We are not even yet fully into the recession
(depression??). Many more homes are going to be foreclosed upon. Consumers have stopped spending worldwide, so it is not just General Motors and Chrysler that are in trouble.Lots of people who still have decent jobs and who have been paying the bare minimum on their credit card statements soon will be out of work. So they will default on their mortgage, their credit cards, and maybe even their car loans. Many people will lose their house, some their marriage.
Vast numbers of people (and companies) have borrowed far too much money. They were under the collective self-delusion that the good times would never end. The value of housing has to get down to reality, as do stock prices. People and companies have to work their way out of this mountain of debt they have created.
Most of America’s manufacturing operations and jobs have now gone overseas. The right wingers said this was a good thing and called it out-sourcing.
Many millions of Americans no longer have access to health care. The worst track record of any advanced country in the entire world. Most American workers no longer have dependable company-sponsored pension plans which will provide them with a reasonable level of dignity when they get too old to work.
Oil has peaked, but the world’s population is still growing. So long term energy is going to continue to increase in cost. Non-thinking religious fundamentalism is spreading.
For the last 25 years or so China (and to a certain degree Russia) has been following America blindly like a not very smart but extremely loyal lap dog. Their economy has completely embraced capitalism without rules or regulations, and the drill-baby-drill, environment be damned ideas. The badly misguided Republican and George W. Bush philosophy is now the Chinese economic model. As more and more jobs are lost in the big cities in China, and more companies close their doors, these newly prosperous workers will have to go back to the poor countryside where they came from. In political science they call what comes next the: Revolution Of Rising Expectations.
The American economy is going to be fundamentally different when it does eventually recover. This unlimited, no-rules capitalism where anything goes will no longer be with us. There will be far more regulation (thank goodness). America will probably no longer be the preeminent force on the world’s economic scene.
So just like the child asking “Are we almost there yet?” when Disneyland is still 500 miles away, the American consumer is in for a rude awakening.
My guess is that we will begin to see a slowing of the downward trends in the economy in about 18 - 24 months. To paraphrase a famous baseball player, the tough part about forecasting is that it is hard to make accurate guesses about the future. If I were a gambler (which I am not) I would bet that anything that sort of resembles an economic recovery lies 5 to 8 years off. Maybe not even in our lifetime.
My advice is to hunker down. Don’t take on any more debt, start paying off your various loans. If you own one of the low fuel economy hogs made in Detroit, get rid of it as quickly as you can. Stop eating out at fast food joints, and begin cooking at home. Put on a sweater, turn your thermostat down in the winter, and turn it up a bit in the summer. Begin to live a bit more sensibly and responsibly.
This actually may be the best thing that has ever happened to us. Life after the Great Bush Recession may end up being far better than before. It all is up to us…
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The best response I got to this post was from a friend who is a coat-and-tie law enforcement officer:
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Paul,
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That was a well written essay on the state of economy. Disillusionment in our greedy countries companies, politicians and their cronies have never ever been so high in my mind. They have "we've got ours go fuck yourselves or let them eat cake" attitudes and when cornered like a Madoff rat they actually have little smirks on their faces as they are lead to penthouse detention.
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I do fear the worse because our government leaders still are pandering and paying off their own till the last drop of honest blood is gone. Then they will feed on their own, then, perhaps a dragon slayer will emerge and chop the head off. Till then all we need now is a plague or dirty bomb. Then watch all civil liberties be damned.
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We are feeling it here, huge 401 losses in wife's part of ATT's 12K human surplus reduction and I've got a second house for sale. Hunkering down we are. If the people rose up as Jefferson would have us they would shoot us down. As in my favorite Hesston movie line God Dam them all to hell. Revolution of rising expectations? Yet I have that American optimist spirit, that we will make out the other side, what we will look like time will tell.
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