Thursday, July 21, 2011
Here; there be Dragons - Congress is ready to let the country default on its debt obligations, no matter what.
“I will not vote to increase the debt ceiling.”
-- Michele Bachmann
As I write this, the United States is a little over a week away from the financial equivalent of Hiroshima. Absent a miracle now, the U.S. will fail to raise the debt-ceiling (something which Congress is required to do if they want to go on borrowing money), triggering a default on interest payments on current debt and bringing the entire American government to a hard stop.
From Iraq and Afghanistan to the local National Guard armory, American military personnel will not be paid. Social Security checks will not go out; domestic organizations from the Post Office to the local Department of Agriculture and FDA inspectors will cease work.
For their part, the Tea Party types in Congress have made it clear (Bachmann being their unofficial leader-of-sorts) that they will not vote to increase the debt ceiling, no matter what sort of ‘deal’ gets made in Congress between now and then. They’ve not made a statement regarding perceived consequences; perhaps they really just want to see the pretty fireworks when it all implodes, or (most likely) they just don’t fucking know any better.
Meanwhile, the Federal Reserve is making contingency plans – there are at least some who see the truth, and they’re engaged in the moral-equivalent of the citizenry who spontaneously went to the outskirts of Saigon to dig tank-traps in the spring of 1975 while their government told them to ‘remain calm’.
I don’t know whether to laugh or cry.
So, what are the consequences? Let’s take a look.
First, our debt-rating would be downgraded. Already, three credit rating agencies have stated flatly that our coveted AAA debt-rating could drop to the status of junk within days.
Second, the stock market could collapse. (Now, I’ll warrant that this has less impact on Joe Average than you might think – most 401K’s are history, thanks to the recession; the only people who own stocks are that sliver of the middle-class which survived, and the wealthy) – however, there’s an immediate effect on things like employment when a company’s stock loses 90% of its value overnight.
Think an official unemployment rate of 9+% is bad? Try 30%.
Third, you’d start seeing dominoes fall in a hurry. Stocks get hit; employment gets hit; everything from the local grocery to the corner sandwich-shop go out of business. In fact, most things would grind to a halt.
Fourth, everything in America would likely double in price overnight. Stating that we’re no longer going to pay our bills is sort of the ultimate ‘fuck you’ to the rest of the world. Anything we get from overseas (which is a lot) wouldn’t show up for fear of nonpayment; anyone sitting on goods would likely hoard them against payment in something which had value (either trade, or gold/silver).
Speaking of gold and silver, count on those going through the roof. Gold is now at $1,500+/ounce; that set an official dollar-for-dollar record recently, but not a real, adjusted-for-inflation record – it’d have to reach $4,500+ in today’s dollar to do that. There’d be nothing to prevent that from happening.
By the time all of these things happened – and they’d happen at unholy speed – we could start looking for serious civil unrest. (If you like the genre of future-history, you can go here and read a piece I wrote this past spring regarding just such a scenario – it begins with a default by one of the nation’s largest states).
There’s a better-than-even chance of balkanization if we get to that point – and there’d be little the government could do to stop it, because the military, National Guard stipends, and most of the nation’s police-forces’ salaries would stop immediately. (History’s on my side here with plenty of examples of soldiers not showing up for the particularly dangerous work of putting down domestic insurrections when they’re not getting paid.)
At this point, it’s anyone’s game. Most people who start revolutions expecting to have a semblance of control don’t quite realize that when ‘power lies in the streets’, everyone is a leader – and when they all show up to the party, no one is in charge.
Obama has the habit of entertaining nuclear-options (remember, he and Bernacke cooked up the whole quantitative-easing thing late last year as a means of injecting money into the economy when the banking bailout didn’t work) – and it’s quite possible he could simply invoke the Constitution and his oath to ‘preserve, protect and defend’ by way of issuing an executive order to raise the debt ceiling.
While this would make the problem go away – at least, until the next election – it would send a clear message to the rest of the world that our government was permanently broken; cries of ‘Dictator!’ would be heard from the far Right, and in this case, they’d be partially correct.
Polarized and incapable of making a decision, Congress may well be handing Obama something he doesn’t want and no sane person would contemplate unless disaster was looming. With their simplistic and skewed understanding of economics and politics, the Tea Party faithful in Congress are behaving now like a gaggle of schoolboys in a room ankle-deep in gasoline who've all-of-a-sudden decided that playing with a lighter is a good idea. A default at this point would cost the American economy 10% of its GDP outright, sending us into a depression-with-a-capital-'D'. Obama is losing his support-base over his bizarre stance on Social Security and Medicare, and now Bachmann and her Teabagger minions are already clapping, anticipating the fireworks.
Meanwhile, no one is at the helm of the Ship of State - and no one hears the vague rushing sound of the waterfall at the end of the world.
Wednesday, July 6, 2011
Returning to the Past is America's Future....
#1 - The Future of Public Services - Bracketed by three main freeways (at a distance), the little town of Alto, Texas lies southeast of the Dallas metroplex on the way to – well, no place, really. It’s one of America’s small towns – grown from farmland and farming people, and largely independent of most things except the land.
Now, however, Alto is getting some press – although it’s now famous for something which I’m sure the citizens wouldn’t want.
It’s the first city in the nation to downsize (read: fire) its entire police force.
Local county sheriffs fielded 20-something calls in the first week of this debacle – over 75% from the little town of Alto (including the arrest of four men from the Dallas area who’d decided to knock-over one of the town’s banks in broad daylight).
#2 - A Return To The 17th Century - About a month ago, a man in his late ‘50’s from North Carolina – unemployed for three years and badly in need of hospital treatment for a chest condition – robbed a bank in his hometown for $1.00. The reason? So he could go to prison in order to get proper food and medical care. This Dickensian return to debtors-prison 'logic' by way of looking after the least-fortunate in American society hardly raised eyebrows.
We only need to read these two stories within the greater context of what’s happening in America to understand that catastrophe is just over the horizon. I’m not talking about ‘severe recession’, where the populace is kept in check by unemployment compensation and variant welfare programs.
I’m talking about the kind of thing which only requires a spark to set off some very unpleasant consequences.
All over America, states and cities are either engaged in or contemplating variant degrees of ‘shutdown’ in order to balance their budgets. The Federal government, misled by a group of people who’ve caved-in at every turn and in thrall to a mob of economically-illiterate morons calling themselves the ‘Tea Party’ is all set to give the far Right everything it wants by way of budget-cuts.
We can forget any additional safety-net. We can count on the Affordable Health Care Act (disparagingly called ‘Obamacare’ by its detractors) being defunded. Say goodbye to parts of Medicare; count on the retirement age being raised on Social Security (and count on some early moves to privatize it).
Speaking of privatization, you can count on private corporations being handed prisons, schools, fire departments, and anything else which can be sold-off (corruption is the usual result of such actions, as evidenced by the recent test-cheating scandal in Atlanta, and multiple instances of corrupt judges sentencing people to for-profit prisons for financial kickbacks).
I think it’s safe to say that we’re going to see a lot of sick people. A whole lot of them. Babies; too. Plenty of banks out there to be robbed for a few dollars – because the fear and stigma of a prison-sentence is nothing compared to starving in the street with a treatable medical condition.
Speaking of starving, there’ll be more than a few people living in the street this fall and winter. By Thanksgiving, it’ll likely be impossible to ignore the problem – parking your car downtown will be a risky affair after dark – and in some cities, because of the lack of police and the increase in desperate people, it’ll be dangerous anytime.
Retail businesses in city-centers will have to organize, pooling resources to hire additional security.
“Wait until October”, said Ralph Nader, recently. “That’s when the budget cuts will hit home.” He’s right, of course – the timing of Federal, nationwide budget slashing, cold weather and desperate people will be a perfect storm of sorts; a trifecta of disasters.
With the Democrats now behaving like Republicans and the Democratic leadership from Obama on down now obsessed with reelection rather than leadership, and with the true tenets of Liberalism now little more than a memory, we cannot look there for solutions. The extremists in charge are not being met by extremists on the other side; instead, they’re met by a group of ‘intellectuals’ led by Obama and promoting the idea that logic and reason will prevail in the face of a group of people who’ve already bought and paid for the government, the courts and the military. What Obama and his supporters don’t realize is that they’ve already lost.
America’s religious institutions are now engaged in the business of self-preservation through endless expansion and fund-raising; some have created themselves anew, touting a weaponized gospel of conquest and radical extremism. Speaking out for truth and justice are a thing of the past; advocating the lot of the least among us is by and large history.
The real question that’s left isn’t “What do we do?” The real question is, “What happens next, and when?” Frankly, we’re likely past the point where the Bush era destruction of the rule of law is reversible; we’re past the point of reversing the damage to the economy from thirty years of Chicago School economic idiocy, as the ‘trickle down’ theories which brought us to this pass are now firmly ensconced as Holy Writ among the new crop of Teabaggers and suchlike; we’re also likely past reversing much of the damage done to our environment (that issue being mired in a politico-religious morass based on the far-Right’s rejection of science).
No; the only real issue left is to do a little math – and ask ourselves whether it’ll take 50 towns like Alto before the whole thing collapses, or 500; whether it’ll take 1,000 people robbing banks for health care, or 10,000 before a revolution occurs.
I don’t put much faith in the ballot-box any longer; the inmates now run the asylum, and current trends are calling for more, and not less, of the same. Elections are an ineffective illusion; a means of giving people the misled notion that they’re actually participating in their own government.
Two anecdotes. The future, as I’m fond of saying, isn’t set – but connecting the dots is becoming more and more a bleak affair; a Greek tragedy where the outcome is more and more certain. We’re out of money, out of time, polarized down the middle, and past the Age of Aquarius. Peace, love and understanding are thin on the ground; the storm you see in the rear view is the New Dark Age, coming to bite us all in the ass. Objects Are Closer Than They Appear.