There is no more money. No money for international hegemony; no money for domestic programs; no money to repay our huge national debt; no money to fuel consumer spending and the domestic economy. Not without a printing press working overtime. This administration has mortgaged the future at the macro level; we have mortgaged the future at the micro level. That debt will come due during the next administration. It is already affecting us. Instead of wage and price controls, the administration has used smoke and mirrors. Federal spending has been fueled by deficits, not real growth. Unwise mortgage lending policy that has allowed Americans to spend every red cent (and more) of equity away from their major capital asset, their homes, has fueled a robust domestic economy. But all of that is a house of cards. There is no more money and the bill collector, already making an appearance in the mortgage industry, will come for a long visit during the next administration.
There is hope. Sorry, Malthus. History also tells us that we have survived a mini version of this coming economic tsunami. I just hope the next President has the fortitude to tell the American people that they are in for some pain and that the cure, though unpleasant, will be acute and better than the consequences of chronic malaise. I hope that the wrong candidates can adapt.
Otherwise, the ride is over. That printing press must be governed. Anecdotal evidence of inflation is everywhere. Servings and service are reduced while the price remains the same or adjusts marginally. In the food service, it is disguised as reduced calories, when it is really reduced ingredients. Check the size of your serving or the loaf of bread you buy at the boulangerie. Quality of service diminishes to compensate for higher component prices. This places downward pressure on wages at the same time the real cost of living accelerates. Consumers are forced to live on their wages rather than write checks against their depleted savings. The cost of imports has more than doubled because the dollar is devalued. Can you see the spiral beginning? It works in the same manner for government at the macro level.
There is hope. When I heard capitulation for the dollar last week come from none other than Jim Cramer, I was reassured that the worst may be over in that arena. This is America. My other hope is that the next administration can attract the kind of talent that can chart an economic path back to the pre-Bush equilibrium without the rapid acceleration of pain some of us remember from the late '70s when the issues were largely ignored. I've already been through this once and I do not wish it on my son (or myself again for that matter). For those of you who can't remember, those were anxious times. Desperate people did desperate things and crime was a consequence. Conversely, when the economy is good, crime diminishes (sorry Rudy, it wasn't your iron fist).
But rely on this: the Bush legacy is already written. It is only waiting to be published. And the next President will be called upon to help us ride out the tsunami. I hope that person is up to the task.
Cross posted at VBDems.org - Blogging our way to Democratic wins in Virginia Beach! Go RK!
The damage done to the American economy does not make front-page headlines every day, but the repercussions will be felt beyond the lifetime of anyone reading this page.
Here's a chilling thought:
A large portion will take decades to fix-and that's assuming the political will to do so exists both in the White House and in Congress. Think of the interest we are paying, year after year, on the almost $4 trillion of increased debt burden-even at 5 percent, that's an annual payment of $200 billion . . ."
It's a nice article because it discusses economics in a clear way, and touches upon very current news. Unlike the folks at Redstate, I have opposable thumbs, and I give this article two thumbs up.
[Humor aside: software geeks are working on a filter to eliminate stupid comments]
http://www.guardian....
At some point the rest of the world will find something else to invest their dollars in besides our treasury debt. As the dollar falls in value, in relation to other currencies, there is fallout:
*Oil, which is denominated in dollars, rises in price (some estimate $25 of the recent uptick in price is caused by the fall of the dollar).
*Countries like China and Japan, which have been propping up the Bush-sponsored and war-driven debt spree of the last six or so years, have begun to have second thoughts about the wisdom of further investment here.
*The ignorance of the average voter concerning macroeconomics (carefully abetted by a media that wants us to concentrate on Paris Hilton, Britney Spears, Barry Bonds, O.J. Simpson, shopping, sex, shopping some more, etc.) may just mean that the next president and the Congress with Democrats in charge will face the same backlash that the Democrats did in 1994. Congress then was lost because of the Republican mantra of "we can have no tax and still spend."
Again, great post!!!
The endless Republican mantra has trained their faithful to hate Democrats because they "tax and spend," and I heard this argument several times while canvassing during the recent election. But the real tax increase comes from Republican policy of repeatedly printing increasing numbers of dollars, resulting in depreciation of the purchasing power of every existing dollar.
The rest of the world is already refusing to accept dollars in payment in international trade, and dollar holders are bailing out as fast as they can, buying tangible assets wherever they can, including American infrastructure, companies, and real estate. Jiggering statistics can hide true inflation only so long from the guillible public.
Bush and the Republicans have sold America's inheritance for a mess of pottage. And the American voters who fawned on Bush helped him do so.
I agree, the resulting tsunami will be framed by the conservative-owned corporate media as a Democratic failure, not the logical result of Bush and the ridiculous conservative economic policies. I fully expect Jeb Bush to be the President after next, and the horrors of Bushdom will be reincarnated as a solution to the problems W caused. Unless, of course, the feckless Democrats figure out to start braying about the problem now, in advance, and actually explain it to the voters.
This is focused on CURRENT policy arguing about the past doesn't really accomplish much in my view and generally devolves to he said she said and blame games. So....
For the Republicans the giant albatross is of course the war spending but non war related DoD spending has increased as well
But the Democrats aren't off the hook either. All of the non-defense appropriations bills have sharply increased since the return of the Democrat controlled congress
The solution of course is to return to a pay as you go philosophy (slight edge Democrats but like I said earlier the Republicans have been hampered buy the enormous war costs) and then in my view an incresingly smaller government (slight edge Republicans but there is plenty of waste within the Defense Department which the Democrats can put pressure on)
Of course the real irony is that people love tax cuts and love increased spending so ultimately the politicans are just giving us what we want so isn't the real blame on.... US just a thought
As for giving the Republicans the edge on small government, are you serious? These Republicans have made government absolutely enormous; at least poor reviled Clinton reduced the number of government employees slightly, and the deficit greatly. Sure, it's all just paper but don't give the modern republicans a pass on big government. Never in our history has government been larger, more instrusive, and less accountable. Not to mention more costly.
Inflation is an invidious form of hidden taxation. It is the Republican way to tax the middle class. Democrats should pound away at this fact.
When this economy slides into depression despite everything the Democratic President does to set the boat aright, America must know wherefore comes this pain.
Say it loud and with disgust:
"The Great Conservative Depression"
Later. Rinse. Repeat.
And let's get our economic experts and our think tanks to begin with studies, early interviews on talk shows, and so on... I have an awful feeling the Republicans have begun already marshalling their loud mouths to twist the facts to suit their fantasy world view. The Administration has so jiggered the stats on, for example, the CPI, any opposing point of view cannot rely on their data. Almost all my investment newsletters are full of alternate figures and warnings about where the United States' economy is headed, and it bears little resemblence to the official happy talk.
I'm less optimistic than you. I don't think we're heading for another 1970s-style period of stagflation. I think we're heading for a 1930s-style deep economic depression. As I recall, in the 1970s, we had elected officials, economists, and journalists who were both willing and able to engage in honest, fact-based, logical debate. After thirty solid years of rightwing propaganda and manipulation of our political system, we no longer have these resources. Instead, we have palace courtiers, whose job it is to convince the public that the King and his Court have everything under control and that everything will be fine if we all just bow more deeply and clap even louder. Anyone who says this country might be in serious economic trouble, we are told, is nothing more than a shrill, partisan, America-blaming, Bush-hater (and, perhaps, a Marxist Lesbian as well).
It may take a serious shock to our economic system to get us to do the things we need to do for the sake of our grandchildren. Hope I'm wrong.
Are results like this worth the hundreds of billions that we are spending over there?
http://www.newyorker...
Led to the rise of the Nazis.