elections ago, Democratic political-carnivore James Carville coined the phrase,
�It�s the economy, stupid,� to denote Papa Bush�s failure to properly address
the 1992 recession. The senior Bush was the idiot then . . . but all of us,
Americans, may be jointly the idiot now. And maybe we shouldn�t be talking
about a recession, but a true depression. You know, like back in the 1930s,
with our McMansions but without apples.
It�s a natural
human instinct: to narrow things down, to simplify things. And even people with
extensive education and high professional stature succumb to any facile answers
to the most difficult and intricate questions. Right now in these United States
we seem to have major trouble accepting the �R� word when it is really the �D�
word that should be worrying us. No, the economy is not just simply slowing
down; it is tanking!
In the past year
I�ve attended more than a half-dozen banks'-sponsored presentations for their
business customers (my clients) about the state of the economy --
international, national and regional/local. A long time ago, I reached the
conclusion that most bank economists are but meaningless window dressing with
no other value; after my latter experiences, I am now totally convinced.
state-of-the-economy breakfasts, during the closing �questions and answers�
periods, I have been posing for all of three years the same questions dealing
with the out-of-control real estate �fake market� and the parallel
�bubblicious� stock market based on a totally unsustainable
consumption-through-credit rate of growth. Questions to which I have been
receiving the same idiotic stock answers; answers that you get to hear
monotonously and often from the blokes and broads at CNBC: �Heck, our real
estate prices aren�t really that high, only four or five times the annual
household income; and that�s really comparable or even lower than the ratios in
most European nations, where they can get as high as seven times.� Also, they
dismiss an overvaluation in world stock markets, perhaps of 5 to 10 trillion
dollars, by saying that it isn�t much when measured against a combined world
markets� valuation of around 60 trillion dollars.
Aren�t we able to
see that grotesque rationalization by our cadre of not very bright economists,
Wall Street bulls-on-steroids, and don�t-give-a-damn politicians? Our
socio-political system, unlike that of Canada, Europe or Japan, does not cater to
the well-being of people -- or at least not as much, as we see other nations
with free higher education, universal health care, great public transportation
systems and many other perks we don�t have -- so a housing ratio comparison is
totally out of place, absurd. If the Europeans are putting 40 percent of their
income into housing, we probably should be aiming at nothing higher than 25 to
And it isn�t the
crookedness of the subprime fiasco that got us here, but a runaway upsurge in
values that had less to do with the workings of a free economy -- the forces of
supply and demand -- and much more to do with greed . . . in great part
selfishly promoted by the real estate industry itself. So here we are 2 or 3
trillion dollars in overvalued housing, some of it already spent in past
consumption (equity loans), the rest in the pockets of crooks, house-flippers
and agents who benefited from unnecessary, unwarranted commissions. A properly
structured capital gains tax on short-erm real estate profits would have
prevented this second onerous tulip festival.
As for that present
valuation of 60 trillion dollars for the world stock markets . . . what would
that value be if earnings decline by 25, 50 or 75 percent (something which a
depression would bring about in short order); 45, 30, 15 trillion dollars
(using same price/earnings ratio) . . . what then? Haven�t we in the US come to
the end of the road as we consume more than we produce? Our grandkids can no
longer collateralize our borrowing, and China is not likely to go along banking
our diminishing-value dollars.
taken Norman Vincent Peal�s power of positive thinking several degrees beyond
rationality. The made in America �something for nothing� syndrome, which has
given us multi-level marketing and other get-rich-quick schemes have seen their
day . . . even with the spiritual backing of those Christian mega churches that
promote the Gospel of Greed instead of espousing a Love Thy Neighbor doctrine.
predatory corporate practices, untaxed individual greed, and unrestrained
consumer gluttony, together, are bringing this economy to its knees. Now, after
the fact, the partner-in-crime government wants to bring about the
establishment of some market controls . . . overhaul the system, they say; that
after lower- and middle-class America have been fleeced -- although the final
realization of �poverty� is a few months away.
Well, we could all
ask Dick Cheney to summarize the state of this predatory economy. Of course, we
should expect another of his customary in-your-face responses: �So�?
� 2008 Ben
Tanosborn, columnist, poet and writer, resides in Vancouver, Washington (USA),
where he is principal of a business consulting firm. Contact him at email@example.com.