The Great Depression, redux?

Psalm 23

A Psalm of David.

1 The LORD is my shepherd;
I shall not want.
2 He makes me to lie down in green pastures;
He leads me beside the still waters.
3 He restores my soul;
He leads me in the paths of righteousness
For His name’s sake.

4 Yea, though I walk through the valley of the shadow of death,
I will fear no evil;
For You are with me;
Your rod and Your staff, they comfort me.

5 You prepare a table before me in the presence of my enemies;
You anoint my head with oil;
My cup runs over.
6 Surely goodness and mercy shall follow me
All the days of my life;
And I will dwell[a] in the house of the LORD
Forever.

I hope everybody got their gardens in. And you might want to lay in a stash of pre-1964 coins, the ones with silver rather than tin or copper or whatever the hell metal the Gummint uses now. It's a good idea to work on barter skills, too.
Seriously, the just shall live by faith. Now we get to find out if we really mean it, or if we just say it. Forget politics. It's pretty much a diversion these days, designed to keep you from thinking about what's real. (Consult CS Lewis, "That Hideous Strength", Miss Hardcastle to Mark Studdock, for further information.) It doesn't matter who gets elected, because we're about to find out that we are broke. As the song goes, "She's so fine/there's no tellin' where the money went." Most folks had a good time, and now the bill is being presented. Good night and good luck.

How secure do you feel? How secure are we? Is the USA too big to fail?

AIG failure as a issuer of financial issurance would have disrupted the markets, particularly the derivatives market. I think, had AIG failed, the the derivatives market would have imploded completely and that would've caused a number of firms to go toes up, because their balance sheets depend on those derivatives.

The problem is having the derivatives in the first place; in essence, it's a way to cook the books and allow compnaies to extend a lot of loans they otherwise would not have been able to create. That worked going up, but going down, it's hellish.

Basically much of the economic growth of the last 20 years has been in the field of worthless paper. When the fog blows away it'll turn out that we're all older and poorer and worse off, but not wildly worse off than we were in 1987, just wildly worse off than we thought we were.

Of course, if we follow that lovely scheme to get into a war with the Russians, I would score that as FAIL. Much worse than this.

max
['10 years of crap ahead.']

I've seen so many of these "economic crises" that turned out to be nothing, that I'll wait and see on this one.

But, yes, it is a good thing to remember where our security truly lies. Should we put our trust in some economic or political system - particularly when you come to think of the motivations and characters that undergird these systems. I just don't expect much from them and in fact expect things to be screwed up.

People have been through a lot worse than an economic crisis, and I'm sure we'll get through this too if it turns out to be the big one. Might even be some good to come of it. It may be a bit shocking to realize that a lot of our security has rested on some fantasies, but it's probably better to realize this than not.

The truth shall set you free.

>How secure do you feel? How secure are we? Is the USA too big to fail?

So now are you ready to listen? About global warming, about economic instability, about maybe the rest of the world isn't some far off group of losers we just can ignore.

Ironic, don't you think, that the "conservative" Republican administration of George W. Bush is in the process of turning the United States into a truly socialist state?

How much of the financial world does the U.S. government have a significant ownership stake in now?

Capitalism today is just another word for welfare for the well off.

www.revolution21.org

I feel like piling on....

Despite two periods of recession in the past decade, U.S. worker productivity still rose 18% in the 2000s...

...But inflation-adjusted income for the American middle-class family actually fell during the same period. The median real income for working-age middle-income families in the United States dropped $2,000 between 2000 and 2007...

for the first time in American history the typical working household has gone through an economic expansion without any increase in income whatsoever.

Remember folks, this is what happened in the 'good times'.

I worked for the Seattle School District for sixteen years before I was laid off - I was one of many teachers laid off after the Seattle School Board "lost" $30 million. Long before that, I discovered that corporations had taken over education, just as they earlier took over the health care industry. Since then, I've been struggling to survive here in corporate Seattle. I've also run public office six times.

In other words, I understand politics, and I also understand the most basic law of economics: There's no free lunch.

About all I can say is that I'm so disgusted with both establishment corruption and public apathy and stupidity, that part of me is actually grinning at the thought of another Great Depression. Obviously, I don't want to become a victim myself - but I've been living under pretty dire conditions for a long, long time. You know what they say, misery loves company.

I should emphasize that no one hates right-wingers more than I do, yet I've come to despise liberals just as much. The extraordinary greed, complacency and corruption here in Seattle can best be seen by the children who are fed pig slop in our public schools' privatized kitchens.

Any nation that sh*ts on its own kids the way we do - during the GOOD TIMES, right here in liberal Seattle - deserves to go up in flames. My philosophy is that it's going to happen anyway, so let's get it over with so we can (hopefully) start rebuilding.

Of course it's too early to know with certainty that we're going to fall off a cliff. But things are much worse than most people realize - I've been hit with nearly half a dozen economic thunderbolts in the last few weeks - and they're clearly getting worse. Whatever it takes to reverse America's race to the ground, I say bring it on.

David Blomstrom
www.invisible-republic.org

*Nobody* is too big to fall.

The Wall Street Journal had an article yesterday about how the retail shops which used to serve the Manhattan financial-industry wonks were all crying over their unsold Prada handbags and $500 dress shirts. You cannot base an economy on speculative bubbles, and luxury items for the few who benefit from those bubbles.

We need to rebuild infrastructure (roads, bridges, decaying cities and suburbs.) David Blomstrom's comments above about private corporations taking over the school lunch programs in Seattle made me sick. Every grade school should have a garden which *all* of the children work in, and which goes to providing *real* food for them. Medical resources should not focus on spending hundreds of thousands of dollars on futile "end-of-life" care (in the last three months, which is where enormous chunks of money go); the priority should be on children and prevention, and the establishment of a single-payer health care system.

Our priorities are totally up-ended. As long as that remains unfixed, we're going to lurch from crisis to crisis like this, until we do go into a major and serious depression, and (God forbid) a war.

stephanie- part of the problem with end-of-life care, though, is that you don't know it was end-of-life care until after the fact.

The "AIG is too big to fail" argument is the road to fiscal hell paved with good intentions. Once you start down this road, who is or is not too big becomes the issue, which means eveyone sooner or later to some degree is going to get the helping hand of the US taxpayer. And all we're doing is subsidizing the bad business decisions of tommorrow. Taking the risk of failure out of capitalism moves us closer to statism. And seriously, with the premiums most insurance companies like AIG charges and the phalanx of attorneys and rules they apply before they pay out claims, how can a huge insurance company, which is a "spread the risk" cocern at it's core, be run so stupidly? By doing this we again delay the financial day of reckoning, but make the ultimate reckoning even more dangerous to the core of our economy.

Some of us, believe it or not, saw this coming with absolute clarity more than three years ago. (The real estate market topped in the summer of 2005.)

We're way past denial and anger, and somewhere between bargaining and acceptance.

We're going to have a depression all right.

What we nee is a laisse faire Coolidge type, but those types no longer exist in an America brainwashed with liberalism

Amen. As I asked on another post: "Where does the Constitution give Congress the power to bail out private business?"

It doesn't. Both parties have ignored the plain language of our founding document since at least the 1930's - acting as if there are NO limits whatsoever on our federal government's power.

Benjamin Franklin's famous caveat about our form of government ("A Republic -- if you can keep it.") has come to pass.

"Where does the Constitution give Congress the power to bail out private business?" / It doesn't.

AFAIK, the original meaning of "commerce" in Article I referred to trade & exchange of goods, as distinguished from the production thereof. Not sure about whether or not services (e.g., extensions of credit) were covered; Randy Barnett (*) suggests not.

Of course, if services aren't covered, then arguably there's also no constitutional basis for the federal government criminalizing partial-birth abortion....

what would happen if China and all those Middle Eastern countries holding our debt called it in. We are seeing it now.

Well, that did happen with Frannie; OTOH, Setser (who I usually refer to on these questions) seems to think that foreign central-bank purchases of Treasuries remain strong. This suggests a "flight to quality" on the part of foreigners - shifting from other types of US debt into Treasuries on the part of foreigners - rather than an overall dumping of the dollar (which would correlate with falls in holdings of Treasuries as well as other types of securities). At least for now.

I suspect this is due less to charity than an unwillingness to see their currencies appreciate against the dollar (in the case of China), and continued US underwriting of Mideast security (in the case of Saudi et al).

I agree with your general point, however - that we'd be better off not being indebted to potentially-hostile foreign powers.

(*) bu.edu/rbarnett/Original.htm

Of course, if services aren't covered, then arguably there's also no constinitutional basis for the federal government criminalizing partial-birth abortion....

You're absolutely right, there's not. The idea of a "federal crime" is an oxymoron, excepting only treason IIRC.

Until relatively recently, there were no such things. Crime was up to the states to regulate.

all i want to know is who is going to bail me out of my student loans