I should probably wait a few days or weeks before writing my reaction to last night’s national insanity exhibition. But I doubt I’ll “level out” on what has happened.
First off, what part of Mr. Obama’s “fixing this will take a long time” did people not understand? Did anyone seriously expect all this mess to be cleaned up in two years? Or is it really just that people are only concerned about their own situation and everyone else can just—well, worry about their own situation?
Let me say this slowly, so there can be no misunderstanding: we have been digging this hole for 30 years. It will take a bit longer than two years to climb out of it.
Thirty years, that’s right. Since Reagan. Dear Ronnie, so classically American in so many ways. Carter began the deregulation frenzy with oil, hoping the oil companies would plow their new profits into development of American resources in the aftermath of the first major OPEC embargo. Reagan was surrounded by the rest of the business community, who whispered into his ear, sweetly, oh so sweetly, “Take the restraints off, Ronnie, and we will build you that shining city on the hill all those Moral Majority types are going on about.” So he did. And that started it.
(Unlike others, I am inclined to believe that Reagan was naive about this. I think he was from that generation that actually trusted people of a certain stature, relied on native patriotism, and so was completely blindsided by the corporate vampires who talked him into deregulating damn near everything. I think he expected them to reinvest in America, not start the whole ugly off-shore account boom and the outsourcing of American jobs. Inclined, I say, but not willing to give him a complete pass. Because along with that, Reagan oversaw the foreign take over of hundreds of American businesses, many of which were involved in basic research and development and manufactured things vital to our national interest. Throughout the 80s, one company after another was bought by Japanese, British, German, French, and occasionally Korean interests and the result was a serious hemorrhage of expertise, know-how, and manufacturing capacity, not to mention the loss of good-paying, high-tech jobs as those businesses were all moved out of the United States and to their new host countries. Why did he do this? Because Reagan was a traditional conservative who believed government should have nothing to do with private sector business, either pro or con, and he refused to establish an “industrial policy” that would have protected these businesses. At the time there was a tremendous wave of sentiment opposed to protectionism, which smacked of a “liberal” or at least Democratic program, but in hind sight clearly was all about keeping international boundaries as open as possible for the multinationals that have presided over the disemboweling of our economy.)
Deregulation has been the culture in Washington ever since. And while that has been the case, we have been through bubble after bubble after bubble. Most people may be forgiven for not understanding what exactly is going on—after all, in the case of derivatives, even the people who write them admit they don’t understand how some of them work—but basically we have permitted large financial institutions to use more and more of the money with which they are entrusted—yours, in other words—to make bets on the rising and falling of markets, which generate virtual dollars.
Now, virtual dollars don’t actually damage anything unless you try to turn them into real dollars—by, for instance, taking your paper profits from such instruments and using them as if they are real and buy into other instruments. Or just by removing what the stock market says is yours and putting it into a regular bank account (protected by FDIC). Now you are removing real money from the economy upon which the bets are placed. Taking it out of play that way means more virtual money must come into existence to fill the void and keep the markets up.
Someone has to actually pay real money into this at some point and that’s where the bubbles run into problems, because in real terms there isn’t enough actual capital—in the form of products or real estate—sufficient to cover the bets. The bets are all made on credit and when the interest on the loan can’t be met, real money has to be brought in to bolster the bubble—hence liquidations occur, foreclosures occur, inflation occurs, defaults happen. Defaults are the worst because it is an admission by one or more players that they know the money isn’t there. Panic ensues, more and more players try to turn their virtual money into real money, but the only place they can get real money is out of the accounts made up of real things—other peoples’ homes, bank accounts, businesses, jobs…
Sounds silly expressed this way, but this is what has been going on for 30 years, and the continual growth and sapping of the economy has left us ragged. It can’t be sustained now.
One might complain that we oughtn’t to have done all that betting in the first place, but that doesn’t get you far. We did it. Why? Because we could. From the top all the way down to the bottom. Gambling.
Not just the big banks, although the damage done by their gambling is the most visible and sweeping, but really they couldn’t have done it had it not been the national pasttime on the individual level. Young graduate gets his (expensive) degree with loans he has to repay. Out the door and into the wilderness, he snags a job that pays a salary his father or grandfather would have found unimaginable at the same time in their lives. But they likely didn’t have the same debts to service from day one, they, or their parents, had to shell out money from savings to get them through college or they themselves worked to put themselves through semester by semester, paying as they went. That is, if they went to college at all, which has itself become a symptom of the new era because the preceding generations fueled the notion that their children would not have to work with their hands and would have degrees. (We have a dearth of tool and dye makers, machinists, practical engineers, carpenters, etc because of this sincere and short-sighted dream, which has in turn made us less competitive in a world where actually making things is still necessary.) But does the newly-minted grad work to pay off his existing debt?
No. He gets married, buys a house, two cars, maybe a boat, they have a couple of kids and start their college funds. All on credit. Now on top of the student loans, he adds all this, so he goes to his new boss and says “I need a raise” and because thousands of these people are doing this, companies start going into overdrive to (a) cover the expenses and (b) find ways to cut costs to remain profitable. And while all this is going on, health care costs rise, competition becomes more cut throat, forcing companies to load on more debt to make them unattractive to larger companies seeking to buy them and gut them. But the extra debt means they then have to cut more expenses and the new grad gets fired in a wave of cut-backs.
And on and on. The simple truth is, you cannot have everything right away, but we have convinced ourselves we can and, more than that, it is our right.
The overburdened system, staggering under the load, collapses when the financial market goes into one of its periodic fluctuations and the people with real money at the top pull out to wait for “an adjustment” and cause the ruination of marginal enterprises…
I could go on. All this is the result of the government being stripped of its power to say No to the betting. The predators at the top are the worst because they know exactly how this works and always walk away intact, leaving a trail of debris behind them, looking for the next bubble.
Yet people seem not to understand that the problem isn’t that companies can’t make enough money but that they can’t finance the virtual economy and survive. They can’t gamble. They can’t do what they’re supposed to do in the financial equivalent of Dodge City. Where there is no law there is chaos. And chaos is what we have.
So the Democrats failed to fix a three-decade-old problem in two years and the voters threw them out of power in a fit of pique.
Of course, this was after a roughly 41% voter turnout nationwide. Had the turnout been the same as 2008, which topped 60%, we might not be looking at an insane outcome. Once more, we do not so much have majority rule as minority veto. Given how close some of the races were, this means Republicans have won with a bit more than 20% of the eligible vote.
Twenty percent.
It is tempting to do a Pilate and walk away. What is it with Americans and their aversion to participate in their own destiny? A question perhaps never to be answered.
But maybe this is a good thing. I’ll look at it that way. This crop of Republicans has two years to prove they can do this better than the Democrats. (And believe me, I don’t think much of the Democrats, but at least they were trying to spend the money where it mattered—here in the country.) Maybe after they fail, they’ll be tossed out on their ear again.
Not, however, for the right reasons. It will be once more an exhibition of the only true national party—the Where’s Mine? Party. Because that’s all this was. People pissed that Happy Days aren’t here after waiting two whole years! Wahhhh!
If the Republicans manage to roll back the new regulations and head us back into the economic environment conducive the great betting game that produces virtual money, we will be…I can’t honestly think of a clearer image, so forgive me…fucked royally. The gap between rich and poor has been the direct result of power brokers throwing dice with the personal goals and lives and dreams of millions of people who do not have the power or the savvy to tell them no.
I guess you can tell how I feel about this election. The monkeys are back in charge of the zoo and it’s bananas for everyone. Don’t like bananas? Tough.
