The Coming Great Depression: Scapegoats and Exploitation (November 26, 2008)
Correspondent Cheryl A. (who recommended the coming depression as a topic) followed up with a suggestion to define "depression" and "recession" as a baseline/context to the discussion.
Thank you, Cheryl, excellent idea:
A recession is a contraction phase of the business cycle, or "a period of reduced economic activity." The U.S. based National Bureau of Economic Research (NBER) defines a recession more specifically as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP growth, real personal income, employment, industrial production, and wholesale-retail sales." A sustained recession may become a depression.Depression:
A depression is a severe and prolonged downturn in the economy. Prices fall, reducing purchasing power. There tends to be high unemployment, lower productivity, shrinking wages, and general economic pessimism.My rough-and-ready definition: any period of stagnating/declining assets, income or purchasing power longer than 8 quarters is a Depression. Then there's the wag's definition: when you lose your job, it's a recession, when I lose mine, it's a Depression. No doubt pundits galore will grasp at some phony 1% "rise in GDP" (Never mind what's happening to incomes or assets) to declare the "end" to the "recession."
So in the Fantasyland of CNBC/MSM Punditry, 3 quarters of declining GDP interrupted by a single quarter of manufactured "rise" in GDP followed by another 4 quarters of declining assets and income (purchasing power) will be labeled "back to back shallow recessions."
The MSM will be anxious to call the Depression "stagflation" or "back to back recessions"--anything but what it really is, a Depression.
Given the excesses and cycles/trends which are intersecting in this timeframe, I would anticipate a sharp Depression of 4-5 years (2012-2013) which appears to end in a "false Spring" and then reverts to a stagnation/decline lasting another 10 years to 2022-23. More on that later.
Today's topic: who/what is responsible for the coming Depression? Put another way: will the American public seek scapegoats, or will it be honest enough to forego scapegoating in favor of a real analysis of exactly who/what caused the Depression?
Correspondent Chris S. made some comments recently which address just this question.
Good essay The Baby Boom's Market Order: Sell, Sell, Sell (November 20, 2008) and is only a tip of the iceberg at this point that will sink the RMS Boomer. I would suggest another essay regarding who has already taken to the lifeboats, grabbed a seat, and put oar to the water. The WHO is very important. At this point it is more important than the how or where they are going. Many people are stuck below decks and don't even know it still.Thank you, Chris. To start the analysis, I propose the "Private Jet Metric:" if you have to lease your private jet, well, you didn't make it into the lifeboat. If you have to beg from Congress, you didn't make it, either. Those in the lifeboat got their hundreds of billions in private meetings; there was no need to sully themselves with abject public contrition or begging in front of cameras.
I have on occasion mentioned the "traffic jam" of private jets bedeviling Kailua-Kona Airport on the Big Island of Hawaii. There just isn't enough tarmac for all the private jets of those visiting their 3rd or 4th or 5th resort home.
If you're in the lifeboat, you don't deal with regulations; you have attorneys and lobbyists for that. (41,000 lobbyists and counting in D.C., and guess how many represent Common Cause or other "we represent the common citizen's interests" groups).
For a deeper analysis, let's turn to correspondent Bruce C. who recommended two historical/analytic approaches:
The Law of Social Cycles is a theory of Varna, arising out of the Indian episteme. Essentially, there are four different types of people, warriors, intellectuals, acquisitors and labourers, who find basic fulfillment in four different kinds of ways.The Decline of the West (By Oswald Spengler): (This is a long excerpt but worth the time/effort)
The Decline of the West (German: Der Untergang des Abendlandes) is a two-volume work by Oswald Spengler, the first volume of which was published in the summer of 1918. Spengler revised this volume in 1922 and published the second volume, subtitled Perspectives of World History, in 1923.So what can we distill from this analysis?
1. The Mainstream Media cannot be trusted to "identify the culprits" as they have actively promoted and abetted the obfuscation and diversions which have deflected any questions or analysis which got close to the truth, i.e. that a tiny privileged class gained immensely from the phony debt-based "prosperity" while the majority lost purchasing power.
And now this same elite benefits as easily-predicted stupendous losses are socialized (bail-outs paid for by taxpayers far less wealthy than those being bailed out) while profits were left safely private. Hedge fund managers got special tax breaks, as did all those multi-millionaires using offshore tax havens and squads of high-priced tax attorneys to forge and manipulate tax loopholes.
So expect the MSM to create red herrings, dodges, excuses, foreign scapegoats, etc. and to lead the gullible public down a path of "alternative explanations" which leave the elites untouched. For instance, lack of regulation: nice, but who lobbied to have the regulations relaxed? What pressure was applied, and by whom?
2. "Money" will continue to exploit/dominate until "Blood" rises up to displace that power with its own power.
In the U.S., I interpret Blood to mean a democratic (small "c": the Democrats sold us down the river as fast if not faster than the "never met a tax cut and resulting deficit we didn't love" Republicans) social movement which forces the political class to betray Money via the only threat Blood can raise: you will lose an election and hence lose power and wealth.
Or, Blood will storm the state capital or launch a Tax Rebellion in which the taxpayer debt-serfs simply stop paying taxes. Once "Money" no longer has unlimited access to tax revenues, the worm will have turned against Money and their political lapdogs in both parties.
3. The ideological banner of "free enterprise" is a wonderful cloak for the reality of exploitation. Ditto "democracy." If we're so "democratic," how come 97% of all elected officials "win" re-election, regardless of the disasters they have fomented/aided?
4. When the exploitation reaches unsustainable extremes, then the exploited finally rise up. I would guess the exploitation ($8.5 trillion appropriated from taxpayers and given to the ruling elites) has reached a financial extreme; the poltical extreme is probably years away. The suffering will have to become far greater and more widespread for people to start questioning if all this was just an inevitable "business cycle" like the waxing and waning of the moon, or if it was calculated exploitation of the "system" by a few who benefitted to an extraordinary degree at the expense of the many who now pay the price of their blindless/apathy.
In a similar vein, correspondent MacLean recommended this provocative piece:
Congress Confronts Its Contradictions (By George Monbiot)
According to Senator Jim Bunning, the proposal to purchase $700bn of dodgy debt by the US government “is financial socialism, it is un-American”. The economics professor Nouriel Roubini calls George Bush, Henry Paulson and Ben Bernanke “a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America”. Bill Perkins, the venture capitalist who took out an advertisement in the New York Times attacking the deal, calls it “trickle-down communism”.
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