The Mother of All Bubbles

Back in the heady days of the 1990’s dot-com bubble there was a TV clip, on Nation Public Broadcasting I believe, that profiled a couple who were what I’d describe as extreme, or more appropriately mindless, investors. They had gambled their entire stash on a company they knew only by its stock market code. They had no idea what it actually did. That was four or five years before the crash, so they might well have cleaned up.



This was also about the time a true economic idiot made a bundle of money writing a book called DOW 36,000 that argued the market was actually way underpriced and was bound to triple in value even when in reality it was already seriously overpriced. It’s a new paradigm! Now the market only goes up! The boom and bust cycle is finished! Most depressing for the state of the world and the state of the American media is that that fellow, who’s name I can’t bother to remember, is still seen on TV doing his punditry thing, in spite of making one of the worst predictions of all time.



That was also about the time Greenspan made his too-smart-for-himself irrational exuberance comment. Too smart because after properly identifying a grave danger to the economy he did nothing to counteract or mitigate the certain crash to come.



You can be exuberantly irrational for limited periods of time but it defies logic, reason and common sense that you could carry on irrational behavior for very long before it results in a very rational smackdown.



I kept predicting the crash year after year; a good friend kept responding by saying, You’ve been saying that for years and it’s still going up. Well, no matter how much one might wish it otherwise, there’s no defying gravity. It’s in the nature of bubbles to burst, that’s what they do at their anointed time.



One bubble per decade seems to be America’s current pattern or need so it was important to create a housing bubble for the double oughts. In the great fear that the economy wouldn’t barrel ahead after 9-11, interest rates - for the bankers, that is - were taken down to near nothing. It’s worth pointing out that low interest rates are not good for everyone. For the savers, the people and their lifestyle that under normal circumstances - thinking of a rational world, that is - you want to encourage, low interest rates are a disaster.



In the midst of the housing insanity I pointed out to the same friend that in a market like Southern California it cost twice as much per month to own a house than it did to rent an equivalent one. An average $500,000 house might cost $5000 per month to own, but only $2500 to rent: in other words paying a $30,000 per year premium to own it. She then pointed out that property values were rising at 15% per year so that half million dollar house added $75,000 to its value and you’d still be way out ahead.



But rising values that were way out of line with reality were pricing people out of the market so mortgages had to be invented for people who couldn’t afford to pay them. NINJA loans – no income, no job, no assets – became the rage. It didn’t matter since the borrowers could always draw equity out of their houses’ rising value… until values stopped rising.



The enabler, I would argue, of both bubbles was/is the excessive wealth held by the powerful of society and the corollary belief that prosperity for the greatest number would be facilitated by placing the least restraints on those wealthy controllers. In reality, whenever they have too much money on their hands the certain result will be dangerous, and eventually destabilizing, speculation and asset bubbles.



Now, in the desperate, frantic, but also wistful and futile attempt to revive the old economy, or even a semblance of it, America is creating another bubble: this time it’s the dollar’s turn to bubbleize. It’s akin to a Reno loser story I once heard. When a gambler’s losses reach too high they feel they have to try anything to win the money back. After they max out the cash limits on their credit cards they go to a furniture store, buy a TV – the cards are still good for purchases – then turn around and hock it at the nearest pawn shop, getting probably 25 cents on the dollar.



America has already sold the farm – trillions of dollars are owed to foreign governments (China is the biggest creditor… If that doesn’t put a chill down your back, it should) – now it’s selling the furniture in the rented farmhouse; all to revive an unsustainable economy that should have been retired long ago.



Eleven trillion dollar national debt, 1.9 trillion dollar budget deficit for this year, 600 or 700 billion dollar trade deficits on an annual basis for years, one trillion dollars of personal credit card debt and now thirteen trillion dollars gambled on the big banks in the form of giveaways, loans and guarantees.



America’s the only country that could run massive trade deficits because the dollar is the world’s currency – people around the globe use dollars for things totally unrelated to the US. Eighty percent of transactions in Cambodia where I live, for instance, are in dollars. Every other country that tried to run those kinds of deficits would have been brought short pretty quickly and paid a heavy economic and social price for their spendthrift ways. Not America. At least not yet.



You know what they say; something that can’t go on indefinitely, won’t. Let me add my own postscript to that; the longer you wait to correct the imbalance the greater the impact when judgment day comes. For America comeuppance will bring catastrophe.



While all the aforementioned mentioned debts and liabilities will contribute to the crash of the dollar, the one most important factor has to be the attempt to save failed too-big-to-fail banks. Even after 13 trillion dollars of support, the Fed’s stress tests showed about half the nation’s 19 big banks will need another 70 billion dollars in new capital.



Moreover when you look at how unstressful the tests were, that 70 billion is a joke. The banks got to decide for themselves how healthy they were – doing their own pricing of their toxic assets, for instance - and their supposed solvency was based on extremely rosy economic predictions for the near future.



America’s on a years-long binge, challenging the gods, as it were, to bring it low. It’s ok to go into debt if it’s for something that has lasting value. It’s also good to go into debt if it’s used for something that brings in revenue and pays itself off. That’s sort of the thinking behind bailing out the banks: healthy banks = healthy economy = high tax revenues = debt no problem. But it’s a tremendous gamble on the order of the sad cases in Reno whose addictions result in them losing everything.



The big problem with going so deeply into debt so nonchalantly is that it has to eventually be paid back. At some point the joy ride must end and the price paid. Under any but the most benign circumstances, retiring debt is painful. It means taking from today’s advancement to pay for yesterday’s indulgence.



The only alternative to paying off the debt, which would require steep tax rises and social sacrifice – impossible to imagine in spoiled-child America - is running the money printing presses full speed ahead and hoping that doesn’t result in worst case scenarios.



There remains an immense reservoir of wealth in America in spite of the current hard times and great respect and trust in America’s strength around the world so I wouldn’t look for this dollar crash to happen tomorrow, but it’s as inevitable as the last two bursted bubbles were.

Blowback

Blowback

Blowback is a military term that refers to unintended consequences that almost always arise in combat situations.

The latest example is the swine flu pandemic. There are strong indications the virus originated at an industrial pig factory. For those unfamiliar with the process, pigs are raised in extremely stressful conditions. They spend their entire lives in cages too small for them to even turn around in in buildings that are literally full of shit and piss. All told, these pig factories are ideal breeding grounds for creation of new viruses.

The only way they can survive is through massive doses of antibiotics to the point where many American rivers now contain noticeable levels of antibiotics with the result that people are ingesting them on a regular basis. This is now resulting in new superbugs that are resistant to antibiotics.

But that’s not the only element of blowback in this situation. The Mexican pig factory suspected of originating the virus is owned by an American company, Smithfield, which was encouraged to move to Mexico by its lax environmental controls and enabled to make the change by NAFTA. The current swine flu seems relatively benign but it’s only a matter of time before much worse viruses arise.

Factory farms can produce pork cheaply, because so many of its costs are externalized. They produce the virus, everybody affected pays the costs.

The plague of Somali pirates is another case. For 15 years from 1991 till 2006 Somalia was effectively without a government: its territory was divided up and controlled by various warlords. In 2006 a fundamentalist Islamic movement called Islamic Courts defeated the warlords and took over the country. As I understand it they weren’t as radical as many other Islamists. In any case, even if many of Somalia’s people weren’t especially enamored of fundamentalists taking over they were welcomed by the populace for the stability they brought. In addition, Islamists in general are honest and devoted to public service.

But having a country run by Islamists was too much for America so it, with the assistance of Ethiopia, drove them out of power and plunged the country back into chaos. This lack of effective government is what has allowed the pirates to freely operate from Somali territory.

The country’s inability to police its waters has also resulted in factory fishing fleets from Asia and Europe mining its fishery resource and putting local fishermen out of business. Somalia has large areas of desert where food is not easily coaxed from the land. It’s also a relatively narrow country with a very long coastline. Fishing, therefore, would have to be one of its major means of sustenance. It follows then that fishermen deprived of their livelihood might turn to piracy.

The classic case, of course, is the US feeding Bin Laden with billions worth of arms and training him in insurgency-type fighting so his mujahadeen could take on the Soviets. When asked about absurdity of assisting a man who later gave the US 9-11, Kissinger and others have said that it was most important to defeat communism. They have an outsized view of an epic fight between good and evil, but the Soviet Union’s days were numbered anyway. European communism died of its own ineptitude: it’s demise was inevitable. The most America’s cold war harassment did was quicken it bit.

It would not be difficult, in addition, to link Osama’s implacable hatred of America with its absolute, totally biased support of Israel. Israel has been a dagger in the heart of every Arab since the founding of the state in 1948; they call that event, The Catastrophe. Israel, with its continuing program of confiscating Arab land so it can populate the West Bank with Jews, its indifference to Palestinian lives in its wars and assassinations, its callous refusal to consider the plight of Palestinian refugees, its essentially racist nature where Arab citizens of Israel have second class status, digs the dagger in a little deeper with each infraction.

From Bin laden down to the man in the street, Arabs have an implacable hatred of Israel. Because of America’s support a lot of that feeling carries over to it. To a lesser extent, Moslems all over the world see an injustice being done to Moslem brothers. All of that adds up to increased radicalism amongst them. To the Islamic insurgents in the Philippines it probably won’t feel like a dagger in the heart, but it might well feel like a thorn in the side.

I’ll never forget how Howard Dean was shot down for saying the US should take an evenhanded approach to the Middle East, as if there could ever be something wrong with being evenhanded, and by implication, fair.

Of course, I’ve barely scratched the surface, examples of blowback are rife.

Bizarre Twist

In the latest bizarre twist to the sordid saga of elite bankers slavering at the public coffers, the banks are planning to use the latest Obama/Geithner bailout money to repurchase the same toxic assets they are getting rid of. Well, maybe not the very same ones, but the same type for sure.

It’s not hard to understand why they might be doing that. Many of those assets are now close to worthless. The plan includes a competitive bidding process that supposedly would give a true value to the assets, but since nearly all losses will be socialized and gains privatized, they will tend to bid high. After they are bought back the former toxic trash will come with a government guarantee. How convenient.

Personally, before I gave the banks another trillion dollars I’d kind of like to know what they did with the trillions they’ve already gotten, but, seemingly, that’s too much to ask of them so we’ll just have to trust they’re doing the right thing. They’re really smart and they certainly have the best interests of the country at heart so why would we want to press them on where the money is going. Just because the US government is majority owner of those banks doesn’t mean it is clever enough to rescue them. No it’s only the idiot (oops, brilliant) bankers who understand how to make everything peachy-keen again.

And we certainly wouldn’t want to place restrictions on executive pay for bailout receivers, else they might not be willing to join the program. If they can’t get their exorbitant (oops, entirely justified) compensation they just might let their firms fail and then where would we be?

After repeated badgering by a pesky congressman, AIG finally opened up on where some of its $173 billion bailout went. What a mistake, better not to know that, for instance, six billion plus went to Societe General, France’s largest bank, another six billion plus went to Deutche Bank, Germany’s largest, and that billions more went to Barclay’s and UBS and other foreign institutions, not to mention a mountain of cash to America’s biggest banks. Knowing that would only get people angry and irate and that might lead to protests and demonstrations and result in those bailout funds being cut off and then we’d really be in trouble. No, better not to know, better to trust the smart guys.

While we might want to regulate hedge funds and derivatives and clamp down on tax havens we wouldn’t want to reinstitute the separation between retail banks where Average Sally keeps her checking account and investment banks which are purely speculative. Even though it worked mighty fine from the thirties until 1998 when the smart guys, including Geithner and Summers and others on Obama’s economic team, had the banking system deregulated, it’s not in Obama’s plans today.

Unfortunately, I can’t think of one glib, sarcastic thing to say about why the separation should not be reinstituted; but then maybe I’m not smart enough. Separation would preclude the banks buying back their toxic assets in guaranteed form as mentioned in the beginning of this rant. Maybe somebody out there has a handle on why that’s not included in Obama’s financial regulation plans. Beats me.

Israel Disowns Two-State Solution

Israel’s new Foreign Minister, Avigdor Lieberman of a far-right party, started his tenure by saying Israel wasn’t bound by the latest peace-process agreement.

Three years ago when the Palestinian people elected Hamas by a wide margin, not just in Gaza but the whole of the occupied territories, it was shunned; ostensibly for three reasons.

One was that Hamas had to accept all past agreements with Israel. Possibly they refused because past agreements had delivered exactly nothing to the Palestinians. Possibly because Israel had never abided by its past agreements to stop confiscating Palestinian land and stop building or expanding Jewish cities in the territories. Israel’s insulting final offer to the Palestinians in 2000, a West Bank divided into three Bantustans completely surrounded by Israeli territory, undoubtedly was also an important factor. Those reasons are, in fact, a large part of why Hamas won those elections.

Another was that it had to renounce violence. Kind of laughable in light of the violent nature of the Israeli nation to hold them to that standard. And that’s besides the fact that, in international law, an occupied people has the right to resist foreign domination. Why is Israel not required to renounce violence? The important point is that Hamas proposed a long term truce, and held to the short term truce, which Israel broke, prior to the Gaza assault.

Israel is worried that Hamas will use the time of a truce to become strong and 50 years in the future will come back and try to drive the Jews into the sea. (Don’t laugh, I actually read that by a reputable columnist.) It’s true that if Israel refuses over the next half century to come to a fair and equitable agreement with the Palestinians, there will continue to be hostility and strife. Look at the Tibetans and Kurds, for instance, they’ll never stop fighting for self-determination.

Finally they needed to recognize Israel’s right to exist. As I understand it they want to wait until they too are recognized as a nation. Makes sense to me.

Netanyahu, Israel’s new prime minister, is for peace, so he says, but not a two-state solution. He wants to improve Palestinian life economically, but maintain the Bantustan concept that allows total control of everything that goes in or out of Palestinian territory. Maybe he thinks they will be so thrilled with their new prosperity they’ll submit happily to foreign domination: even as they see their land continue to be confiscated and given to Jews. Both Netanyahu and Lieberman are in favor of increased settlement construction.

For those of you unfamiliar with the Bantustan concept, it was a device tried by apartheid South Africa to put all of its blacks in their own ‘sovereign’ countries (there were ten, I believe) but all completely surrounded by South African territory. Needless to say, the minority whites retained the greater part of the land and resources and total control over the blacks in that scenario. Nobody outside South Africa recognized them.

Is Obama going to accede to this new dynamic lying down or will he finally force concessions from Israel? World boycotts helped to kill South African apartheid. All the US has to do is cut off Israel’s totally unwarranted foreign aid (the largest recipient though it is a rich country) and the settlement building stops and the Israelis become a lot more adaptable. If they can no longer use US aid to subsidize colonization and the military forces necessary to protect what are essentially outposts in hostile territory they will cease their illegal activity or make a real sacrifice to continue.

Obama’s Problem

I finally figured out what Obama’s economic policy problem is: He actually believes Treasury Secretary Geithner’s harebrained, cockamamie, welfare-for-wealthy-bankers scheme is going to work; is going to fix the economy, get America growing again.

In simplest terms (partly because I’m no professional economist) the banks made a lot of bad bets so now they feel really poor and don’t want to lend money. What we’ll do is take those pesky debts off of their hands and they’ll feel rich again (you would too if somebody threw tens of billions of dollars at you) and start to lend money again… just in case anybody actually wants to borrow it.

What we’ll do is ask the hedge fund guys (who, by the way, pay income taxes at the same rate, thanks to their good friends in government, as average Sam the roofer) to help us in these hard times. If they will so kindly put up their money to buy those toxic assets we’ll guarantee them against almost all losses. We taxpayers will also let them leverage their generous assistance and equal their paltry 6% investment.

In simplest terms, they put up small money for toxic assets, which actually do have some value (but it’s hard to tell exactly how much since they’re so complicated). If all goes according to theory and the economy turns around those assets will be worth a bundle. If it doesn’t, well then the US taxpayer takes the hit. Very convenient… for bankers.

Here’s an interesting scenario. The banks, even while they’ve been getting showered with public money, have been raising credit card interest rates, in some cases up to 40%; rates of nearly 30% are common. The ‘exotic financial instruments’ that’re giving the banks such big headaches don’t just include subprime mortgages, they also typically include credit card and other types of consumer debt.

So the bank raises credit card interest so high that a lot of people default on their payments. It then goes hat in hand to the government pleading poverty since so many of its credit card customers are in default. The government then, needless to mention, graciously and gratefully covers their losses. Very cool, if you’re a banker.

There are a couple reasons why this nutcase scheme is not likely to work. Firstly, the amount of toxic debt out there in financial netherland is far greater than the US government’s ability to cover.

Secondly, if it actually did work in the short run, the debt burden undertaken combined with a surge in commodity prices that would come with a strong recovery would cause far worse economic calamity than just letting the banks fail and starting from scratch with new banks.

If we did want to get the economy back on track and believed the blockage was based on lack of credit, then a small part of the $10,000,000,000,000 (trillion) the government has already spent or committed or guaranteed on the part of banks too big to fail could create a lot of new banks untainted by the greed and stupidity of the past. With ‘only’ $1 trillion we could capitalize 1000 new banks with 1 billion dollars each, or 10,000 new banks with $100 million each – still a substantial amount of money.

The only reason to pursue the present course is to save the asses of craven bankers. Individual depositors are already covered, it’s only the fat cats that stand to lose if the banks are allowed to fail.

If we really care about stimulating the economy then put money in the hands of the millions of unemployed people who are not eligible for unemployment benefits. Increase social security payments since many recipients are living in or on the edge of poverty. Reform welfare ‘as we know it’ so millions aren’t left hungry and homeless. Put money into keeping people from having their homes foreclosed. Cap usurious credit card rates so debtors can have more money for their survival instead of giving a large part of their income to the banks.

Start universal health care now: that would allow employers to put more workers on short weeks to share the work and let the government cover the loss of income. That’s what Germany does. Employers can put workers on half time with the government covering two/thirds of their income loss.

There are any number of better things that can be done with ten trillion dollars than spoon feeding wealthy bankers.

While we’re at it we should place heavy taxes on the corporations and wealthy. As I’ve been saying for years they have too much money to play with. That is the root of today’s economic problems: too much of the country and world’s resources going into non-productive financial chicanery, not enough into the things needed for healthy lifestyles. Besides, that tax revenue is needed: huge deficits can bring huge unintended consequences.

A Trillion Here, A Trillion There…

And pretty soon you are talking about real money. What I’m concerned about is an economic reinforcing feedback loop similar to the climate change loop that is accelerating warming. For instance, as warming melts ice and snow which reflects the sun, dark colored earth or sea, which absorb more heat, become exposed, thus intensifying the cycle.

Now we have the figurative printing presses of the fed and treasury running full speed making more than two trillion dollars of new money. Part of it is being used to buy treasury bonds with the purpose of increasing liquidity; that is, there’ll be more cash to lend in case anybody wants to borrow it. The other half will be used to exchange good (though somewhat depreciated) cash for toxic trash investments. The purpose of that is to relieve the banks of responsibility for stupid decisions and incidentally give them a lot more leeway to reward fantastic bonuses for spectacular failure. Without their ‘best and brightest’ where would the banks be today?

By the way, the US government, which owns 80% of AIG stock through $170 billion of bailout cash, considers AIG’s contracts to pay bonuses to its execs inviolable, but required GM’s employees to forego their contract benefits in order for GM to get only $14 billion. Do I see a double standard here?

The money press run immediately caused the dollar to slide 4% against the Yen and Euro. When the value of the dollar goes down, the cost of imported commodities - food, industrials – goes up to compensate. This also causes the trade deficit to go up requiring the US to borrow (print?) more money. The US already needs to borrow nearly two trillion dollars to pay for this year’s budget deficit. This will essentially flood the market, further cheapening the dollar and causing interest rates to rise. Rising interest rates means higher cost for servicing America’s ten trillion dollar debt.

Either way, printing money or borrowing, inflation will be the result. Inflation combined with today’s very low interest rates are bad for savers: saving needs to replace borrowing and spending if the US economy is ever to right itself.

While it’s true that some people understand the severity of the present downturn as equal to the Great Depression, the general feel for tackling the problem relies on thinking of it as just one more recession, albeit a grave one. That thinking allows the pundits, including some I have a lot of respect for, to use statistics like debt as a percentage of GDP to justify these great public expenditures, saying the US debt was much worse, for instance, right after WWII.

Yes, but the population of the US was less than half what it is today and the population of the world an even smaller percentage of today’s. Yes, but natural resources then were virtually, or seemingly, unlimited and thus very cheap; and besides people lived in much smaller houses and lived a much simpler, less acquisitive life. Yes, but there was no consciousness of climate change, no need to consider water shortages or fret over the world approaching - with the impacts of climate change factored in - the limits of food production.

Yes, but the US owes its senior citizens nearly three trillion dollars because it’s been borrowing from the Social Security Trust Fund for the past 25 years, using the excess received from payroll taxes to pad its general budget; funding, for instance, it’s wars and tax cuts for the wealthy. Very soon the extra 200 billion dollars a year from payroll taxes it has had access to will reverse and the government will have to start paying that back further stressing the budget.

A perfect storm is brewing for the US economy and society. Meanwhile, Europe seems relatively unconcerned. American policymakers have been pushing Europe hard to spend more money on stimulus packages to little avail. The answer can be found in Europe’s generous social safety nets. In America, barely half the unemployed are eligible for unemployment benefits, meaning the potential of widespread destitution when jobs vanish. Across the Atlantic, in contrast, all are generously covered so there is no great push to run massive budget deficits to ‘jump start’ the economy. People don’t lose their health care when they are no longer working. All in all, the crisis is seen in much less stark terms. They will not face the same crushing debts.

Prevailing wisdom says don’t worry about the debt, all we have to do is get the economy back on track and tax revenues will increase to cover it. But what if the economy isn’t resusitatable? What if it stays in the doldrums and then food prices spike? There are a lot of conditions that could bring that about. What happens if commodities like oil rise again? It’s still a limited resource and we’re still using it up at a fast pace, even if not as fast as during boom times.

I fear Obama, as smart and well-intentioned as a president can be, is making all the wrong moves. The only consolation is that everyone else who might’ve occupied that office in his stead would’ve reacted at least as poorly. Still, not much consolation when the perfect storm hits.

A Bottomless Pit

American Insurance Group has now been showered with a total of $180 billion of public money, supposedly because it’s too big to fail. If a natural course were taken; that is, if AIG, which is basically insolvent, were allowed to go bankrupt we are told there will be terrible consequences for the economy. It’s hard to know for sure because, though it’s public money that has kept it alive, the public is not privy to where the money is going. And while the public’s investment is far greater than the value of the company, the public seemingly has no control over its actions. Or understanding of how deeply it’s sunk in the mire.

Moreover, the mere fact that it has come back, begging bowl in hand, four times in just six months seems a clear indicator that it really has no idea how badly off it is, or what it will take to right it.

There’s no doubt it will be dire, but mostly for the bankers, investors and all-around scammers who, through their unbridled greed and concurrent belief in the tooth fairy, or its equivalent, that property values never go down, have helped to bring the world economy to its knees.

AIG’s ordinary insurance business is not in trouble. The problem is the insurance, aka, credit default swaps, it sold on (now toxic) mortgage backed securities and other ‘exotic’ investment vehicles. What do I care or you care if the high-rollers who bought insurance on their wild speculative purchases don’t have their asses covered by AIG?

The biggest problem is that many of those investments were highly leveraged; that is, as little as $3 was put up to purchase $100 worth of securities. That is how the value of exotic securities out there got to be such an astronomical number. As mentioned previously, while the total US mortgage market is (or was until recently) around $10 trillion, the derivative market based on mortgages was $45 trillion. Eighty percent of that money was imaginary, created from thin air. They gambled on derivatives and then gambled that AIG would cover them in case of loss. Fine, sometimes gamblers loose: so be it.

It’s a bottomless pit. Instead of trying to fill it with public dollars it should be filled with the bodies of the ‘financial wizards’ who created the mess. AIG’s traditional insurance function should be separated out and the remaining stakeholders let loose to fight over the remains. There’s no way the US government can make good on all those bad bets, and no reason to reward those who made them by continuing to gift them with such ungodly amounts of money.

In any other context 180 billion dollars would seem immense: for instance, it would buy an extensive new light rail system for 30 to 40 mid-sized American cities.

And what is the motivation behind not letting them fail? Otherwise, we are led to believe, we won’t be able to regenerate the old system of prosperity based on borrowing and spending.

On the contrary, we should be giving the reckless and profligate past a decent burial, not trying to bring it back from the dead. Especially since every additional billion thrown into the abyss will reduce the resources we have to create a new economy, one based on sustainability, community and a healthy environment.

The consumerism of the past was never a good idea, no matter how much seeming prosperity it engendered. It was based on trying to get people to buy things they didn’t need; to shop as an end in itself. I came across an amazing statistic recently; that there is six times as much retail space per capita in America than in Europe. Vast retail areas will become redundant, and should.

Just in the past few weeks I’ve come across predictions, supposedly from those in the know, that recovery could be right around the corner… by the end of the year, 2010 at the latest. Only one more bailout and we’re over the hump. This one will work for sure. If we only show that we are acting, tackling the problem with gusto, confidence will return and we’ll be back on track.

If only. This is a wreck of a fast train in a tsunami of historic proportions in the core of a category five storm. The economy is not going to look tidy for a long time. No amount of wishful thinking is going to change that imperative.

The only way to ease the increasing hardship of the next few years is to share available work. Slow down, work less, spend less, enjoy life more. Whatever resources the government possesses should be used to keep people from destitution and prop up education and the social part of life. If a lot of people lose their fortunes, well, tough luck. Let the chips fall where they may. We’ll pick up the pieces and start over. Meanwhile we’ll be consuming less and giving the planet a welcome breather.

Ever additional attempt to protect the fat cats will only make the transition that much more difficult by burdening the people of the future with massive and unnecessary debt.