This financial crisis has been a long time coming. It is a result of how our democratic (small d) politics works, on local, state, and national levels. Politicians on the left and, less so but still egregiously, on the right, have learned that the path to power is to make promises for which there is insufficient revenue, and then to deliver on them by borrowing money (the preferred method) or by raising taxes (on the “rich” and the sinful).
These grandiose promises are made in exchange for votes of course, but they are made primarily in exchange for campaign contributions, from large corporations, unions, and trial lawyers.
Individuals have also learned that only a fool lives within his means. Many people learned to live on home equity loans and credit cards, in expectations of inevitable increases in real estate values and general prosperity. Flipping condos was considered a great way to “earn a living”, as was day trading on the stock market.
Unfortunately, as Maggie Thatcher said, “The problem with socialism is that you eventually run out of other people’s money.” This wasn’t all about socialism. Much of it was just old-fashioned belief in getting something for nothing, a concept that informs but precedes socialism.
Judgment day has finally arrived. The U.S. government, California, New York, San Francisco, Detroit, cities and states across the country, and countries across the globe, have all, more or less simultaneously, run out of other people’s money.
Turns out there are no other people. It’s just us chickens. There’s the us that consumed, and still expect to consume, all these goods and services, like cars and boats and social security. And there’s the us that provided them, paid with IOUs. Ultimately it’s the same us, and we can’t pay ourselves. So, no more new stuff, no retirement, no health care, no consumers, no jobs. God bless the child that’s got his own. He better invest in gold and ammunition.
Stimulus, schtimulus, there is no quick fix. We all have to pay it all back. Except Goldman Sachs of course. In other words, we are all a lot poorer than we were pretending to be. Except Goldman Sachs of course.
There is a lot of whistling past the graveyard these days, desperate hopes that this is just another recession like previous recessions, and it will be over soon, and everything will be back to normal. That’s why the stock market is doing so well.
Not gonna happen. We’re not looking at a possible double dip. We are looking at a perma-dip. You ain’t seen nothin’ yet.