It’s worse than you think
Talk of recession is in the air, even talk of depression. Well, from my limited perspective, we are already through the looking glass and it is far beyond the talk stage. I’m old enough that I’ve lived through three major recessions, two stock market slumps, eight years of McKinleynomics, two gas shortages, and the savings and loan crisis. None of them even hold a candle to the current disaster unfolding in the world’s economy. Trillions, that’s right, trillions of dollars have now been thrown at the problem without effect, since of course none of this money is addressing the root of the problem. American and European financial wizards created the biggest bubble in history, and like all bubbles, it’s finally reached the point where it is unsustainable. Throwing buckets of cash at it may stave off complete collapse awhile, possibly till after the election, but it’s only going to get worse from here.
A tsunami is underway, an economic tsunami that will know no boundaries, will respect no class distinctions. A tsunami that will finally sweep away the gilded age of denial we in the west have largely lived in since the end of World War Two. It’s time to head for higher ground. What’s happening in Iceland is going to happen everywhere else in the west. Their banks have closed, their money is worthless, their store shelves are rapidly emptying. A year ago they were in the midst of an economic boom, when they opened their stock market this week it dropped 75% in the first hour. It hasn’t opened since.
As I move past being shocked and depressed about this, I am amazed by the number of people still more or less actively in denial about the situation. I’ve even heard people still claiming that this crisis is all media hype, and it will blow over soon. Yes, there may be periods of calm between storms, but I don’t recommend laying on the beach during breaks in the weather. When I say head to higher ground, I mean it’s time to slash spending to the bone and stock our larders. I’ve gone on a depression era budget myself, and I intend to stay on it until at least the inauguration in January. It’s really a win-win situation. If the economy continues to tumble, I’ll be as ready as I can be. And if we muddle through somehow, I’ll have saved up a pile of money and have a really well stocked larder. I’m pretty sure that won’t be a problem.
So in future posts (and it’s lovely how this fits in my current doomsday theme,) I will be giving suggestions on how to stock a larder, grow a victory garden, and other survival tips. Even CNN ran a piece on depression tips, like eating squirrel. Frankly I don’t plan on sinking that low. Especially since squirrels are just basically tree rats. The same goes for pigeons…rats with wings. Heck, if we get to the point where people are cooking rats, I’m pretty sure I won’t be blogging anymore. And, well, I’m going off at a tangent here. I still haven’t even posted about how to survive radioactive fallout with a pillowcase, so many potential calamities, so little time to prepare.
On the plus side, and it’s a very plus side, it’s very possible that the implosion of the centralized financial system will take out other massive centralizations of wealth that have been artificially created by cheap credit. I’m talking about things like Walmart and MacDonald’s. And anyone who has travelled in the USA can guess what would happen if some of the big guys went under. Why, all those closed store fronts on main street would start to reopen! Yes, if the larger economy collapses, people are still going to engage in commerce. And even now in the land of the merger and the chain store everything, much of America’s economy is still based on very small businesses indeed. What’s good for GM is not what’s good for America, not in the long run. People shouldn’t be thinking “too big to fail,” they should be thinking “too big to bailout.”
It’s my ultimate conclusion (today’s theory) that the underlaying theme of this whole crisis, is the concentration of wealth. That we in the west have allowed our entire large scale economy to be based on mining money from the population at large, and putting it into these huge concentrations of money where financial shenanigans allowed it to be parlayed into piles of paper money so large that they dwarf the imagination. We turned “debt” into investments, and the financiers took the idea and ran, and now our mountain of wealth is based on debts that in no realistic sense will ever be paid off. So it’s not that there is a shortage of credit, it’s just that we have so debased the currency and tied it to these bad debts (malinvestment) that the money isn’t really worth anything. It’s too much credit, not a shortage of credit. Yes, I blame greed, the most powerful force in the known universe.
And guess what, printing up more money isn’t going to fix this. Which is exactly what the bailouts are, printed money. Trying to fix this economic crisis by throwing money at it is like trying to fix a jammed copier by feeding more paper into it. So basically we are back where I started, we’re screwed. As always I invite comment and argument. Convince me I’m crazy to go on a depression era sending plan, because I’m already sick of my own cooking.
(The above image is from the National archives and the Roosevelt Library. It is claimed as Fair Use under US copyright law. It’s not being used for profit, etc. It’s a guy during a dust storm during the dust bowl in the 1930s. A storm’s a coming folks.)