you go, and you borrow from your uncle again. Not very smart, eh? Now imagine that your uncle is China and you are the collective American consumer. A little oversimplified, sure - but you get the point.
Still, the Chinese are unlikely to crash the U.S. dollar outright on their own. It would hurt their economy too by making their goods more expensive to American consumers. It gets more problematic, though. The dollar is getting into trouble without the Chinese doing anything. So as the dollar falters, it becomes more likely that the Chinese will start to dump it. Many others countries already are. The dollar is nearing what many analysts see as a breaking point, after which a free-fall could happen. And there are more problems.
The rampant deficit spending, fueled by an irresponsible war for profit in Iraq, threatens to keep credit tight. That will bring more instability into the American housing market. A market that was due for a correction anyway is going to be very difficult for quite some time, no matter what happens with the dollar. And still, we have a president who insists that cutting taxes to the wealthy while throwing hundreds of billions of dollars at the occupation in Iraq. He is throwing fuel on the smoldering fire that the U.S. economy is right now. And he has the nerve to keep preaching on how the economy is so good. Good for him, his family, and his cronies, anyway.
We are on an economic Titanic, but the iceberg is still a few miles away. We can still turn the ship, but it needs a new captain and crew. If you want a secure future for your family, don't just sit and watch. If we stop buying, we reduce the Chinese threat to the dollar. If we stop using credit we don't need, we give some breathing room to the credit market. As the economy does slow, gas prices will ease somewhat. We need to take that breather and use it to reduce total usage. Conserve wherever you can, and pressure leaders to keep seeking alternatives that aren't war conducive. And most importantly, seek change in leadership. The neo-con agenda has proven to be an abject and complete failure. Don't let it push us over a cliff. What we must learn is that to be a real society in a modern world, we need to know that we are all in it together, and act accordingly. It is a shameful abomination that we don't provide full and universal health care for all Americans while the rich grow richer exponentially. Capitalism run amok has caused every major economic crash in American history, including the Great Depression. We can stop it from happening again.
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