Courting Convulsion

"How infantile is American society? Last night's CBS "Business Update" (in the midst of its "60 Minutes" program) featured three items: 1.) The New Moon teen vampire movie led the weekend box-office receipts; 2.) Cadbury shares hit an all-time high; 3.) Michael Jackson's rhinestone-studded white glove sold at auction for $350,000. Some in-house CBS-News producer is responsible for this fucking nonsense. How does he or she keep her job? Is there no adult supervision at the network?

"Meanwhile, over at The New York Times this morning, Paul "Nobel Prize" Krugman writes:

" "Most economists I talk to believe that the big risk to recovery comes from the inadequacy of government efforts; the stimulus was too small, and it will fade out next year, while high unemployment is undermining both consumer and business confidence."

"Disclosure: I'm not one of the economists that Mr. Krugman talks to (nor am I an economist). But it's sure interesting to know that the ones palavering with Mr. Krugman imagine that that the US can possibly return to an economy based on the fraudulent securitization of reckless debt. Does Mr. Krugman think that the production housing industry can resume paving over the nether exurbs with half-million-dollar houses (to be bought with no money down loans by the sheet-rockers working inside them)? Does he think all those people receiving cancellation notices from their credit card issuers are in a position to flash their plastic at the Gallerias this Friday? Or ever will be again? Is he perhaps misusing the term "recovery?" After all, that is generally taken to mean resuming a prior state, which is, in turn, presumed to be a healthy prior state. Is that what the economy of the past decade was? And, incidentally, what exactly is a "consumer?" And why, at the highest levels of journalism in this land, do we refer to citizens that way? As if the American people have no other purpose except to buy things? Or is that the only way an "economist" can imagine them?

"I'm sorry to burden the reader with so many questions, but the idiots running the mainstream news media in this land are not doing it and somebody has to.

"If a "recovery" is not in the cards, then what exactly is going on out there?

"What's going on in the US economy is a slow-motion convulsion from which we will emerge as a very different nation with a different economy. The wild irresponsibility of the media in pretending otherwise is only going to make the convulsion worse, more painful, more socially and politically destructive. The convulsion can be described with precision as one of compressive contraction. Historic circumstances are requiring us to change our behavior, to make new arrangements for everyday life in all the major particulars: capital accumulation and deployment; food production; commerce; habitation; transport; education; and health care. These new arrangements must be organized at a smaller and finer scale, and on a much more local basis."

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The China Syndrome

"Barack Obama came back from China and immediately announced that he was worried that about high deficits causing a double dip recession. Notice the chronology. Trip to China: announcement that deficits are a problem. In other words, the Chinese told him to get the US deficit under control, or else, and he responded.

"Why? Because Barack Obama’s play, under Geithner, Summers and Bernanke’s controlling hands has been all about getting the financial play going again. Instead of saying “financialization of our economy caused the crash so we should de-financialize” the lesson he learned was “don’t let the financial play fail” and the strategy is to reboot the system.

"The Chinese own an awful lot of US assets. If they were to decide to diversify out of those assets faster, well, that would be the end of the US financial play reboot. There’s still a fair bit of appetite for US assets, but it’s far from infinite and there’s a lot of uneasiness about the value of US assets in the long run. Any time it pleases China can remove as much value as it desires, simply by selling various assets. And since the Chinese are convinced they’re never getting that money back anyway, the primary value of those assets to them is now the leverage over US policy which it enables.

"So why wouldn’t the Chinese want the US to keep spending massive deficits? After all, stimulus in the US equals Americans buying Chinese goods, and the Chinese need that, right?

"Right. But stimulus in the US also means increased US use of oil, which increases the price of oil. And oil is hovering just under $80/barrel. Oil is the bottleneck resource. Every country’s growth is constrained by oil. East Asia is seeing a recovery, without the US recovering. The conclusion they have likely drawn from that is that they don’t need the US to recover fully, and that in marginal terms, it’s better to have cheap oil than some marginal American consumption which will drive oil up so high that the economy crashes out under the weight of it."

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15 Signs American Society Is Coming Apart at the Seams
Are we nearing a tipping point as rapacious elites push a heavily armed populace too far?

"The economic elite have launched an attack on the U.S. public and society is unraveling at an increased rate. You may have missed it in the mainstream news media, but statistical societal indicators are reading red across the board. Let’s look at the top 15 statistics that prove we are under attack.

"1) The inequality of wealth in the United States is soaring to an unprecedented level. The U.S. already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the middle class and poor much harder than the top 1 percent, the gap between the top 1 percent and the remaining 99 percent of the U.S. population has grown to a record high.

"2) As the stock market went over the 10,000 mark and just surged to a 13-month high, the three big banks that took taxpayer money and benefited the most from the government bailout have just set a new global economic record by issuing $30 billion in annual bonuses this year, “up 60 percent from last year.” Bloomberg reported: “Goldman Sachs, the most profitable securities firm in Wall Street history, had a record profit in the first nine months of this year and set aside $16.7 billion for compensation expenses.” Goldman Sachs is on pace for the best year in the firm’s history, and it is also benefiting by only paying 1 percent in taxes.

"3) The profits of the economic elite are “now underwritten by taxpayers with $23.7 trillion worth of national wealth."

"As the looting is occurring at the top, the U.S. middle class is just beginning to collapse."

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Two charts on unemployment. Previous recessions recovered faster. Bailout not helping construction

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