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Wed

26

Nov

2008

Getting Through the Coming Depression
Wednesday, 26 November 2008 21:16

by Bernard Weiner

Our men's group, currently in its 17th year, is composed of middle-class professionals -- lawyers, educators, therapist, writer, corporate manager, doctor, etc. -- and each of us in this perilous economy in recent months has taken a deep financial hit of one form or another or knows (or has heard of) someone personally who is struggling to hold onto or already has lost his/her job.

The general conclusion based on our personal knowledge, on the relevant economic indicators, and on what we are hearing from experts and economic-focused journalists and bloggers from around the globe, is that the U.S. and the other nations of the world are in a deep recession and are heading quickly toward a major Depresssion. This dangerous state could last for many, many years.

We middle-class types most likely will make it through to the other side, with a lot of financial pain, belt-tightening, supporting each other more, joint projects, etc. The wealthy, of course, will easily weather the crisis. But the lower-middle class and the poor, with fewer job skills and a badly frayed "safety net" of social services, will be the true victims of the economic meltdown. Charities and shelters and church programs will be overwhelmed. The permanent underclass will grow at a rapid rate, with a comcomitant rise in violent crime. Pollution-control and global-warming projects may well be postponed or canceled due to lack of funds. Public education, as is usual in times of belt-tightening, no doubt will take a big hit, thus perpetuating the problem.

IGNORING THE WARNING FLAGS

Government economists like Alan Greenspan, Ben Bernanke and others (the supposed "wise men" about money matters) professed to be surprised by the major collapse of the financial system, and the housing market, that has brought us to our present pass. Lots of sharp observers sussed out what was coming long before, but, by and large, they were derided as tinfoil-hat paranoids while the golden goose continued laying such profitable golden eggs.



Economist Duncan Black, who writes under the blogger name Atrios, ( www.eschatonblog.com) had been warning for nearly two years about what he called the "big shitpile" growing exponentially in the country. He, and a few others, realized the consequences and ramifications long ago, but few in power wanted to pay attention. It was all good, as long as housing values continued their "inevitable" rise, interest rates were low, and credit plentiful. An occasional government insider would warn about the extreme danger of unsupervised hedge funds and unregulated bundling of shaky morgages and "credit default swaps" and so on, but they too were shunted aside by many, including a complicit Congress that should have been exercising oversight.

About a year ago, a number of the members of our men's group started asking our financial advisors what they thought about "the big shitpile" concept, even if that exact term may not have been used, and whether we should be concerned. The advice we tended to get back was the prevailing wisdom of the time: there might be a "slight, temporary downturn" in the economy, but "the markets always bounce back" and the "longterm prospects look good." Just ride it out. And then came the bursting of the housing bubble, the collapse of the financial institutions and thus the easy-credit system, and the resulting devastating market crash. And the worldwide recession/Depression.

And now we're all expected to grab a shovel and help reduce the huge "big shitpile" stinking up the middle of our country's economic living room. We're all in debt, including our children and grandchildren, while we bail out the largest financial and corporate institutions -- those deemed "too big" to risk their going under -- in hopes that the economy will be stabilized and start slowly climbing back to health.

But, per usual, even today there is precious little oversight of these hundreds of billions of dollars (or is it trillions??) being doled out. And, surprise!, the banks and corporate behemoths are using our money in ways that aid themselves but do not really help out ordinary American borrowers and consumers all that much. The rich get richer, the politicians get to seem as if they're actually doing something, and the "bailouts" arranged in our names ensure that we ordinary Americans wind up as the ones paying the freight.

AMERICAN "SOCIALISM" ARRIVES

I remember my parents talking about the Great Depression they lived through in the 1930s, the millions of proud unemployed men that were forced to the soup kitchens for sustenance, the "safety-net" institutions of the time that were overwhelmed by the demands for their limited services, and the demagogues that were stirring up angry crowds by blaming scapegoats of one sort or another ("the blacks," "the Jews," "the Catholics," "dirty immigrants," et al.).

The situation is so dire in late-2008 that free-market capitalists have become, so to speak, a variant of "socialists" virtually overnight. They are having to recognize, against their own ideology and instincts, that there is such a thing as the "public good/public interest" and that a centralized government has a major role to play in ensuring economic survival and a general sense of "we're all in this together and need to get out of this together." That's a sea-change in American political culture, which brings with it all sorts of ramifications, some positive, some negative.

In 1932, the aristocratic New York politician Franklin Delano Roosevelt became President and soon, faced with the reality of the crashing economy and endangered institutional structures, found himself taking drastic social/financial action to stave off imminent economic collapse and the possibility of revolution.

FDR, recognizing that the most important task was to get citizens earning a paycheck once again, set up government works projects, mostly centered around rebuilding the country's infrastructure. The initiatives worked, with a side benefit that the psychological mood of the country shifted away from panic and fear into glimmers of hope and optimism. Unfortunately, it took shifting to a full-scale war footing -- building ships and planes and tanks and bombs -- to yank the economy back to solid health.

Barack Obama is inheriting a godawful mess as he prepares to move into the presidency, virtually none of it of his making. The governmental/corporate looting system that was the CheneyBush Administration, with greed as its organizing principle and lack of oversight as its all-clear authorization, has broken the back of the American economy. And because when America sneezes the rest of the world catches a cold, the situation is even more dangerous and desperate.

REBIRTH OF "NEW DEAL" PROGRAMS

Obama, some in our men's group speculated, might well turn out to be this generation's FDR, if he has the willingness and intelligence to seize the moment -- and luck on his side.

In his comments toward the end of his campaign, Obama talked about the necessity to put our citizens back to work, so it's possible that he will initiate huge infrastructure projects that will generate millions of salaries. Likewise, by moving ahead quickly with massive alternative-energy projects, he may be able to create millions of other "green" jobs. However, to be able to start these massive projects, he will have to borrow immense sums of money from the international community (read: China, which is undergoing its own economic downturn).

None of this will guarantee success. We're talking long-range investments here, which may pay off many years down the line. But the point is that the federal government, after being ideologically and intellectually asleep at the wheel for eight full years (the better to allow for the organized looting by their corporate supporters), finally will be headed in the direction of intelligent action.

If this means government-sponsored works projects, heavy borrowing up front to finance the initiatives, universal health care as a way of dealing with skyrocketing costs, tighter regulation of banks and other lenders, it appears that the American public, even including many staunch conservatives, will approve. Maybe we can grease the tracks for such necessary initiatives by not using the "s" word; we can refer to these projects as "national-security infrastructure programs" or some other euphemism.

In the meantime, many, like those in my men's group, will realize that to get through the coming lean years, there will have to be much more sharing by friends and neighbors of resources such as garden harvests, tools, vehicles, work, cash loans, meals, etc. We all know that this will entail a shared sacifice and that it takes a village's collective wisdom and strength to get through hard times.

It worked for our parents and grandparents, who transformed themselves and the U.S. in the process. There's no going back now. The "big shitpile" is where we are. We can either give in to despair and hopelessness, or, in a spirit of hope and optimism, we can work to change things for our generation on behalf of our children and grandchildren. In so doing, we have the chance to transform ourselves, and our country, for the better.



Bernard Weiner, Ph.D. in government & international relations, has taught at universities in California and Washington, worked as a writer/editor with the San Francisco Chronicle for two decades, and currently serves as co-editor of The Crisis Papers (www.crisispapers.org). To comment: crisispapers@comcast.net .

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