Chatter about ruin and collapse
As I’ve written before, we’re in a crucible here and no one knows what the outcome will be. A statistic to watch is how many businesses never re-open.
Donald Trump needs to get the best possible gloss on the state of the economy by November 3, so he’s trying to fund spending. The Federal Reserve is fully in rescue/bail-out mode. Seeing the latter, financiers are driving up the prices of assets — to a point where the salubrity of “Wall Street” has even-less-than-usual relation to that of “Main Street.”
How many businesses never re-open just can’t be known. The economic statistics are all over the place. But within the population there is a sense of foreboding. Great tides seem to be shifting. There already had been intimations of radical unsustainability, given a world of money-tree-money, debt acceleration, fractional reserve banking, cyberspace opacity, unmeasurable methane pools under the tundra, etc.
The next (fall) issue of my Green Horizon Magazine will contain an interesting article about “collapsology” by David Watson titled “Soon To Be Picturesque Ruins!”.
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One could get lost for weeks in the online chatter. It’s a challenge to discipline oneself to avoid it! But I was listening this morning and could clearly hear the undercurrent of foreboding:
(condensed, edited, paraphrased, names changed)
Pat:
The real hard figures that count for the future are the employment and profit indexes. In the last several months something like prices-charged can be manipulated to look like a sharp V-shape, but only temporarily. As profits crater on top of those higher prices, macroeconomic demand must fall no matter how much cash they inject into the economy. As unemployment not only grows but becomes structural and entrenched, what we will have is a depression, not a momentary gasping recession. People out of work ALWAYS means lower demand, lower production, lower profits. And we are now caught in a downward spiral that we cannot yet begin to see the bottom of except to say it is going to be far worse and far longer before we hit bottom than anyone has previously predicted. The politicians could have arrested that spiral with bigger inflows of stimulus on top of the already poorly distributed flows up till now, and the Democrats did take a shot at it by passing a $3.4 trillion plan, but that was and remains blocked by the GOP, which simply does not care what happens to individuals.
I personally do not like the proposed Democratic stimulus, it is FAR too generous to the unemployed, making sure they are paid $2,600 per month on top of what other Unemployment Insurance income they may have. And even in the reddest state where UI is low, like in Florida at $257 per week, that amounts to a middle class income for most unemployed workers and well more than they were making when working. It is also more than I receive in Disabled Veteran Compensation, meaning vets are even lower in economic standing than unemployed people. In the meanwhile my fixed income has to cope with the shortages and higher prices with no supports or assistance at all. And the higher prices are here. It will get worse. With their plan I will not survive this year financially, I am already stressed to the point that the new house and move across country is in danger of failing this summer. Barring a miracle I will have to walk away from my new house somewhere around the election but certainly before this year is over.
What they needed to do and still do is a temporary Universal Basic Income where all adults are given a tax exempt $2,000 per month rather than a very uneven and poorly distributed extra UI benefit. States with very stressed budgets are denying UI claims even though every granted UI claim means an extra $600 per week enters that state’s economy. So, 100,000 people granted UI would mean a federal stimulus to that state of $60 million they will not get by denying those claims. There are at least that many people in Florida alone that have been arbitrarily denied and who are appealing their decisions.
I think if forensic accountants ever can or do go back and try to trace where all the trillions distributed so far have gone, we will see that something like two-thirds of that money ended up on Wall Street and in the pockets of shareholders who are the very last to need it. We are talking about two things here when it comes to stimulus, one is need, the other is arresting that downward spiral in the macro-economy, and the GOP understands neither.
My conclusion is that we are on track to see the economy fall into a deep and lasting depression we may never fully recover from and that along the way tens of millions of people like me will be not just damaged economically but destroyed.
I do believe they will finally one day years from now see a future so bleak that they will attempt to slow the fall with socialism but it will be too little too late and the wrong prescription anyway. They will attempt to level out incomes when what they have needed to do all along is level out assets. They set up a system mostly via the Fed that concentrated assets in too few hands, we now have an economy where 10% of Americans own 85% of all assets and capture MORE than 100% of all new national income, and it has been that way since Bush was in office. In order for them to take more than 100% of all new income they have to capture 100% plus a chunk that used to go to the other 90% of us. Meaning, literally, the rich are getting richer and the rest poorer. Being in the 90% means riding the down escalator to poverty while the 10% ride the up escalator to wealth — and it is baked in, social mobility is as low as it has ever been. The so-called solution will just make that worse.
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Pat then responding to a comment by Althea:
Your values remind me a lot of my mother and grandparents. My great-grandmother was born into wealth, as her father had built up a small mercantile empire in Oregon in the 1800’s, and my grandfather was raised in luxury — but they lost it all quite literally overnight when he was a teen. He was scared for life by that. When he died we found envelopes with small amounts of cash hidden around his house, several, and we are sure that there was quite a lot more we did not find, possibly in coffee cans buried in his yard or under floorboards.
I do not think inequality is of itself evil, but I do believe that when the talents and hard work of millions is under-compensated in a structured economy that is tilted — in the favor of a very few who enjoy massive levels of access and similar levels of unequal justice — then that system IS evil and people have to stand up to it, change it, break it if that is all it will respond to. Socialism is not viable; it can be made to work for a while, but always fails in the long run; and then, when it does, it takes most of what is good in a culture with it.
Nonetheless, I think the West, particularly the US, has reach a point where the wealthy know their time is almost up and a socialist wave will wash them away. They’re staving that off as long as they can with bribery and quasi-socialist programs to temporarily blunt the coming socialist impulse of the populace. This gives them time to feather their nests, loot the government and treasury, convert to portable assets, off-shore what they can. They have no loyalty to the US, their loyalty is to themselves and mammon, that is why Trump is so popular with them, he is the ultimate self-centered money-worshiping pirate with zero compassion or empathy.
I would not worry so much, and not for my own financial issues either, except this time the sweep of history will very likely bring death and misery, possibly even extinction with this turning. History has great wide swaths of societies rising and cultures falling, and Dark Ages overtaking, to later revive in renaissance, sometimes after many centuries. This time, though, the pressures of billions of people and nations possessing high technology mean that humans could not simply go into a dark age but exit altogether! It almost feels inevitable. And even if that dire possibility does not come true I shudder to think of all the reinventing-the-wheel we will have to do to emerge from the dark. I will be gone, but, what was all the work and struggle for if a few narcissistic playboys can bring our entire culture to this darkness with their rapacious greed? It makes me tired to think of the effort and work and self-imposed ethics that prevented me from being “successful” only to find out late in life I never actually had a chance in the first place. The banquet was laid for others and not the likes of me.
I was wealthy once. Or, I should say, a wealthy person took a fancy to me so that, with him, I lived the kind of life people so often dream of. That wealth by now is well into the billions — his father had been lucky enough to inherit a lot of money and was a bank president in the depression buying up foreclosed property at pennies on the dollar, farms, mines, ranch land, owned some 22,000 acres in and around his state’s capital. My friend bought depressed stock at fire-sale prices, but, to this man I was an object, and money was a tool/weapon if that was what was needed to get his way. After three years I left the relationship. He is dead now, but I am sure he would have felt a real kinship with Donald Trump, and people like Jeffery Epstein.
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Reply to Pat from Seymour:
Some businesses aren’t viable right now. With people working from home there’s less need for suits. No coincidence that Brooks Brothers declared bankruptcy. Yes, casual dress is a trend, but the virus was a huge catalyst. In New York dry cleaners are closing down for much the same reason. Gyms too are having trouble. Town & Sports Intl, a leveraged buy-out victim and zombie company for years, is once again pondering a filing. Equinox, a high-end gym, has not been paying full rent. Restaurants for sure can’t survive on outdoor dining and delivery. Many are closed or wondering about next steps. And, of course, airlines are toying with mass layoffs — they’ve been very open about not being able to operate profitably with the middle aisle not filled. It’s clearly selective and mostly related to restaurant and leisure. We’re still not feeling the second shoe to drop, government jobs. Tax revenues are down. Local government will have to lay off and raise taxes on a smaller tax base.
