America's Lost Decade
Mar 8, 2009 1:06 PM - Show original item
It is difficult to muster any sympathy whatsoever for the goddamned banks. This is a crisis entirely of their own manufacture. Yes, the housing market went down -- which anyone with an ounce of sense could have predicted, and did. Any bank betting the entirety of its assets many-times-over on that not happening deserves to fail as spectacularly as possible, its corporate leadership condemned to no greater future responsibilities than bussing tables.
Of the two current largest zombie banks -- Citibank and AIG, neither of which has any rational chance of survival, short of the government simply pouring cash down their gullets until they are well and truly satiated -- I have a special loathing of Citibank. A bank dedicated towards building consumer debt in ever more creative ways, they helped to push for the infamous bankruptcy bill that made it impossible for the struggling middle class to get out from under credit card debts, explicitly. As it turns out, that was probably a wonderfully stupid move on their parts. What happens when people can't pay credit card debts, and you pass a law saying they have to, period, no matter what? They don't magically have more money than they did before the law was passed, so something else has to give. Something like, say... their mortgages?
Well, there you go, brain trust. Well played.
In any event, the American political arena is currently locked in mortal combat over such words as "nationalization", because when given the choice between doing something according to common sense or according to asinine and petty mantra, no politician or pundit will ever chose the common sense approach. Call it nationalization, or socialization, or a bailout, or lemon capitalism, or temporary restructuring -- call it beagleization or mangrove dispepticism for all any of us care, the fact of the matter is that insolvent banks are insolvent banks, and we have a choice: we can take them over, as form of government-backed insurance of the marketplace, or we can let them burn. Our hearts say let them burn, and with as many of those insufferable, rich-as-hell and dirty-as-snot Masters of the Universe inside them as possible. Our heads, though, say we don't want to wait in Depression-style bread lines just for a bit of schadenfreude, and so we're going to be taking over these banks. The alternatives are letting them fail, which is economically devastating, or simply printing new dollars by the trillions and giving it to them free of charge or restraint until all their debts suddenly become manageable, which is impossible. So fine; we'll be taking them over, in at least some capacity.
You know it, I know it, the politicians know it, and the banks know it. The expectation that that will be happening is, in fact, one of the few moderating influences on the current market.
While their may once have been a time when Wall Street could have been considered the engine of American finance, it has become in actual practice little but a high-fashion casino. (Perhaps Bernie Madoff made it too explicit, but in reality his Ponzi scheme functioned for so long, and with so little investigation, precisely because it did operate much as any of the other high-roller operations that it mimicked.) Credit default swaps (at least, as they were implemented) served exactly one purpose, which was to give uninvolved parties a roundabout way to bet large amounts of money on something that was, due to the inherently untangleable mess of the underlying "assets", of unknowable value. Like much of the financial inventions of the last decade or two, it did nothing to stimulate any part of the economy other than finance itself. It created no jobs, except the jobs required to push paperwork from one desk to another. It created no new products, and invented no new technologies, and it gave no money to any party interested in doing either. And America boomed because of it.
That is the nature of the new kind of "finance" that continued to represent a larger and larger share of America's ostensible "prosperity". We have become a nation incapable of effectively making textiles, cars, steel, electronics or other physical things, because those things only allow for a little profit. Instead, we choose to dabble in the strictly theoretical profits of high finance -- imaginary profits on imaginary wealth. Finance became more and more speculatory, and less and less encumbered by physical products, or assets, or services.
And the rich have done exceedingly well for themselves, in that new economy. As for the rest of the nation, the middle class found themselves subjectively in a recession for the entirety of the Bush years. Food prices, gas prices, housing prices -- on every front, it became harder and harder for the middle and poorer classes simply maintain the status quo, and yet none of this counted as recession or poverty, because we simply kept redefining the terms to exclude such unpleasantness.
What did we gain? Ask yourself -- what, exactly, did the nation create during those years? What new projects did America embark on? What betterments did we make to the lives, or health, or happiness of our citizens? What did we do?
The answer is jack-squat. We did nothing. We were attacked, and so we had a war. We suffered recession, and so we were told that to save our economy we should go to the malls and buy more things. We presided over the draining of our own wealth, and did nothing, and under what truly must count as the most dysfunctional American government -- legislative, executive and judicial -- of many decades, we actually were told we should feel proud over all of it, or at the very least to shut up about it.
We are aware of Japan's "Lost Decade", a period of real estate collapse and economic stagnation. We have, though, been in our own Lost Decade since the turn of the millennium, and only now that the higher echelons of our society have found themselves in as unpalatable a situation as the rest of us have been in has anyone important deigned to notice. We have had a decade of doing nothing, and two decades of offshoring our every competence, leaving us to putter in our financial closets and declare ourselves kings of all we could see.
If there is anything to be learned from any of this, is that at some point, America simply must invest in itself again. If we can no longer build cars, so be it -- but perhaps we can build a new energy infrastructure. If America is uninterested in even maintaining the highway infrastructure that a past generation built, fine -- perhaps in this hundred years, we can evolve past them. We have already faced fifty years of price shocks, petro-dictatorships, and every sort of punishment as a result of our stubborn insistence that oil is the One and Only Possible Energy Source -- why, exactly? How did America get, to put it too damn bluntly, so dumb? We once could reach the moon -- now we cannot. We once could provide both pensions and healthcare to our citizens -- now we cannot. We once led the world in technology in nearly every field -- now we do not.
We could be leaders, if we simply regained our interest in leading. If we were interested in technological leadership, or educational leadership, or having the best infrastructure, or having the best healthcare, or having the best anything, save military might, we could have it. We are gladly pouring over trillion dollars into propping up the necessary fictions of speculatory finance, money that exists in no form other than numbers in the computers and file cabinets of the world; what would a trillion dollars do, if invested towards infrastructure, of any sort? A trillion dollars could not only cure cancer, it could turn it into ice cream. A trillion dollars could not just build high speed trains to replace our crowded airports, but create an army of robots to wash your damn car while you were away. We could do anything, if we were as dedicated to the prospect of doing anything as we were to doing nothing.
We have spent a decade -- and yes, it should be said, under the proud banner of conservatism -- doing nothing, as a nation. We have wasted our advantages, and put our own infrastructure in hock, and allowed the greediest and most crooked among us to dictate how the rest of us should live. We were told that giving money to the rich was good, and giving respite to the poor was sinful. We were told in supposedly serious books by supposedly serious men that giving up our jobs and industries would make our nation rich. We were told that our companies knew more about how to govern a nation than our citizens -- and we let them draft our laws, and lobby our government, and we squeezed the middle class at every possible opportunity. We were told many, many stupid things by people who now, by any rights, should end up on street corners wearing nothing more than rags made out of their own past pronouncements, but who sadly will never be nearly as inconvenienced by their actions as you or I have been.
We are likely about to enter a second Lost Decade, one in which the pain will be far more widespread than the first. Still, though, the shining beacons of conservative thought have little to say other than meeting at CPAC and calling people gay; the party of Goldwater or the smashingly well-spoken racist Buckley now can only find wisdom in the dimwitted buffoonery of Sarah Palin, Rush Limbaugh, and Joe the Plumber. We seem bound and determined not to do anything too bold, or invest in ourselves too much. We can never expect a thimbleful of apology from those that led us into this wreck, but it also seems that we also should not expect even the base acknowledgement that things have gone wrong.
It seems that in order to avoid a true Depression, we must more than anything else simply believe in investing in our own nation, as collective action. We may not even get that much.
See, that's the thing I keep trying to wrap my head around. Everything feels so goddamned fictional ... money that isn't real, a patchwork of lies and subterfuge and manipulation and sleight-of-hand ... and we didn't step up and put our collective feet down and put a stop to it. I think he hit the nail on the head when he says:
We could do anything, if we were as dedicated to the prospect of doing anything as we were to doing nothing.