Tuesday, May 5, 2009

You can’t go home again


The entire world economy rests on the consumer; if he ever stops spending money he doesn't have on things he doesn't need -- we're done for.
- Bill Bonner


Wow! The stock market has rebounded to 2009 levels! Home sales have increased 1.3%! Consumer confidence is up! Green Shoots, motherfuckers, Green Shoots!

Goodness, we are desperate to get back to where we were; using our homes as ATM’s to subsidize our credit jones, anesthetized by a scandalously successful stock market, driving those completely retarded* Hummers. Let’s get real. Even when the economy recovers, it is going to be at lower levels of employment with lower levels of credit, the same low wages that drove us to credit in the first place, more expensive resources and an insurmountable new tax burden. The orgy of wealth creation we’ve been experiencing (from a distance mind you, only 2% of us actually got any richer) was based on a big fat irretrievable lie.

Our houses weren’t worth what we paid or what the bank would give us; prices were driven up by easy (stupid, fraudulent) credit. We couldn’t afford a 25K credit line when we had no job (this is me and MBNA I’m talking about). Without our home equity and credit cards, there is woefully insufficient fuel for the growth economy. Also 2 billion really angry chinese people.

Wall Street’s “success” came from finding a new (and completely unsustainable) way to re-sell debt. We totally lost that bet. The $6 trillion in stimulus/loans/investments we’ve thrown at this problem will never come back to us except in the form of inflation and higher taxes.

The US auto industry will never be what it was (which is kind of sad but kind of cool, too). We have no credit to buy cars, even if they made good ones. Silly rabbit, let’s not even pretend we’ll have actual dollars to buy anything.

With no automobile industry and no commodities economy (abandoned that ship 30 years ago) we are left with a growing class of permanently unemployable people…now with NOT just brown people…and unemployed people don’t buy stuff.

All the economy has to do is pick up a little and fuel prices are going to go through the roof. (Some people theorize it was the pressure of high fuel costs in 2008 that brought about the collapse of the housing bubble). The energy oligarchs haven’t been investing in new extraction since the prices have fallen so depletion curves have shifted and once the inventories are run down (or not, the oil companies seem to do whatever the fuck they want for no particular reason), look out for the bitch slap happy motorists!

Between the debt of federal, state & local governments, private households, business and domestic financial sectors, including federal debt to trust funds (social security) we owe $57 trillion. That’s $186,000 person. That is 500% of GDP. That’s twice the debt level we had in 1957. 79% of that debt took only 19 years to create. It’s getting worse every day.

So, we have high unemployment, low to no credit available to business and consumers, high fuel costs and ever increasing interest payments on our debt IN RECOVERY. They are right when they say our lifestyle is not negotiable because it’s over.

You can’t go home again.

*I use this word to describe voluntarily retarded behavior. I intend no disparagement against folks with Down’s syndrome. I’m not an asshole.

UPDATE:
As I was saying…
Happy Conspiracy

7 comments:

  1. ITA with everything you say. I've always been one to opt out and hide and that is what I will continue to do. Not buying, not participating and certainly not believing there is a recovery. Nothing will convince me to go out and spend.

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  2. "Nothing will convince me to go out and spend"

    That's what I call "trusting your own research", Nina! Brava!

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  3. "Permanently unemployable" - that will indeed be the status of a growing number of de facto economic refugees, although the system will of course try to convince them that their personal "recoveries" will accompany any Potemkin economic recovery, and all too many of them will believe it for too, too long.

    -Russ

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  4. This comment has been removed by the author.

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  5. A great bit on the concept of extraneous people from David Simon, the creator of The Wire:

    http://www.pbs.org/moyers/journal/04172009/profile.html

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  6. Juliet,
    I read your post....ok so these happened or are happening or maybe it is just an opinion of some that there is no regulation.....What do you think we should do now? I mean we inherited that but we are supposed to be the adults!! At least this decade (lol) What do we teach our kids.... I mean a previous generation past a world war so my hope is that we can solve this! Lt me know what you think-John

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  7. John,
    There is no question; Americans could reform their habits and priorities tomorrow and this crisis would be over. We'd land ourselves in a stark new paradigm with some new rules of ownership but we'd be fine. The problem is we won't. We'll ride this consumerist debt model right off the dock. As I said in a previous post; "infantilism, voluntary disempowerment and cultural inertia are what stand between us and the options of A. a difficult future and B. an apocalyptic future." Enlightened individuals can prepare for the future (reduce your overhead and learn how to barter/time bank for services, grow some food or find a good local source, acclimatize yourself to a spare existence with fickle utilities etc)but globally, I think it's going to be a rough ride. Let me once again plug Chris Martenson's Crash Course for a good basic outline of the problem and the steps one can take to prepare. He's in my blog list.

    Best,

    Juliet

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