Roller Coaster Year

From the heights of exuberant irrationality, to omens of the Great Depression, 2008 was a deal-breaking year. As long as the masses kowtowed to the gods of unfettered capitalism they were assured the majority would benefit. Ok, what the ruling class really meant was the majority representing the upper half of society. But still, many prospered: housing values spiked (against all reason, it should be added) providing the ownership class an easy ATM of lots of ready (unearned) cash; the stock market just kept going up keeping those 401k’s rising handsomely; hedge fund managers paid only 15% income tax on their spectacular megamillion dollar earnings – compared to the 35% rate paid by Average Joe Middle-Class - but that was the price of innovation, the ‘good greed’ that kept the money spigot going and exhibited the greatness of capitalism, American style.

But then a well worn quip comes to mind: If something can’t go on forever, it won’t. Think about the nature of a bubble: the bigger it gets, the thinner its walls and likeliness of bursting; when it does reach its limit it has a quick and exciting end and then disappears with hardly a trace.

It was a year of mind-boggling extremes. Crude oil is now barely more than 25% of its July high of $148. In mitigation, there were two special factors that contributed to that very high price. One was the drop in the value of the dollar of about 25% compared to the world’s other major currencies which would lop about $35 off that high price. Speculation was said to have caused another 30%. Minus those two factors the price would have been about $75 per barrel. Still, the speculation part only happened because demand was pushing up against supply.

In any case it was the world’s second oil price shock with a warning of future hard times implicitly included. The first, in 1973, came with a doubling of the price, long lines at the pump and stations running out in front of your very eyes – I was once the last to get filled up. It can’t be emphasized enough that the larger problem wasn’t the spike in prices, it was availability.

The breathtaking crash in oil prices should not lull one into thinking it’s time to rush down to the auto dealer for that giant dream machine. Even if demand remains low for years, the resource is finite and will be drawn down on a daily and yearly basis. Another spike, therefore, is inevitable.

To date, developed countries world wide have been rushing around frantically grasping at straws trying everything they can think of to revive the old economy; essentially to get people to return to their profligate, devil-may-care, heavily-indebted ways. Fortunately for the people the banks have taken their trillions of handouts and hoarded their cash; what little they have used has been expended doling out handsome salaries and bonuses.

This is good: the mindless consumerist ways of the past should die an ignoble death. Unfortunately, the old patterns won’t die easily. The leadership is hoping against hope that numbskull consumerism won’t be totally finished off; that at most it will only be held in abeyance temporarily until a new crop of buyers can be cajoled and manipulated into running up their 28% interest, credit cards to the max.

Ok, I’m being cynical; most people will recognize that is folly and instead get behind frugality and savings until some important change happens in the world. That being the case the one certainty surrounding the present economic crisis is that demand for goods and services will remain dismal, even abysmal. In that case, the only thing that makes sense is to shorten the work week to share what’s available and embrace the deflation that’s inevitable and necessary (and beneficial in the long run) if people are working and earning less.

What’s required is a total rethink of the purpose of economic life and the value of work. What’s needed is a transformation of the concept of Gross National Product (that we must see rise in perpetuity or we tear our hair out in panic) to an accounting of Gross National Health and Happiness.

To that end I propose a two month national holiday in which only emergency and necessary work takes place, which gives people the time to get together and discuss what they want their world to look like, not to mention lets inventories catch up with purchases. This would be organized on neighborhood and local levels with daily meetings and debates on desired futures. Everyone would be eligible for unemployment benefits for that period. All interest payments and accruing interest would drop to zero for that time and there would be a moratorium on foreclosures and credit defaults.

Time to take stock…

Not that I think any of this will happen, but the world still needs its dreamers.

Meanwhile on another topic: Israel is in massacre mode once again using the same tactics that have failed it time after time: Sweet Revenge, it seems clear, trumps all. Next on the blog: being Jewish and relating to Israel.

The Root Cause

What Should Obama Do? The above question, referring to the economic crisis, was posed to me by a friend who often comments, especially lately, on my commentaries. I would have a very difficult time answering that question because what Obama should do is radically different from what I would do.

Nonetheless, there are several areas in which I am in substantial agreement with the President. (My god, what a great relief it is to write about an American President without feeling compelled to be derisive, derogatory, caustic and spiteful.) For sure, massive investment in infrastructure, especially focusing on electric transportation, is something that cries out for happening regardless, so now’s a perfect time to tackle those needs. Increased unemployment benefits, food stamps, assistance to state and local government are obvious responses to the hardship that is/will be felt across a wide spectrum of society. Renegotiation of mortgage loans under foreclosure is another obvious no-brainer (though equally obviously, there can’t be many brains in Washington or it’d already be happening).

There’s an additional factor that desperately needs action that we might agree on, but for different reasons. That is America’s rotten health care system. While we both would concur on the social and ethical reasons for reform, there is an equally important economic reason, which we wouldn’t agree on; that is, the need for job flexibility and short work weeks.

Obama has totally bought into corporate-oriented conventional wisdom that requires manic pursuit of a return to growth by any means possible – bailouts, borrowing, income tax cuts, lower interest rates. Any straw in the wind is being grasped to try to rescue and reinvigorate that fundamentally destructive and bankrupt world view.

People are cutting back on consumption because they have less to spend based on declining wealth – falling asset values - or loss of employment or because they wisely understand the need to save for trying times ahead. Economic activity is thus declining sharply which is good for the world, bad for the old economy. If unemployment spikes as a result and you believe, as I do, that contraction is a good idea, then the only solution is sharing the available work. Stimulus packages will keep the economy from crumbling but won’t bring full employment.

Besides, people need to work less as a matter of principle – more leisure, more time for social life, less money for consumption. This can not happen as long as America has an employer-based health care system which encourages employers to work their staffs longer hours. Thus, single-payer health care is an absolute prerequisite for the purpose of slowing life down and improving its quality. A single-payer bill was submitted to Congress with 93 co-signers but hasn’t received a single hearing so don’t hold your breath; nobody in power wants to upset the insurance, pharmaceutical and health care industries.

The US is projected to have a trillion dollar budget deficit this year as a result of reduced revenues because of the downturn and the cost of stimulus packages and bailouts. The addition to the national debt as a result should not be taken lightly: these are perilous times to take on massive new debts. We are hearing a lot of talk lately of the renowned economist of the 30’s, John Maynard Keynes. In response to Hoover cutting back on government spending to reflect a downturn in revenues caused by the 1929 economic crash, he suggested that government should do the opposite and increase spending to get the economy moving again. He argued that deficits could be made up later on upon recovery.

The problem with invoking him now is that he advocated building up surpluses during good times to balance the deficits of the bad whereas we are beginning this economic meltdown after a string of massive deficits. It can be argued that those large government deficits, along with obscene levels of personal debt are what had kept the economy from stagnation since the start of the Bush disaster. America was essentially on a compulsive borrowing binge.

Therefore, I’m totally opposed to any form of tax breaks except those relating to the least fortunate members of society. The average doctor earns $265,000 per year, so that nearly half would receive a tax break under Obama’s tax cut plans for those earning less than $250,000. They undoubtedly have everything they truly need in life so whatever they would spend the money on would be bad for the world and should not be produced.

As I’ve ranted and railed about ad nauseum recently, the last thing we need to do is rescue the old economy of profligacy, waste and mindless debt-fueled consumption. To that end, the wealthy and corporations should absolutely be reined in.

While I wouldn’t advocate a return to the 91% personal income tax rate of the fifties and sixties, taxes on the wealthiest should be raised to at least 50 or 60%, not only to raise money but also to curb unnecessary consumption. Corporate tax rates should also return to rates of the past sufficient to restore the fifty-fifty ratio of income taxes once paid by corporations and individuals.

Corporations are creatures of the state and must be tightly supervised. For more than a century they have enjoyed the privileges of personhood with none of the responsibilities. When a person commits a crime they are taken out of circulation, when a corporation does, they are slapped with a small fine and thus encouraged to be on their merry thieving ways.

There are several ways the corporations have of controlling the American agenda. The most important and insidious is advertising; it is the root of corporate evil. It’s worth reiterating the stunning conclusion of a study done on the effects of advertising on pre-school 3 to 5-year-old kids. When served mcdonald’s burgers in plain and company wrappers, 80% said the burger in the corporate-logoed wrapper tasted better. America’s children are being educated for the corporate bottom line before their personal health. For the need for luxuries before the health of the planet. Americans are told it is their duty to buy things they don’t need and often can’t afford, thus building mountains of debt, for the sake of the economy.

I would remove advertising from deductible business expenses, except for a reasonable amount needed by a small local business, maybe $25,000 per year. People don’t need to be encouraged to consume, it’s already a natural response: old things wear out, new innovations come on the market. People will continue to consume without the encouragement of advertising, just not so much of the mindless sort. Let corporations compete based on producing quality instead of slick marketing.

Slowing consumption requires reining in credit. Even as Citigroup is showered with $320 billion in public welfare, it charges nearly 30% interest on credit card debt, for many people making it difficult to ever clear their debt. Thanks to a corporate funded Congress, bankruptcy laws were changed recently to make it harder to erase those debts, even putting credit cards on an equal footing with child support.

Credit has its importance; easy credit is a mistake. People need to be encouraged to save. I got turned off to credit with my first experience. I bought an article - don’t remember what, it was nearly 50 years ago – on a six month payment plan. After 2 months the article broke, but I had to keep paying on it and I thought, this is nuts. In the fifties, you could buy a car with 20% down and two years to pay. If you had to sell before the term was up, you had some equity in the vehicle. Today, with no down and 7 years to pay, you have to take large sums out of your pocket to sell within the first two years: that is crazy.

Tightening credit is a good idea. Let homebuyers bring a 20% down payment with them and let the government subsidize mortgages for the bottom half of society. Anybody with a solid history of work and responsibility should have access to their own home. In recent years they’ve been excluded from home ownership by artificially high prices. Prices which only could’ve risen with the help of ‘innovative’ subprime mortgages.

The Root Cause of the current economic meltdown is too much money in the hands of the wealthy and powerful. They have time on their hands, they are obsessed with making money and often have no scruples. With money to burn they have created an economic bubble, a Ponzi scheme of epic proportions; one that is bringing hardship to people all over the world.

Therefore, excessive wealth must be curbed and all forms of speculation taxed. Even a small stock transaction tax would discourage short term speculation. Let investment be for something more than pursuit of a quick buck; something that embodies lasting value. International currency transactions should be taxed and the proceeds used for development aid to the world’s poor.

Unfortunately, Obama’s picks for his economic team do not leave much room for confidence since they are uniformly on the corporate bailout side. They helped to create the deregulation that is responsible for the current crisis and most likely have no other idea how to fix the system than repeat the mistakes of the past.

Repeating the mistakes of the past will only dig the hole deeper with debt that will have to be paid eventually, and paid with even more pain than it would take to start to work it down now.

I realize my economic prescription involves a severe deflation with serious consequences, but, I would argue, no more serious than the impacts of propping up the old economy. At least, we would come out with a sustainable, well-being oriented lifestyle designed to benefit the majority who’ve been left out in these past decades of conservative trickle-down economic thinking.

Bailout Madness

I’ve been feeling the need to write about something besides the financial bailout – the strangulation of Gaza, the mass fascist coup attempt in Thailand, the carnage in Mumbai – but the bailout money has been flowing so fast and in such fantastical amounts, it’s almost beyond superlatives and comprehension.

I titled one of these commentaries, “Cure Worse Than Disease” way back when we were talking less than a trillion dollars. Now by one reckoning we are up to $4.2 trillion, by another nearly $8 trillion. In addition to the recent well publicized bails of Citigroup to the tune of $320 billion and another $800 billion to a wide array of corporations in need of a handout, there’s the small matter of $2+ trillion in loans made to financial institutions by the Fed whose recipients it is trying to keep secret, else, the thinking goes, precipitate runs that would break them. Bloomberg is suing under the Freedom of Information Act to try to force transparency.

Bailout protagonists, which include just about everybody in government, business and the punditocracy, will explain the money is all about restoring confidence and is in the form of equity and investments so when the economy gets back on track, i.e., people return to their primary role as consumers and head back to the auto dealers in droves to buy the latest model, honcho-sized SUV’s - amongst other hallmarks of the consumption economy - and the government will get its/our money back.

The first point to consider is that the Fed has printed up or borrowed trillions of dollars to help its friends totally on its own, with no oversight from any level of the US government. The second ponderable is when it will all end. What if the job needs another five or ten trillion? And what if, and this is the real corker, people don’t go back to their stupid, heavily-indebted mindless-consumerist ways?

We are assured that the consequences of not acting to stem this massive economic breakdown would be staggering, mind boggling, catastrophic - to that you can add your choice of another ten or so similar words expressing disaster of epic proportions.

However, the magnitude of the resources going into this corporate feeding frenzy at the public coffers is so overwhelming, we are entering a lose-lose situation. If the money does in fact does succeed in keeping the banking sector afloat, it’ll come at a nearly unbearable cost to society.

The third question, which is only being asked by the those of us on the radical fringe: Why do we want to prop up and save a rotten system; one that’s dedicated to consumption in a world being overtaxed by unconscious, unsustainable consumption?

In any case the old ways are finished. It’ll be years before people have the theoretical ability to return to their mania for consumption and by then, if the economy does start to pickup, resource depletion and rising prices will end forever the possibility of that numbskull lifestyle.

This actually is a perfect time for those of us who recognize the world’s desperate need for transformational times, for there truly is a crisis ahead of us that dwarfs the current economic one. We are talking climate change, of course. We have received a one-off reprieve in the form of the economic breakdown: The world desperately needs to reduce all forms of resource consumption to avoid the worst of global warming.

We should be delighting in the drop in consumption and using the vast resources that are now going into beating the dying horse of the old economy and using them instead to build the new. In the act of emptying the resource barrel to try to prop up the old we are precluding the new, a change to a sustainable economy of well-being.

Personally, I don’t take delight in calamity as it causes wrenching difficulties for the bewildered and innocent; nonetheless, I think we can all appreciate its cathartic and catalytic powers. Ok, maybe I do take a little delight, but not because I like to see people suffer, but rather the belief that macro political and social changes seldom happen without the force of great events.

It’s hard to say if we still have the opportunity to properly respond and adapt to this calamity: the door is closing fast.

Fat Cats Belly Up to the Bailout Bar Again

Now it’s American Insurance Group, worlds largest insurance company, back at the Bailout Bar to knock down a few more for the road. Altogether, $150 billion will be ‘invested’ in another craven, irresponsible, corporate welfare cheat.

Just for a little perspective, $23 billion would end hunger in the world. We’re always too poor to lay out the bucks to rescue dispensable little people from hunger, the ultimate deprivation, but always have the wherewithal to help mendacious corporations in their hour of need.

I don’t know about anybody else out there but if I were going to shell out $150 billion dollars of my hard earned dough, I’d want to have a say in how that money was used. As of now there are, in effect, no hard-wired restrictions on how the bailout money is being spent. Some recipient banks are using their freebies to purchase other banks, others are buying treasury bills when the bailout money was supposed to go for loaning. A full 10% of the money will wind up going for the same immense bonuses to top execs as before they lined up for the government dole.

Now General Motors is taking its turn showing up at congress with its begging bowl. If any corporation were allowed to fail it should be GM. Car manufacturing in America should continue but GM should be left to an ignominious death. Not saying Ford and Chrysler are that much better, but GM especially deserves the axe for the burial of its electric car, the EV1. I won’t repeat the whole sordid story; suffice to say that GM went through great lengths to get the few electric cars it did produce – by California government mandate – off the road, including refusing money from leaseholders who, at the end of the leases, begged GM to let them buy them.

Along with the other car companies, the labor unions and members of congress from auto producing states, they lobbied hard to prevent increased mileage standards. As a result, vehicles kept getting bigger and more destructive of the earth in the process. They ignored more efficient hybrid technologies for as long as they could, while concentrating on designing new gas-guzzling behemoths. They blew off trying to build better quality, longer lasting cars so they could concentrate on bigger profits and ever more insane compensation levels for top management.

Why is it a Japanese car will still be going strong at 200,000 miles while an American car is ready for the scrap heap at 150,000? Is it because American CEO’s are paid so much more than their Japanese counterparts? Japanese CEO’s earn about 11 times the average pay of their workers while American CEO’s earn upwards of 400 times.

Without a change in corporate culture and governance, the bailout babies will revert to the same stupid, greedy focus on immediate profits that caused them to falter in the first place. At the present time, corporations are forbidden to take the needs of society into account. They are literally prohibited from being good corporate citizens if that action impacts on shareholder value.

Take the case of Ben and Jerry’s. The two entrepreneurs wanted to earn a profit and manufacture a quality product as most firms would, but they also felt strongly about creating a healthy workplace for their employees and a cooperative atmosphere with their suppliers: one happy family. As a private company this was no problem, Ben and Jerry could run it as they saw fit.

But then grow or die reared its ugly head. You know, the idea, which totally defies logic, that a company that isn’t growing must be dying. What is so hard to comprehend about a company earning the same healthy profit year after year? But B and J got caught up in the growth mantra and decided becoming a public company would allow them to expand their products and good ideas to a wider sphere.

Big mistake. Once you have stockholders their well-being is the only consideration you are allowed: it’s not written into law, you’ll just get sued if you don’t put them first. Once B and J was public a multinational pounced with an offer to buy the company that could not be refused on any altruistic grounds else the certainty of that aforementioned suit.

The lamest of all presidential ducks has now taken to defending capitalism itself, pleading with the world not to try to regulate too much. Somehow the regurgitant coming out of his mouth is sounding a little hollow. If unbridled capitalism is so great, why not follow its own precepts and let poorly run companies die?

The big three automakers should be allowed to go bankrupt.

The hard assets could then be purchased by the government for creating new companies with the common good written into their charters. Once back on their feet, shares could be sold to the public but the government should keep a controlling interest. Capitalist purists will tell you that the government can’t effectively run a giant corporation, but what could possibly be worse than what current management has done?

It is sickening and disheartening seeing trillions of dollars spent feeding the wealthy and superwealthy while there is so much dire need in the world; it is truly painful to watch. Worse yet is knowing that money will not meet its objectives. The world economy is going down regardless; all that those trillions will do is let the fat cats breathe a little easier in the knowledge that their exorbitant compensation packages are intact.

Ultimately, it makes no sense whatever to provide that largesse to the very same people following the same economic beliefs that caused the problem in the first place.

Bush Nightmare Almost Over

Though his misunderestimated legacy will live on to haunt the American polity for a painfully long time and we’ll no longer find grim humor in his stupendous ineptitude and mendacity, his Reign of Error is thankfully nearly over.

Our man Obama has triumphed. The popular vote was closer than I expected but the electoral vote was so lopsided no amount of Repug voter suppression or thievery could’ve changed the outcome.

And history was made with America electing its first multi-racial president. I phrased it that way since in fact, he’s not really black anymore than he’s white. Being any part black is considered a taint, which goes to show how far there still is to go regarding race. If you contrast American blacks with Africans, it’s clear that the vast majority of African-Americans have a good deal of white, or other races, mixed in.

As someone who picketed Woolworth’s in 1960 because of its segregated southern lunch counters, to see a person of color in the White House is breathtaking. Maybe it should now be painted a nice shade of tan and called the Off White House.

Interestingly, in Thailand, which is about 15% Chinese, people of mixed heritage refer to themselves as Chinese as a matter of preference.

At any rate, our man of the moment will have his work cut out for him. His biggest challenge will be to keep people from losing their faith when things don’t magically turn around overnight. FDR brought hope to America, not to mention make-work jobs and food on the table, but the economy remained in the doldrums for years.

A president with heart can keep people going through extremely difficult times, hopefully transformational times, but will not be able to resurrect the endless growth paradigm. No amount of fiscal stimulus, whether in tax cuts, infrastructure investment or corporate welfare, is going to bring back the old free wheeling economy. (By the time it might be theoretically possible again, four or five years down the line, the world will be entering resource scarcity mode.)

Nor should it. Starting back in the 1950’s and ‘60’s when mechanization of industry – then called automation – was allowing businesses to increase production with fewer workers, there was talk of people working less and having more time for family, community, life. That did not sit well with the business community since it meant workers would also have less income and reduced ability to consume.

Instead of a more social world where people worked less and had more time for leisure, working hours lengthened to the point where Americans recently were working 200 more hours per year than back in the ‘70’s. This movement came partly as a result of trickle down economic policy. As mentioned recently, putting a lot of money in the hands of the wealthy results in the bidding up of prices for many necessities, especially housing. As costs rise, average Joe’s are forced to work more to get by. In the midst of all the recent booms, large numbers of people were forced to work more than one job just to survive and most families had to have multiple wage earners.

Of course, it wasn’t just survival; we also entered consumption mode, later to intensify into hyper-consumption. Much of the extra work went for four dollar lattes, 60 inch TV’s and the many other accouterments of the ‘good life’. If you didn’t have the ready cash for all those good things, you could always borrow it on your credit card (at very high interest rates). With the people at the top having so much surplus money to ‘invest’, they made it easy for people to get into debt.

Rather than engaging in frantic and futile efforts to resuscitate the old economy - and engendering huge amounts of new debt in the process - we need to create a new economy. We will need to spend heavily to insure that necessities are provided for - homes to live in, food to eat - but well-being needs to replace consumption as the primary goal. To that end, the work week needs to be shortened to spread scarce jobs, as well as provide the leisure time that Americans have been so sorely lacking. Europeans, in contrast, are guaranteed four weeks paid vacation per year with many countries mandating more.

That change would be impossible without universal health care that is provided outside the current employer-based system. The current system encourages the opposite - fewer employees working increased hours. With the government taking health care costs out of the equation, people and jobs would both be more flexible. Americans could go on about working to live rather than living to work.

Of course, I’m being unbelievably, unrealistically utopian. Have you ever heard a Dem, let alone a Repug, speak of building a stable, sustainable, light-on-the-earth economy? Of shrinking the economic sphere so people could work less and enjoy life more? Unthinkable. Yet, it’s the only way that makes sense.

One of the greatest times of my life came when I had the least money. I did the authentic hippie commune thing back in the early ‘70’s. At one point I calculated that 35 of us were living on about $600 per month, in total. We had no electricity or flush toilets, very limited piped water, all cooking and heating was from wood we had gathered. We bought 50 lb. sacks of rice, kerosene by the barrel for our lamps: We lived simply.

Yet it was also one of the healthiest, happiest, easiest and most enriching times of my life. We never went hungry, though often didn’t have all the variety we would’ve wanted. Meanwhile, our diet was probably a lot healthier than one we would’ve preferred: you know, brown rice and veggies most of the time.

We had no electricity for stereos or TV’s so we had to make our own music. We conversed, meditated, communed with nature to fill our time. I was apprehensive about living without modern conveniences before going to live there. The realization of how unimportant those things are was almost instantaneous upon arrival.

We lived in a beautiful spot. It wasn’t special compared to a lot of places, but we did have forests, gardens, clean fresh air, a mountain view, a swimming hole with clear, clean mountain water for those hot summer days; really, all one could ask for.

We had work to do - but not jobs, except for occasional off site work like fire fighting and brush clearing - and lots of leisure time. It took very little actual work to keep the community going, no more than 10 or 15 hours per week per adult.

I’m not saying everyone should go primitive as we did. Only that living on a lot less doesn’t necessarily mean living less. Truly, no amount of money could’ve bought a healthier, more enlightened lifestyle.

Our goal needs to be well-being, not to get the economy back on track. Growth is not what we want unless it’s intellectual, social, spiritual. The more money spent trying to prime the old economy for a renewed growth cycle, the harder and longer the transition will be to the new way of life.

Political Climate Change

Conventional Wisdom will insist that launching universal health care in America is out of the question in light of the financial meltdown. On the contrary, this is not only a good time to do it but society will literally have no choice.

Fifteen percent of Americans currently lack health insurance, another 30% are underinsured - large numbers of people who’ve been declaring bankruptcy for medical reasons actually had insurance but were buried in co-pays. A friend who came down with breast cancer who had reasonably good insurance had to come up $18,000 in co-pays for her treatments.

When large numbers of people become unemployed they will also lose their medical coverage. Concurrently, many employers, taking drastic measures to try to cut costs and remain in business, will reduce or eliminate insurance.

The current system will begin to go on life support, leading to a total breakdown. Government rescue will be imperative; action will also be essential from the standpoint of needing to cut costs on a systemwide basis. In spite of the many uninsured and underinsured in the states, per capita medical costs are consistently higher than in Europe; nearly double that of the UK. The current system will simply become unaffordable.

Change will also come from falling property prices: after the dust settles from the financial crash, that will turn out to be blessing for the bottom half of society. Once people have eaten their losses, both imaginary – when a way overpriced property goes down to a rational level it feels like a loss to the individual involved but it’s really just a reality check - and real – people are loosing their homes - housing will become much more affordable. In the process of throwing money at the wealthy - the economic imperative of the last 30 years - prices of many things have gone up, but especially in housing. Many Americans have been struggling to pay the rent for years; falling prices will provide some respite.

It was recently said that housing is still 10 to 15% overpriced, but that was based on the heady levels of artificially inflated neo-con economic irrationality. Thought of in the context of very high unemployment and general economic hardship, prices have to go down a lot more than that.

The punditry talks about the inevitability of boom and bust cycles: They are not inevitable. Ups and downs can not be avoided, but booms and busts are only part of the picture because of warped economic paradigms. Were subprime mortgages inevitable? Only because public policy made them so. If prevailing economic wisdom dictates that a government must do all in its power to maintain growth then there will certainly be extreme ups and downs.

The more frantically a government tries to push the economy upward, the more likely a serious crash on the downside, even though it may take a while. And it’s not like there’s no financial or monetary consequence when vast sums of money are expended on (ultimately futile) rescue and stimulus plans.

On the other hand, if the goal is long term stability and sustainability in a context of minimum income disparity (and no superwealthy) where every citizen has work to do and a home to live in, then there’ll never be another crash. The problem revolves around manic desire for growth.

Take Japan and Europe, for instance: There is constant lament over the very low growth rates they’ve been experiencing for a long time. But look more closely and you see mature and aging societies with stable or sometimes even declining populations.

Those kinds of societies have no reason to grow. Older people need and consume less with the exception of medical care. There’s no need to build a lot of new residential, commercial or government buildings in a stable population, only upkeep and a small amount of replacement is necessary. Infrastructure is largely in place, only maintenance is needed.

There is absolutely no reason for them to grow unless that growth involves societal advancements like renewable energy and conservation, more efficient transport, better educational and cultural opportunities; things that actually improve life and the environment. America needs some growth to provide for increasing population - entirely the result of immigration - and possibly to correct for extreme disparity in wealth, but to borrow and spend, to consume for its own sake - like building giant houses in the exurbs and manufacturing monster SUV’s to access those far flung mcmansions - is totally unnecessary, destructive and stupid.

Most important of all, now is not the time to pull back on tackling climate change because we somehow now can’t afford to. The extremely modest goals the world has set for itself will already have no impact whatever on the problem. They are only a start on a change of consciousness that will hopefully evolve into real progress on the matter; a change in thinking that might actually someday save the planet. The work that needs to be done to tackle the problem of global warming is the only kind of growth that makes sense.

The world cannot continue to increase its population and consumption and still survive. Fixation on growth must change. It is a theoretical impossibility that is nonetheless embraced by nearly all Serious thinkers and Important people.

The worldwide economic crash provides the opportunity to settle into a new, sustainable, lightly-living lifestyle; however, I am not optimistic. No matter how badly the Establishment has fucked up the world, they will insist that their way is the only way to right it; obviously a ridiculously inane conclusion.

Many people over the world are going to suffer tremendously from this man-made disaster, we can only hope against hope it isn’t totally in vain.

It may even be possible that the poor, who have not existed in American political discourse since Reagan, will actually have their needs considered again. If that does happen it’ll only be because a lot of formerly middle class people find themselves heading towards the bottom.

Meanwhile we can try to suspend our disbelief that the feckless, spineless, close to worthless Democratic Party will somehow find the will to do at least some permanent good – like universal health care, regulation of the financial sector and building of sorely needed infrastructure. The Dems haven’t had a leader with the guts to stand for anything for a long time. Will Obama stand up to the plate, play that role, come through for America and the world?

Economic Meltdown Next

Alan Greenspan now says nobody could’ve predicted the scale of the current banking meltdown. Meanwhile, the Maestro, as he once was called, who guided the economy with a “magic touch” during his long tenure blithely ignored every indicator that trouble was brewing. He is correct, of course; nothing like this has happened since 1929, and moreover, probably wouldn’t have happened if the banking reforms put into place in response to that calamity hadn’t been eviscerated ten years ago under Clinton’s watch.

For certain, everybody who didn’t have a personal vested interest in being optimistic, was pointing out extreme imbalances and deficiencies in the economy that were likely to have serious, if not necessarily catastrophic, consequences. People involved in reporting on and opining about the business news invariably own stocks and are totally sold into the conventional wisdom so unconsciously project optimism in their reporting. You know: “All we need is a few trillion dollars to bail out the banks and they’ll start trusting each other and then they’ll start lending as before and people will be borrowing just as in the past and in a couple of quarters the world economy will be back on track.”

They also assure us that we can’t have another Great Depression because we ‘responded’ quickly with huge bailouts and because there are now programs in place to protect individuals from the extreme deprivations of the thirties. As to the latter: Thank God for small miracles; people will at least have something, small as it may be – I get $600 month in Social Security; how far will that get you in America? - to help negotiate the hard times.

The bailout may have led bankers to feel a lot better about themselves and the security of their exorbitant pay, but even if it was enough to get them loaning money again, not many will want to borrow.

Let’s face it, anybody with half a working brain cell who isn’t part of the wealthy elite, is hoarding their resources, saving for a rainy day, learning how to get by on less (if not yet, then soon). That being the case, industrial production will plummet, housing construction will grind to a halt, any business that depends on discretionary spending - restaurants, etc – will see their profit margins reduced to the bone, governments will be starved for revenue and be forced to cut back on services… you get the picture.

There’s no going back to bubble-like days of prosperity predicated on figmentary money created out of whole cloth or based on borrowing from the future. Recent precipitous falls on world stock markets show that investors are catching on that this is not a temporary detour on a strong upward economic path; a mere glitch in the endless growth paradigm.

This is going to hurt, as well it should. Americans, amongst all the world’s rich peoples, have been living beyond their means and the ability of the earth to provide for their insatiable appetites. It had to come to an end. For sure, it would’ve been a lot smarter and easier and more sensible to gradually transition to a more stable, sustainable lifestyle, but there’s nothing in the world, that is, no amount of reason or logic, that could’ve stopped this juggernaut from destroying itself in an orgy of excessiveness and exuberant irrationality.

Thankfully the entire neo-con, unfettered free market, trickle down economic regime is crashing and burning after a long and bruising binge… while also leaving a hangover that has created a monumental headache for the world.

Europe is closer to getting the message than the US. When the former bought stakes in tottering banks they took voting power, in some cases, voting control of the institutions. America purposely took no voting rights: I guess that would be too much like socialism to take control over institutions that you’ve just showered with Joe Sixpack’s money. Bush and the Democratic Congress wanted to preserve the ‘Free Market’.

The American economy is going to languish in the doldrums for a long time. I’m hoping against hope it’ll emerge in an entirely new and sustainable context. With oil prices hitting rock bottom this is our last chance to convert at a reasonable cost. Petroleum won’t stay cheap for long. World population is growing along with their aspirations. If China’s growth slows to half last year’s pace there’ll still be millions of new cars on their roads every year. Electricity demand in lowly Cambodia, currently supplied 90% by fossil fuel, is growing at 25% a year in spite of 80% of its people not even being connected yet.

There’ll need to be massive New Deal type public works programs and welfare – that dirty word - for the destitute and people simply experiencing hard times. There’ll need to be a sharing of available private-sector jobs else unemployment really will approach Depression era levels. There’ll need to be publicly financed mortgages for low income people. And there’ll need to be higher taxes on everyone but the poorest else public debt become an unsustainable burden and public works be impossible to finance. Let’s not forget that America experienced some of its most prosperous times during the fifties and sixties when income tax rates on the wealthy stood at 91%.

As most of you reading this I’m hopeful that Obama will rise to the occasion. That he will bring the country together in a way that takes the hardest edge off of hardscrabble times. In no manner will it be easy, but at least he won’t emulate Hoover saying giving food to hungry Americans will hurt their self-reliance.

For certain, dynamic and fascinating times are ahead.