The U.S. economic situation is going to get a lot worse.
The current mass delusion that
will go down in history as the "green shoots fugue" can't possibly
bring the credit freak show back because the credit -- i.e. money
borrowed from the American future -- was swindled away. Something like
$14 trillion worth of nominal dollars is being sucked into a cosmic
vortex never to be seen again. It was last seen in the spectral forms
of so many collateralized debt obligations, credit default swaps,
so-called structured investment vehicles and other now-obvious frauds.
That giant sucking sound we hear means the process is still underway,
and the "money" disappearing into yawning oblivion will out-pace any
effort orchestrated by the Federal Reserve and the U.S. Treasury to
replace it with new "money" (or credit). Therefore there is no chance
between heaven and hell that the pre-2008 suburban homesteading and
shopping fiesta can ever come back. The American polity is tapped out
in all sectors, personal, corporate, and public.
Notice the two
words largely absent from whatever public discussion exists around
these matters -- "swindle" and "fraud." The reason they're missing is
because if they happened to enter the conversation, something would
have to be done about them, namely investigations and prosecutions. The
president is the person in the best position to set the terms of this
public discussion, and by avoiding these two words he's blowing the
chance to begin the process of correcting the tragic course we're on.
These swindles and frauds range from malfeasance at the highest levels
to indecency in the lowliest cubicles -- i.e. the collusion of a
revolving cast of cabinet-level officials with Wall Street executives
to loot the U.S. Treasury, the probable criminal dereliction at the
mid-level of agencies like the Federal Reserve's oversight office and
the SEC, to certain and outright street grifting in the traffic of
securities known to be worthless at their creation. The current fiction
that the public seems to be swallowing (for the moment) is along the
lines of the old "mistakes were made" locution, which is an easy way to
avoid holding individuals responsible for misdeeds.
The
competence and hence the legitimacy of the U.S. government is on the line
here. The U.S. economic situation is going to get a lot worse. Many more
people are going to lose incomes and chattels and will suffer, and the
moment will arrive when they will direct their anger outward. They
need to be told two things: that the borrowed-against future is now here, requiring very different behavior;
and that those who received lavish payment for looting the American
future unlawfully will be subject to due process of law. So far, nobody
has even been fired, let alone officially investigated.
Meanwhile, the nation is lumbering toward an epochal moment of truth
when the non-viability of how we get by day-to-day is exposed for all
to see, including those other nations who have been lending us colossal
sums of their hard-earned money to keep our operations afloat. This
will be the moment when the United States renounces its debt -- or just proves
unable to continue pretending to service it. This moment is liable to
come sometime after the middle of this summer. It will be the moment
when all the green shoots babytalk stops and the scope of onrushing
hardship becomes self-evident. It will be the moment when all of
America finds itself in something like the aftermath of Hurricane
Katrina, when the federal government proves comically impotent and the
cold reality hits that we're now all on our own.
If it comes
to that, I will be sorry to see Barack Obama in the goat-leader role
formally occupied by George W. Bush. I voted for Mr. Obama mainly
because I thought he had the capacity to tell the public the truth and
inspire them to move forward out of childish indulgence into a more
rigorous and challenging way of life consistent with the mandates of
reality. I'm still not convinced that he'll fail at this, but time is
growing awfully short.
The dreadful moment may arrive with the
functional bankruptcy of California, which is on-schedule, as it
happens, for July. Governor Schwarzenegger, who really seems to have
tried introducing fiscal reality out there, and just plain failed, will
surely come to the White House begging for a bail-out. It would be
hard for President Obama to turn him down, but then forty-nine other
governors will line up behind Arnold and everybody in the world will
see what a farce our governance has turned into: a snake eating its own tail.
***
My 2008 novel of the post-oil future, World Made By Hand, is available in paperback at all booksellers. I am at work on the sequel.
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