Tough Times

@kennethamy,

kennethamy;99871 wrote:

Hmmm. I wonder what that has to do with it.

Governments, societies, economies, and even money are only forms... Our form of economy has reached its logical end... Well, they have used monatary policy and tricks to get around its logical end, but the longer they put off their end the more violent will be change... That is what it has to do with it...Understand what you are dealing with... Turn your blue prints right side up...

0 Replies

@Elmud,

Fido, wouldn't you say that it also reached a logical end in 1929?

2 Replies

@Aedes,

Aedes;99992 wrote:

Fido, wouldn't you say that it also reached a logical end in 1929?

Its end is reached when the number supported by labor far outstrips the number of productive workers... As you decrease labor to lower the price to intensify profits you lose markets and so decrease profits...I will not say capitalism never worked...I will never say it will always work... As Engals said: the search for markets cannot keep pace with increased ability to produce... Okay, then have a war to burn up excess until there is no excess of the very resources and market we are fighting for...

0 Replies

@Elmud,

If we have reached a logical end right now, it's not the logical end of capitalism overall. It's the logical end of securitized subprime mortgages bound to real estate speculation. It's the logical end of unregulated credit default swaps... but those are just as much side effects of capitalism as is child labor, it's about making profits with a blind eye to side effects.

1 Reply

@Elmud,

Lax lending standards were partly created by political pressure, during the Clinton administration. But in the end, greed got in the way, and a lot of people got over-leveraged, thanks to a rampant panglossian outlook on the future of the real estate market.

And this is usually how it goes...a mania of speculation, fueled by greed, grows until it is no longer sustainable by the market, and then the 'boom' is necessarily followed by the 'bust'. It's needed to bring prices and egos back to reality.

There's some story about a well-known investor from the 1920's who made it fine through the crash of 1929. He said he knew it was time to sell when a young girl on the elevator was dishing out stock picks to everyone on board. Such maniacal optimism in the market can only last so long. This is what happened with the housing market, and this is why subprime mortgages were even considered to be an acceptable risk, and why these firms became so leveraged on mortgage-backed securities. It's the same mentality that can be found with most bubbles in the market historically, and with other events, like the california gold rush.

0 Replies

@Aedes,

Aedes;99992 wrote:

Fido, wouldn't you say that it also reached a logical end in 1929?

I would. Hoover's "stand back and watch" attitude was stomped flat. Isn't that why the former Fed Chairman zoomed in? They say he's an expert in the Great Depression (which is the kind that's defined as when unemployment reaches 25%)

The actions of Franklin Roosevelt cemented a socialist approach into the US, advocated by Keynes.

20th century American conservatism was a reaction to this swing toward government control over the economy. Then the Cold War justified humongous federal hemorrhages of funds (can you tell I think it was big?) into the US society to generate social transformation. This is actually the good times we look back on. That time period changed our perception of poverty. If you have store-bought clothes, your great grandparents wouldn't call you poor. So if we fall back to the way things were in the 1920's... it will be a devastating event.. mainly because we don't remember how to live that way. People can adapt though. That's our forte'.

So I agree, that if we don't see that we've reached logical endings several times now, we're just failing to realize what's actually passed.

There are a few ways that today is different from the 30's, though: the US went into that great depression in the black. There was no national debt. The huge national debt diminishes the ability of the federal government to alter the situation today. Nobody says "run on the dollar" because nobody wants to think about that. People have said "nationalization of the banking system" which would have been unthinkable previously. I think we are in uncharted territory.

I don't see a revolution coming because that would require at least a figgling of an alternative. Americans are kind of like the orphans of the world. The core of the American identity isn't a certain land mass, language, history, or culture, although all those things exist. The real core of the American identity is it's governmental form... it's constitution. Lacking any other underlying identity to act as a safety net, revolution isn't psychologically possible. I don't think.

And.. all American depressions have been deflationary. When prices are falling, that's not necessarily a good thing.

1 Reply

@Arjuna,

The current federal deficit is running at 10% of total gross national product. This is the largest deficit the United States has ever had since the time of the Second World War - I believe it is 11 trillion U.S.D. This debt is owned by those countries who export (and are indeed dependent upon exporting) their manufactured products to us.

It is pure evil to allow this accumulation of foreign debt to continue. The foreigners must be prevented from purchasing more debt: this evil must stop. (They are buying our debt in obscenely large quantities of dollars.)

It is simply wrong to place the American people who in the future are obligated to pay back this overly large sum of debt in such a position. It is wrong to borrow money when there is no prospect of paying it off.

We are in the midst of an international suicide-play. This suicide-play is only possible because the dollar is the world reserve currency. But there is simply no way we can pay it back. We are no longer in the position we were in at the end of the Second World War: Back then we faced enormous growth potential for a variety of well understood reasons. Today we face a much bleaker future; we are not capable of growing fast enough to come near to paying off this debt - quite the contrary - we must continue borrowing staggering amounts in order to evade a second great depression.

The United States of America, as we speak, is a bankrupt nation.

The idea to expand government spending at this time by the creation of a national health insurance plan tells us that the immoral rulers of the country are not capable of comprehending the basic economic dilemma. Or else they are secretly plotting to destroy us.

1 Reply

@Pythagorean,

Confidence in US currency is and has been declining rapidly, and there will come a point when we can no longer borrow and borrow from the future to finance what we want today. Interest rates on foreign credit will go to the moon, and we will be stuck.

And, you know, there is one way to possibly inspire enough growth for us to climb out of our hole...enter into a world war, like we did when we got out of the depression. Though our current service economy could not do this as readily as we did at that time, a war is a tried and true method for growth, and, hey, we've been recently training for and investing in war for almost a decade now. And we already know that our leaders are more than willing to pursue military ends to economic problems.

1 Reply

@Pangloss,

To all,

There is a fundamental confusion. You are treating debt as if it is actual money: It is not!

The only question I have is: how are we going to pay off the debt of which we are currently accumulating at such a phenomenal level?

I don't believe war is an option or an oppurtunity. If we go to war we will end up like Britain after the Second World War i.e. as a second tier economy.

We only have three possible options then:

1. We declare bankruptcy now (or very soon) and stop borrowing and attempt to rebuild manufacturing capacity.

2. We find a way to pay the debt (there is no way, our manufacturing base is too small.)

3. We wait until external circumstances dictate a solution (i.e. the collapse of the dollar).

Number three is the current path.

0 Replies

@Aedes,

Aedes;99996 wrote:

If we have reached a logical end right now, it's not the logical end of capitalism overall. It's the logical end of securitized subprime mortgages bound to real estate speculation. It's the logical end of unregulated credit default swaps... but those are just as much side effects of capitalism as is child labor, it's about making profits with a blind eye to side effects.

As a system it has come to produce more evil than good, so yes, logically it should end... Yet, it will never end, and perhaps should never end completely...Innovation and invention should be encouraged, and if this is not done legitimataly it will be done illegitamatally...While progress is encouraged, the wealth of the commonwealth should be returned to the commonwealth...The money, the wealth, and the property in any country should always be in play...It should not be protected by law so much as intelligence...The first law of property is the only law; The fast fish belongs to the one fast to it...

The difficulty for all of humanity lies in the same situation... We abstract realtionships by their structures, and understood thusly call them forms or systems... Within those forms are many individual relationships that people adapt to and survive through...Even when the form endangers survival the inclination of people is to hold to the familiar form even while it kills them, and it is sad though it offers hope to the intelligent... Before the French and American revolutions the rebels had their clubs, their Freemasons and Jacobins... Those people got together and talked it out to the point of realizing there was a better possible form of relationship... At least some of them realized the beast they were dealing with in forms... All carried a certain idealism into their efforts, and they changed the world... Today we have the internet, and we will know it is over when the government shuts it down as it does by price today for many... While only certain ones may have their say, there is a slight hope for a consensus, and for change... Clearly, such people as Jefferson studied forms, and when they set about replacing the old form with the new they did so with a purpose... For us it is enough to think clearly, and speak clearly of the subject... With enough people aware of the problem the thing will change on its own...If only a few people are desparate for change violence is inevitable... Well that is capitalism all over... Most people do okay, and the system consumes the rest, but all are demoralized because we see the failures of capital in its human wreckage, and justify it which makes it impossible to justify our own resistence when the thing eats us... That is the worst thing about capital... Greed is just the start of it, but general immorality is the end... Every single imaginable thing becomes a possible article of commerce...Virtue, honor, peace, and privacy all have their price...Even those qualities so abundant in former times as to have no value now have a price...Fresh air, clean water, and sunshine and now we must pay for all of them...

2 Replies

@Fido,

Fido;100066 wrote:

As a system it has come to produce more evil than good, so yes, logically it should end...

So it's come to its end in a moral sense, you're saying but not a functional sense.

There are three problems with this moral idea, though:

1) There isn't an alternative that is fundamentally different yet will produce more good than evil, certainly not with the demographic and economic magnitude of the world in 2009.

2) The transition to any other system might prove worse than stability within any given system. Look at how bloody economic revolutions can be, simply because haves turn into have-nots and vice versa.

3) There is no central moral arbiter.

1 Reply

@Fido,

The UK was in debt prior to the Great Depression. That debt was never paid... it just disappeared. I think the same thing will happen to the US debt. Maybe the US debt comes in part from the fact that nobody takes tribute anymore. Maybe the US could become a military/service arm of the global government.

For decades now, AT&T has been working to become a global company, selling expertise in creating the technological infrastructure of the global economy. One of its main obstacles has been that it's hard for Americans to develop relationships with non-US governments. Their strategy has been to use "long-lines," the nickname for their long distance service, as a cash cow, using the funds to buy foreign contacts... that is, to buy entities that already have those contacts. That's apparently why they bought NCR: more than 50% of NCR was non-American.

I think those who are developing alternative energy sources are also thinking about selling expertise to a global market. How crazy is that? Marx never would have guessed that things might go this way.

Anyway, I see the global situation as headed for a collapse that will allow reorganization into a more fully integrated global situation. The US will quietly go into the history books as the final chapter of the British Empire, whose early efforts created global trade in the first place. Maybe.

1 Reply

@Arjuna,

It's easy for the U.S. to get rid of its debt, just default on the loans. Go to the Chineese and the Japanese and say, you know, we're sorry but we can't pay you. That would be the moral thing to do.

But at the heart of the problem is the strange ideological belief in so-called free trade.

The Japanese economy and society is so very far from being open to free trade its not funny. I've never seen an economy that was as closed as the Japanese. By loaning us trillions of dollars they are subsidizing their manufacturing sector. This is a brutal and very effective tactic.

Most Americans don't know this but Japanese cars -cars that are sold in Japan - have the driver's seat on the opposite side. The cars that the Japanese sell in America are tailored to the American market. The Japanese have been effectively dumping their technological goods as well as their automobiles in the American market for decades. They are responsible for the massive and sudden dissapearance of our manufacturing sector. (And it is absolutely assured that these jobs are never coming back!) And of course the Chinese are now doing the same thing. If someone told this story to an alien from another planet they wouldn't believe it, it is such a foolish betrayal of the American worker it is truly astounding.

And nobody says a word. They all believe in so-called free trade to this very day. As 'helicopter' Ben Bernanke said in front of the Congress "Globailization is here to stay". What a blithering idiot!

The questions to ask yourself is:

1. Can America maintain its current living standards without a viable manufacturing sector?

2. And also, is the so called "new economy", (which consists largely of finance) based upon sound economic principles?

3.Is the current global trade imbalance a good thing or is it a bad thing?

Also, to Arjuna, the coming reduction in living standards in the United States, the imminent economic implosion, will not end in an era of social quietude.. A large storm is brewing here.. political and social upheaval is on the horizon.

1 Reply

@Pythagorean,

Pythagorean;100092 wrote:

It's easy for the U.S. to get rid of its debt, just default on the loans. Go to the Chineese and the Japanese and say, you know, we're sorry but we can't pay you. That would be the moral thing to do.

It's hard to say that this would be a moral thing to do, because it isn't a possible thing to do. If Brazil defaulted on its loan, the global economy would collapse...if the US did: that's crazy talk. Besides, the debt isn't souly owned by Chinese and Japanese folks. It's owned by the global banking system: a lot of which are American. I myself, own a couple of T-bills. Yet, I understand that the Chinese are propping up the US economy right now.

The point is: the US is not an independent entity like it once was. We're actually one big thing globally, we just haven't completely figured that out yet.

Pythagorean;100092 wrote:

But at the heart of the problem is the strange ideological belief in so-called free trade.

You're right. Flashback: there was a global trade war prior to the Great Depression. That trade war was one of the precipitating factors. We learned: they're ain't going to be no trade war.

Pythagorean;100092 wrote:

Also, to Arjuna, the coming reduction in living standards in the United States, the imminent economic implosion, will not end in an era of social quietude.. A large storm is brewing here.. political and social upheaval is on the horizon.

What do you see happening?

1 Reply

@Arjuna,

Arjuna;100103 wrote:

The point is: the US is not an independent entity like it once was. We're actually one big thing globally, we just haven't completely figured that out yet.

If we are one big thing globally then why worry about the global trade imbalance at all? The point is we trade in dollars they trade in RMB. Only if you substitute a new 'global' currency will you be able to say that we are one trading block.

To default is moral because it prevents the U.S.population from going even deeper into debt. The trade imbalance will self-correct in any event. It is just a matter of time and method. The deeper the United States goes into debt the more dependent and backward it will be and the more horrible will be the consequences.

Arjuna;100103 wrote:

You're right. Flashback: there was a global trade war prior to the Great Depression. That trade war was one of the precipitating factors. We learned: they're ain't going to be no trade war.

There has never been a situation like the one we are in today. America is dependent upon imports for the basic necessities of life but apparently doesn't have enough money to purchase these things, hence the debt. We are stuck in between a rock and a hard place. We are facing a loser-loser situation. We are headed down a one-way, dead end street. Ironically, it is the very size of American debt which provides the absolute proof of the illigitimacy of globalization. It is completely unworkable.

Arjuna;100103 wrote:

What do you see happening?

The sooner we default on our debts the easier it will be to pick up the pieces. The longer we wait the harder it will be to climb out.

I don't know what form the social and political upheaval will take. There are already large tax protests going on here on a regular basis. I assume we will begin to take on more and more the aspects of the third world upheavals.

But there are so many social problems here already. In many ways the cities of America already exhibit third world symptoms which are taboo to talk about. A new dark age is ascending here.

-Pyth

2 Replies

@Pythagorean,

Pythagorean;100107 wrote:

In many ways the cities of America already exhibit third world symptoms which are taboo to talk about.

The things that are happening in cities in developing countries happened here a century ago. Namely, mass migration from the countryside into cities because of economic factors, chiefly industrialization. This created very large neighborhoods and environments of impoverished people. Add to it the quasi-ghettoization that happened at the time.

Because of various social forces, namely access of poor people to health care and education, access to the vote, and civil rights, this is actually getting better over time. We're not moving towards "third world symptoms". We're emerging from them. Hopefully at some point the "third world" will as well.

1 Reply

@Pythagorean,

Pythagorean;100107 wrote:

If we are one big thing globally then why worry about the global trade imbalance at all? The point is we trade in dollars they trade in RMB. Only if you substitute a new 'global' currency will you be able to say that we are one trading block.

I don't know what RMB is: could you explain? I think there's been talk of creating a global currency... like the EU did with the euro... seems like it was the Chinese who want it. More investigation is needed here, on my part.

Pythagorean;100107 wrote:

There has never been a situation like the one we are in today. America is dependent upon imports for the basic necessities of life but apparently doesn't have enough money to purchase these things, hence the debt.

Yea, but the present debt started with the Vietnam war. I think that time period created a lot of short sightedness, because there was an apocolyptic vision clouding people's judgement: the eminent success off the USSR. They invisioned it as some sort of super productive bee-hive or something. They thought that a free society is inherently crippled by all the energy-wasting shenanigans that go with it. They saw the USSR as an amoral foe, unencumbered by the inner weakness of organic life. Obviously, they were seeing their own fear, not the actual USSR. Thusly they created a gigantic nuclear arsenal that nobody wants to use. In the process, they created radioactive waste and stored it in barrels. There's now hydrogen gas forming at the top of those barrels. Not good. As far as I know, we haven't even started research on what to do about it. The point is, we live with the legacy of a particularly insane period of human history: the 20th century. I think we're still trying to get our bearings. Good time for a global crisis, huh?

Pythagorean;100107 wrote:

We are headed down a one-way, dead end street.

Well, when a mouse in a maze goes down a one-way street, he just turns around when he gets to the end. I know cultural turn-arounds are traumatic. I don't downplay the suffering involved, because that would be a betrayal.

Nevertheless: there was a recent American redo of the movie: Godzilla. It went around stomping everything flat. That expresses part of who we are too. Call it the crazy part. Which part of us isn't crazy?

1 Reply

@Aedes,

Aedes;100114 wrote:

The things that are happening in cities in developing countries happened here a century ago. Namely, mass migration from the countryside into cities because of economic factors, chiefly industrialization. This created very large neighborhoods and environments of impoverished people. Add to it the quasi-ghettoization that happened at the time.

Because of various social forces, namely access of poor people to health care and education, access to the vote, and civil rights, this is actually getting better over time. We're not moving towards "third world symptoms". We're emerging from them. Hopefully at some point the "third world" will as well.

Africa is poorer in 2009 than it was in 1950. This is an economic fact.

I do understand that the parts of the world that have rejected centralized governments and embraced market economies have improved. But if they hadn't Westernized they would still be poor and in that great great misery.

If you want to talk sense you must make distinctions between the different parts of the world. It is undeniable that America is over its head in debt, and so her people's standard of living will fall while the tax burden will be pressured upward. The quantity of the existing debt assures that this will happen. It is a simple matter of living beyond your means.

That you imply that America is improving economically is beyond reason..

-Pyth

1 Reply

@Pythagorean,

Pythagorean;100120 wrote:

Africa is poorer in 2009 than it was in 1950. This is an economic fact.

Well, the first African nation to become independent was Ghana and that happened in 1957, so we're sort of comparing apples and oranges if you look at 1950.

But it's not quite accurate (or perhaps oversimplified) to say Africa has gotten poorer since 1950. GDP, GDP per capita, and nearly all measures of human health have improved since 1950, and this is true throughout Africa. Africa has gotten worse by some other measures over the last 20-30 years, but this is largely attributable to AIDS and to the resurgence of malaria after the ban on DDT. The main economic measure that has gotten worse in Africa is national debt.

Pythagorean;100120 wrote:

I do understand that the parts of the world that have rejected centralized governments and embraced market economies have improved. But if they hadn't Westernized they would still be poor and in that great great misery.

They're kind of like Western economies 100 years ago. Capitalist, but without any social safety nets, and there is therefore an enormous impoverished underclass. In a lot of African countries, however, the major industries are federalized.

Pythagorean;100120 wrote:

It is undeniable that America is over its head in debt, and so her people's standard of living will fall while the tax burden will be pressured upward.

Well, as a function of GDP our national debt has been considerably higher in the past, and we seemed to make it through that ok.

Pythagorean;100120 wrote:

That you imply that America is improving economically is beyond reason.

I didn't say "America", I said cities, and this was cities by rather specific measures. Call me unreasonable, but suffrage, access to education, access to health services, access to legal protections, access to sanitation, life expectancy, and maternal and child mortality have all dramatically improved in American cities in the last 50-100 years. What is worse about that?

0 Replies

@Arjuna,

Arjuna;100118 wrote:

I don't know what RMB is: could you explain? I think there's been talk of creating a global currency... like the EU did with the euro... seems like it was the Chinese who want it. More investigation is needed here, on my part.

RMB refers to: Renminbi, the currency of the People's Republic of China.

The point is, Arjuna, that, as we sit here today, there is no global currency. This is what traps the U.S. within an amount of debt that by all rights should utterly destroy us. The only reason the U.S. economy is still on its feet is due to the fact that the U.S.D. is the world's reserve currency. This is the heart of our debt trap. We are risking hyperinflation like the kind found in Zimbabwe today.

Arjuna;100118 wrote:

Yea, but the present debt started with the Vietnam war. I think that time period created a lot of short sightedness, because there was an apocolyptic vision clouding people's judgement: the eminent success off the USSR. They invisioned it as some sort of super productive bee-hive or something. They thought that a free society is inherently crippled by all the energy-wasting shenanigans that go with it. They saw the USSR as an amoral foe, unencumbered by the inner weakness of organic life. Obviously, they were seeing their own fear, not the actual USSR. Thusly they created a gigantic nuclear arsenal that nobody wants to use. In the process, they created radioactive waste and stored it in barrels. There's now hydrogen gas forming at the top of those barrels. Not good. As far as I know, we haven't even started research on what to do about it. The point is, we live with the legacy of a particularly insane period of human history: the 20th century. I think we're still trying to get our bearings. Good time for a global crisis, huh?

Very funny. Smile

The situation today is a result of the decline of the manufacturing sector. The United States presently consumes more than we actually produce, unlike the Japanese and the Chinese who produce more (way more) than they consume. They are savers and we are big spenders. This is commonly referred to as the "global trading imbalance" or the new Breton Woods.

Now add in the free trade ideology which puts even more downward pressure on the manufacturing sector of the U.S. The corporations of the U.S. are sending jobs overseas and we are facing a 10% unemployment picture. There is a manic rush to offshore jobs in the U.S. which has been going on for over a decade now. Everything here is now finance related, we are a "service" economy. There is little of actual goods that we produce and this is the heart of matter. As the Chinese and the Japanese can well attest actual manufacturing production means real money!!! And as we can clearly see by the amount of debt we're in here in America the lack of manufacturing jobs means the opposite i.e. bankruptcy.

In 1965 the U.S. produced 95% of all of the clothing that it consumed. In 1985 it shrank to something like 60%. Today, in 2009 the United States produces a paltry 5% of all of the clothing that it uses. But that's not the full picture. The same trend has manifested itself across the board.

Arjuna;100118 wrote:

Well, when a mouse in a maze goes down a one-way street, he just turns around when he gets to the end. I know cultural turn-arounds are traumatic. I don't downplay the suffering involved, because that would be a betrayal.

I couldn't agree more. But you don't understand: the alternative to turning around means the status quo. Not turning around means to keep piling on the debt until we reach hyperinflation.

I think we should turn around and I know it will be painful. So we agree then, the United States must default on its debt no matter how 'painful' the process is. There is no moral alternative.

---------- Post added 10-27-2009 at 01:24 PM ----------

Aedes;100125 wrote:

Well, as a function of GDP our national debt has been considerably higher in the past, and we seemed to make it through that ok.

You are mistaken. The debt to GDP ratio has never been this high during peace time. It seems you aren't aware of the type of growth potential that awaited America in 1945 compared to the prospects today.

Aedes;100125 wrote:

I didn't say "America", I said cities, and this was cities by rather specific measures. Call me unreasonable, but suffrage, access to education, access to health services, access to legal protections, access to sanitation, life expectancy, and maternal and child mortality have all dramatically improved in American cities in the last 50-100 years. What is worse about that?

I'm not talking about the level of health care in the last 100 years, I'm tallking about the total decline in the American economy as represented by the debt.

I would agree the health care is greater now than ever in the past. But I would stipulate that the original causes for such a high standard have crumbled long ago and we are now at a kind of peak.

I had an old Neurologist who recently retired. He was an outstanding doctor. My PCP says he is the last of a certain breed; they don't come like that anymore. So I see a dark future in the health business myself, especially in the event of an economic metldown in the real economy like we are beginning to see with official U.S. unemployment at 9.8% and unofficial unemployment at 17% and expected to rise some more as we'll see on the 6th of November, 2009 when the monthly jobs data for October are released.

1 Reply

Related Topics

Quick Links

My Account

able2know