While We Debate Reverend Wright, The Economy Goes To Hell

New York, May Day: Thomas Jefferson used a phrase in a letter that is still ringing all these years later. Here’s his thought, a candidate for “THE WORD” segment on the Colbert Report:

“I had for a long time ceased to read the newspapers or pay any attention to public affairs, confident they were in good hands, and content to be a passenger in our bark to the shore from which I am not distant, but this momentous question like A FIREBELL IN THE NIGHT [caps mine], awakened and filled me with terror.”

So many of us were content like that in the years leading up to the slow motion crash that rocked our economy in August 2007, and many still remain comatose like that today.

We were, all too many of us, confident also that we were “in good hands.” On May 2, just a year ago, our President told America’s general contractors — so many of whom are out of work today — “we’re proving that pro-growth economic policies with fiscal discipline can work. And our budgets are shrinking [sic]. The best way to keep them shrinking is keep the economy growing and be wise about — and setting priorities with your money.”

There was a fire bell ringing that very night, and he didn’t hear it, that is, if he could ever hear much besides his own voice. (Now he says the economy defies a quick fix!) Wall Street was making money by the ton just a year ago, and our regulators were cheering them on while most of our media was dozing. Worthless securities were being pedaled globally with stamps of approval from credible ratings agencies. Predatory lenders scammed customers. Protests from advocates for the victims were ignored.

At the same time, credit card debt rose 7.6% — almost $3000 a person. There were warnings of an impending collapse but few paid any heed.

A one time Republican strategist named Kevin Phillips was already ringing a fire bell about our mounting debt. He had documented the rise of the Financialization of our economy in which a credit and loan complex — using debt as its driver — was dominant, soon controlling over 20% of GDP. He warned of the consequences, of the hijacking of our future and our economy. Our system had become, he argued, a house of cards. Who listened?

In a new book, Bad Money: Reckless Finance, Failed Politics and the Global Crisis of American Capitalism, he documents how those cards started tumbling in painful detail.

This reality should, in Jefferson’s words, wake us up and “fill us with terror.” (Odd that thought of “terror,” written centuries ago. How prophetic!) Perhaps we are fearing the wrong terrorists?

Yet even now, most of the media would rather debate Reverend Jeremiah’s Wright’s words or Miley Cyrus’s photos than examine the calamity facing us and our world. Where are the investigations of the greedy and unscrupulous? That’s who gave us the subcrime crisis, or in Phillips words, the “reckless finance,” that brought the market down, sending prices and joblessness up.

You can’t really track these mounting problems by watching TV or even reading many of our newspapers who failed to cover the crisis as it was building steam from 2002 to 2006, and when it might have been stopped.

It is usually only after the fact that we realize that the official response to these crises is also making things worse.

Example: A former top Federal Reserve official now says that the Fed’s bailout of Bear Stearns will come to be viewed as the “worst policy mistake in a generation.”

Reported the Wall Street Journal: “Vincent Reinhart, who used to be the Fed’s director of monetary affairs and the secretary of its policy making panel, said the event would be compared to ‘the great contraction’ of the 1930s and ‘the great inflation’ of the 1970s.”

Run that by me again — “the great contraction?” Duh? Does he mean the Great Depression? Then, we had a government that tried to end it. As of this week, only 2000 homeowners facing the threat of foreclosure have been helped by our government. As many as three million homeowners face homelessness!

If you read the financial blogs linked on essential websites like Ml-implode.com, you get a much more sobering picture. According to the RGE Monitor, we are in the THIRD year of a housing recession—did you know that?

They report: “We are in the third year of the U.S. housing recession and the bottom does not seem to be in sight yet. Housing starts (and completions) are falling but not yet fast enough to offset the sharper fall in demand (home sales) and therefore to insure a fast absorption of the rising home inventories that keep putting downward pressure on prices.”

Do you realize the extent of the housing collapse? The number of vacant homes reached a record high of 18.6 million units, which was a 1 million increase in the past 12 months, with a record 4.1 million vacant homes for rent, and the rental vacancy rate rising to 10.1%.

One out of 194 US households are now in foreclosure. Housing prices are falling with expectations in some quarters that they will drop a further 20%.

Translation for a society in which realty is considered reality: This is an ongoing disaster with worse to come.

Patrick Net reports: “Salaries cannot pay for current house prices. This means house prices must keep falling or salaries must rise much faster. You probably noticed that your salary is not rising much, and that inflation in food, energy, and medical care has been very high. This leaves less money available to pay for housing.”

Another website, Minyanville, sees not just a subprime crisis but a deepening consumer consumption crisis as credit gets tighter. Already the overall growth rate has fallen to 0.6% as consumer spending freezes.

”It’s important to recognize that with each passing day, as credit is tightened and unemployment grows, more and more asset classes and population groups will be affected. And you need only look at the news from BMW or last week’s earnings report from Harley-Davidson and Starbucks to see that consumers can no longer afford their aspirations.”

Another site, Denninger.net, sounds angry, a sign of the ugly mood that is starting to go public as the only upturn appears to be a rise in the lack of consumer confidence:

“If you’re operating under the premise that the losses have been (mostly) recognized and we are now going to see ‘write ups’ somewhere down the road, you’re more than wrong.
You’re delusional.”

Are we delusional or just distracted by campaign circuses? Are we even aware of the link between the housing crisis and the food crisis?

Mike Whitney argues: “The global food crisis is a monetary phenomenon, an unintended consequence of America’s attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington’s economic misery now threatens to become a geopolitical catastrophe….”

So what now? Will the desperation so many people feel go inwards or outwards? Here are two stories on two tendencies likely to merge:

AP: “A man upset over thousands of dollars in fees owed to a condominium association brandished a gun and took two association employees hostage before he was killed by a SWAT team, authorities said. Deputies ‘were screaming at him to put the gun down, but he didn’t seem to be paying attention,’ said Ross Torman, 30, a resident who watched the standoff from his nearby balcony. ‘He just put that gun right to his head and that’s when they began to shoot.’”

The Housing Panic blog reaches into history to remind us of an uprising that saw martial law imposed in Iowa in 1933 after “a mob of 150 farmers dragged Circuit Judge Charles C. Bradley from the bench, manhandled the 60-year-old jurist and threatened to lynch him unless he promised not to sign further foreclosure orders.”

Don’t think never again. If it has come to this, it can come to that.

– MediaChannel.org blogger and News Dissector Danny Schechter directed In Debt We Trust, the doc that predicted the crisis (Indebtwetrust.org) and will soon publish PLUNDER, a book on this calamity. Comments to dissector@mediachannel.org

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The problem is much deeper. The machanics of capitalism as it was known in in the fifties have been changed. As Joe Heller said: “Something happened.”
The Oval Office became a den of criminals under Reagan and stayed that way.
Bush senior was a crooked cop setting the stage for the Clintons and his son.
The Clinton became super rich in political office and wish to return with their cronies to feed in trough.
Bush Jr. finished the job his daaddy started and threw in a bunch of war crimes and crimes against humanity to compound the crime’s of his father and the Clintons.
The press slept on for the most part. There were voices raised on the right which have ignited a populism. There are voices on the left but they were muted by the Clinton cronies. Schechter, Goodman, Kline and Wolf saw the train wreck coming, but there was no juice at the major outlets. They were bought and paid for with fear being the currency.
Many of the reporters who could have talked were sidelined or killed. Don Bowles, Gary Webb, William Cooper or they were dismissed as kooks by the scion of Scripps Howard, Dean Singleton
other media messenger boys.
After breaking S&L in Denver I became unemployable along with Bryan Abbas.
Savings and Loan was just the surface as was dot com. The money stolen there was put into the home building racket and the crooks carried on after all wasn’t Neil Bush let go, as is Joking Joe getting the walk right now for looting Q-West and breaking tens of thousand pensioners?
The idea of a dozen thugs holding the wealth of the world while six billion starve is coming to fruition. Is it too late?

Welcome to the good ol USA” Useless Stupid Americans “please save the tears, for the best is yet to come. You voted an oil Baron as president, after he places us in a winless war with poor results you vote him for another term. USA.
We sit and watch oil and gas prices rise and rise, with nobody really complaining or doing anything to stop the oil companies, USA rather pay than fight! January 2000 regular gas was $1.27 per gallon at the start of George Bush Term, Today is regular is $4.00 per gallon USA. Did anyone stop and think of the domino effect? USA.
Well now it’s the predatory lenders fault? 2,203,295 foreclosure filings in 2007 hum only 75% more fillings than 2006? USA. The peak of teasers, Arms, Interest only will mature in November of 2008, just in time for a new President to milk us a little more? USA. Today’s milk average price $4.31 per gallon. USA.
We allowed our government to print unlimited undocumented dollars to support the war, USA. We allowed our greedy homeowners to ATM the last penny out of their homes in hopes of catching up with credit card debt and rising costs, USA.
We are in a depression only, USA no one has the balls to tell you. Blame greedy brokers, straw buyers, and the high cost of operating homes. USA. Six years ago I sold 3 water front lots for 325,000, Last July just one sold for 2,600,000, economies do correct themselves.
When home prices double every three years instead of ten to twelve, ask your self did my income double in three years? 2 months ago the dollar lost, first time in history against the Canadians, the Euro killing us almost 2 to 1.
We have been purchasing and selling homes for over 21 years. I stopped buying last month, only because my buyers can’t get financing, great scores 700 and up, nobody has down payments or reserves! USA
Let’s face it most of America is a sub prime country and the FHA has the antidote for low score borrowers are you joking? Turning away good properties offered at 50 to 65 cents on the dollar. USA.
I am an American that is proud I was born in Brooklyn NY and I feel for our countries struggling home owners or should I say future renters? USA the best is yet to come?

Who to blame? Granted, high finance and economics are beyond my ken - but this I know - I know I have credit card debt that I am struggling to pay; I know that I cannot afford health insurance and so haven’t had any healthcare in over 5 years; I know I cannot afford to buy a home and each month it’s a race to pay rent but by “doing without”, at least there’s a roof over my head; I know that my 10 year old car is falling apart, but I can’t afford anything beyond the routine maintenance, which I do myself; and I know that when push comes to shove, I will continue to do without any government handout because I know there are others out there in worse shape economically than I am.

The Emotional Spin of the economy. Tax prayers received a little cash, and What did many of them do, 800,000,ooo million dollars for Grand Theft Auto Video in 3 days, most violent, 60.00 dollar video. Folks camping in front of the door, to be first in line for this extravaganza of violence. And You think that you can speak to these fellow Americans, let me know, so I can listen too. Recession, depression, world wide increase in violence, abuse to Women and children, Pedophiia on the increase, suicide Huge increase in Japan, American Vets, Huge profits for oil companies and Loteries. This swing from one extreme to another, the YOYO effect, has lasting biological effects, with social implications beyond our imagination. More of everything moving in fast forward, like some say speed kills in more ways than one. Unfortunately the plublic is in a technical COMA satiating their senses and pretending to have a life. Good Luck America, hopefully this caricature of the American Mind will burn off like pestilence, come back to some for of reasonableness, is that too much to ask for? thankyou peter knopfler.

Unless and until the politicians in Washington begin to demonstrate some fiscal responsibility, the economy as nowhere to go but down. Of course, fiscal responsibility does not seem to be on anyone’s agenda. The Republican plan seems to be to bankrupt the nation via tax cuts for billionaires. The Democrats? They’re all too willing to borrow and spend. Like a drunken sailor with an American Express card and no apparent credit limit. What happens when the rest of the world freezes our line of credit. It WILL happen.