156 online
Most Popular Choices
Share on Facebook 21 Printer Friendly Page More Sharing
Exclusive to OpEd News:
Life Arts    H3'ed 6/18/09

Why the Coming Crash Will Be More Severe than the Great Crash of 1929

By       (Page 1 of 3 pages)   7 comments
Follow Me on Twitter     Message Richard Clark
Become a Fan
  (108 fans)

Why the US economy is far more fragile and vulnerable than it was in 1929

A summary of the main points made by Charles Hugh Smith in his essay at http://www.oftwominds.com/blogjune09/depression06-09.html:

Since the "Reagan Revolution" of 1981 (“don't tax and spend, just borrow and spend”), our federal government has borrowed and spent way too much.  Even worse, it has borrowed most of it during so-called “good times,” and on a scale once reserved for the rare Keynesian stimulus needed to combat serious recession.  Thus, now that we’re in a deep recession, when we can least afford it, we find ourselves at an unprecedented level of indebtedness (comparable, in terms of GDP, to the entire cost of World War II).  

In addition, we are saddled with:

1.  A corrupt-to-the-core corporate structure riddled with bogus accounting, reliance on financial trickery for profits, and misdirected/worthless/inadequate regulatory oversight.

2.  A banking sector of such debauchery and fraud that the excesses of the 1920s are by comparison more like the pranks of slightly-naughty choirboys and girls.

3.  A Federal system of entitlements (Medicare, Medicaid and Social Security) that has grown far faster than the underlying economy for decades and now threatens the very solvency of the government itself, so stupendous are the future obligations.

4.  A global military hegemony which costs more than all the other military’s and intelligence operations of the entire world put together -- the US military consumes more oil than the nation of Sweden (9 million residents). 

5.  An industrial, transportation and energy infrastructure that, rather than being rebuilt during the past 26 years of debt-based "prosperity," has crumbled in a long slow decline.  Rather than invest in electrical power grids and energy-efficient transport systems, the US squandered its trillions of borrowed dollars on toys, gewgaws, electronics made elsewhere, malls and commercial towers with only transient value, and millions of bloated, inefficient, poorly constructed homes no one needed or could really afford, i.e. "assets" that were not productive at all, "assets" that are now capital traps on a scale heretofore unimaginable.

6.  A paucity of US savings (and thus of domestic capital) with only one historical comparison:  during the depths of the Great Depression when unemployment was 25%.

7.  A huge reliance on financial leverage, debt, borrowing and trickery for corporate profits -- the US exports soybeans, increasingly worthless dollars and "financial innovations" that are now exploding in economies from Ireland to India with the destructive force of superweapons.  In exchange for this dubious paper, we have accepted actual tangible goods from the rest of the world.  And the rest of the world is now slowly waking up to the fact that they've been conned on a scale few can yet grasp.

Globalization has reworked the global supply chain in an astonishingly brief period of time.  As a result, the arbitrage of currencies, wages, governance (less is more profitable) and environmental regulations (zero is the most profitable) have all placed advanced post-industrial economies like the US at great structural disadvantage. 

The US claims to be competitive but much of this competitiveness is highly selective and thus illusory.  Everything in the U.S. -- labor, goods, buildings and taxes -- is high-cost, overregulated (except for finance, banking and governance) and vulnerable to unpredictable lawsuits and officially sanctioned looting.  Other than recent immigrants, non-US employers often find their workers to be surly, unappreciative, narcissistic, entitlement-obsessed, unhealthy, poorly educated, unmotivated, and more inclined to get-rich-quick schemes than actual enterprise or productivity. 

Meanwhile, middle management labors under impossible demands to enrich stockholders next quarter, and heavy turnover insures that few stay in any job long enough to learn it effectively.  Team cooperation is a doublespeak fraud imposed by "facilitators," creating a phony work environment where employees and managers alike pretend to care.  This bogus environment breeds a looting, game-the-system mentality in which everyone is grabbing for all they can before retirement, restructuring, reassignment, resignation or getting fired. 

A "quarterly-profits-are-God" mentality reduces the workforce (even the good workers) to units of input which are pared back or hired without regard to morale or loyalty.  This managerial and cultural pathology makes a mockery of worker loyalty and breeds the very qualities of distrust and "I got mine" attitude that undermines both productivity and workplace happiness. 

Last but certainly not least, the growth-dependent US economy is also quite dependent on cheap, abundant fossil fuels -- the very fuels that are rapidly being depleted, happy stories about unlimited natural gas and tar sands notwithstanding. 

Next Page  1  |  2  |  3

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Must Read 3   Well Said 2   Interesting 1  
Rate It | View Ratings

Richard Clark Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Was Pat Tillman Murdered by an American Sharpshooter to Shut Him up?

New JFK assassination bombshells

Two U.S. presidents implicated by ex-CIA black-ops assassin

The cholesterol - heart disease scam: How the medical-industrial complex is raking in billions at our expense

Four Ticking Time Bombs That Will Soon Ignite a Revolution

The Ultimate Goal of the Bankster-led Political-economic Warfare Being Waged Against Us Is . . . ?

To View Comments or Join the Conversation:

Tell A Friend