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OpEdNews Op Eds    H2'ed 2/9/09

A Note In A Bottle

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From abroad comes various kinds of bad news. Pots and pans in the streets of Reykjavik, Iceland, and the government collapses. Yes, just pots and pans! The government was so embarrassed (and impoverished for ideas) that it resigned. One (or more) of the PIGS is next, but which one only the Portuguese, Italians, Greeks, or Spanish have any idea. Their economies are upsidedown in the proverbial ditch, but this was a multi-vehicle smash-up and the paramedic countries are busy binding their own wounds. Meanwhile here at home the Republicans babble about budgets and fiscal responsibility as if they knew anything about it, and Democrats still try to sell these morons seats for the morning after concert. The economy is still in free-fall with jobs being shed a half-million a month. The cruel fact is that there is no morning after. The cycle of lost confidence and rigid disbelief must finally touch those who believe least before anything will begin to repair. The next morning will be a murderous hangover that could last a decade ... or more! We now have it on pretty good authority that the Dow Jones Industrial Average will fall below 5,000. This means that from the current 8300 area the value of stocks will decline an additional 40% over the losses already sustained. This will begin to get the attention of the free-market ideologues, but it will be too late to save millions of Americans from the destruction. And Americans are but a small part of the total. This is a world financial collapse with no country able to save the others, and the trouble that will emerge from the loss of jobs and homes and dreams of bootstrapping out of poverty will engulf the world for years to come. The markets will fall because stocks are still over-priced and earnings are falling, this means that price to earnings ratios will continue to go grotty as the world economies contract. Buyers are wary and sellers distraught. How much more do they have to fall before you realize that this is a death spiral? Earnings will stay down because the so-called stimulus package being concocted in Washington is way too small to make a significant difference. Boldness, the only thing that can transform a government into a lifeboat has given way to post-partisan we're all in this together cumbaya platitudes and heavy breathing. President Obama needs to come to his senses about post-partisanship. The very last thing you would want to do is give a dying man a bottle of the stuff that is killing him. Why then give the Republicans the opportunity to rant about free-market ideology and fiscal conservatism when these are precisely the problem. Post-partisanship is a sweetmeat that can wait until the Republicans have a positive ideology (which is maybe never!). Ask yourself: If you were a Republican would you sign on to a Democratic ideology? Of course not! The sad fact is that the bubble you see on the chart in the Dow Jones link, above, has to deflate. Bubbles always deflate and they must return to solid values. If, for instance, you were hoping that your house would retain some of its inflated value, forget it. It cannot happen. And, now you see the nature of the problem. All of us are addicted to inflated values and every last one of us is hoping that this whole thing will go away. It will not go away. The bubble is deflating and values must go back to pre-bubble reality. You lose! Joe down the street may lose more, depending, but you will surely lose. Your $450,000 house will sell for $275,000 when this is all over. You may not be the one selling it, however. The bank's bankruptcy court may be unloading it as best it can. The problem is world-wide. This means, as I wrote at the beginning, there are no tooth-fairies or fairy godmothers to swoop in and make it all better. A global depression is a serious thing. You have only read about them, but now we have one happening, and you are in the thrall of the opening moments, disbelieving that it is really a depression. I don't know what you want for proof, but if I throw your kids out of college, will that help? If you both lose your jobs there in Middletown, will that help? Do you really need to be dismembered personally to understand the pain of others? My personal belief is that Republicans (and Democrats) who have steadfastly put politics ahead of our economy and our obligations as a leading country will not understand this situation until it hits them over the head personally. We need to see some Congresspeople ruined, Senators and Representatives. They need to look at their holdings and realize that they are headed back to where they were financially at age thirty, but now they are sixty and have no time to make it up. The free-market ideology must be thoroughly discredited, and that is going to require massive destruction. Paradigms do not fall quickly or cleanly. Look at the scoffers about evolution by natural selection! The reason is that free-market people have other reasons for holding onto that false idea: religious belief, the psychology of authority phobias, confusion of individual liberties with economic realities, and so on. As it turns out, essays like this are really just notes in bottles to the next generation, assuring them that we—the shipwrecked—were at least as stupid as their history books say. JB
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James R. Brett, Ph.D. taught Russian History before (and during) a long stint as an academic administrator in faculty research administration. His academic interests are the modern period of Russian History since Peter the Great, Chinese (more...)

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