Consumer spending, traditionally the engine of American economic growth, fell 3.7 percent in the third quarter, even worse than the previously reported 3.1 percent decrease.
Trying to keep up with the fantastical numbers bandied about each day as the financial crisis romps on exponentially – AIG, Lehman Brothers, Citigroup, GM, Chrysler, Bank of America – the list is basically that of the corporate giants of America, all long since fleeced and dismembered in the pursuit of the biggest bang for the short-term buck for the top echelons, and tough-shit for the rank and file, is too much to keep up counting. It’s 700 billion here, 300 billion there, and wham bam the added up count by some estimate is already in the 3 trillion range. Nevermind neither you or I have even the vaguest clue what the hell 3 trillion means. However, for a vague sense of measurement, the so-called war in Iraq already in five years of extravagant waste, mismanagement and corruption allegedly cost 500 billion dollars. Now a trillion is a million times a million. Well, good luck on sorting all that out.
So our flim-flam artists at the big banks, including The Fed, which, contrary to its name is not the bank of the Federal government but rather a private bank which is, in effect, backed up by the Federal Government, to say by your tax dollars. The Fed is presently printing up new money as fast as it can, since it doesn’t have these trillions of dollars to throw at, well to throw at all the “too big to fail” banks and insurance companies and mortgage backers and credit card issuers who caused this mess – along with the behavior of America’s deliberately dumbed-down and mal-educated “masses” (all the better to con you, Grandma).
As Mr Bush and Mr Obama both say, they must “save the system” which, since it apparently needs “saving” (to the tune of trillions of imaginary dolars), obviously has FAILED. No one seems to want to question “the system” or say that obviously something is inherently wrong with it, wrong on such a profound level that it can’t be fixed, least of all by throwing trillions of dollars at its very core and to the very people who emblematically are everything that is wrong with it – i.e., the bankers, the Wall Street traders, etc. Nope, just like the old Soviet Union, we go whistling Dixie in the dark, and while he hasn’t even taken office I begin to think Obama will be our Gorbachev, hesistently muttering that perhaps the emperor wears no clothes as the totally dysfunctional and failed “system” crumbles around him, and events swiftly overtake this modest admission, and he gets the rap for having been at the vortex when the tropical storm turned into the nastiest hurricane ever. Poor Barack.
So each day a new “too big to fail” entity goes, its capitalist tail tucked between its legs, and begs for a public handout in Congress or at the Fed, socialism for the rich. Coming up shortly will be the consequence of a hundred million or more of individuals who having swallowed the bait bought far more on their credit cards and can no longer pay up, especially after they missed a payment or two the the interest was jacked to 22% or 30% so their (US average) 10K plastic debit has to be written off sending the banks presumed recoup + income from interest askew. This will make the housing bubble look small.
So, as I’ve suggested here (in the new and old CE) for quite some time, we’re waltzing headlong into a depression, perhaps made all the worse by the relative opulence which a good chunk of the younger populace has taken as a permanent given all their lives. Well, get ready to learn how to live on the street or other such exigencies.
On a practical level for myself, for the moment whatever savings I accrued here in my on-arrival well-paying professorial gig, they have diminished (if exchanged into all mighty greenbacks) by a mere 33%: when I got here 98 won bought a buck; now it is 150. I am checking to see which 3rd word realms have maintained a parity with the local currency. So far it looks like Mexico and Argentina slipped equally, but not against the won. Philippines look livable too. However, things are so volatile that I won’t in the least be surprised if the buck totally collapses, though where this will drag the won, who knows. Locally the economy here has tightened up, noticeable in the anxious waiting-at-the-door solicitations at the many restaurants (papers say biz dropped off drastically) and an upsurge in the local beverage, soju, a cheap alcoholic rice wine.
Meantime Obama campaigned with the slogan “Change you can believe in!'” and while surely some right now, with the appointment of a slew of former Clinton people, the retaining of Gates, and the backing of the same old same old Wall Street guard, are feeling short-changed, the simple fact is that Obama’s slogan was truthful: the only “change” you can really believe in here in the good old US of A, is perpetuation of the same old two-party system between which the differences are marginal, and when nitty comes to gritty, the same policies will govern bedrock things like “the system” and making sure the Veterans of Foreign Wars halls across America continue to have reason for being. Any real change is going to be the consequence of the complete collapse of the present system. Which just may be in the works, coming to a mall near you. [Note: as malls close down, there’ll be space for the homeless…]
For a little corrective on the “to save the system we must get folks shopping again so the money flows and things keep growing” mantra which is part of “the system” thinking: