The Sage Observer

Our Nation, Economically, Where Are We?

Let call a spade a spade. Let’s tell it like it is, beginning with where we are now.

            Currently, our nation is coming out of one of the deepest recessions in which we have ever been since the Great Depression in the 1930’s. In fact, it would have been a depression deeper than the depression then if it were not for our having certain safety nets in place this time, i.e. unemployment insurance, Social Security, Medicare and Medicaid, and public welfare, all programs inaugurated by the administrations of Franklin Delano Roosevelt during the Great Depression, and Lyndon Baines Johnson with his Great Society program(s) in the 1960’s—all fought vigorously against by those on the “right”, the Republicans. I don’t want to even think about what our nation would be like right now if these programs hadn't been in place. Also, not unlike the Great Depression, we aren’t coming out of this quickly. It will take time.

Even these safety nets may not have been enough if it were not for the trillion dollar plus bailouts of the financial markets and certain selected corporations in order to offset the effects of the collapse sustained by the financial markets, a direct result of their gambling in certain financial securities, i.e. derivatives in the form of credit default swaps, which motivated an immense build-up (“bubble”) and consequential collapse of real estate prices in the housing and commercial real estate markets. Also, all of this financial relief was further aided by actions of the Federal Reserve with their Quantitative Easing programs (QE_1, QE₂, etc.) by which they further charged the economy with cash money, trillions of dollars, through their purchase of government bonds, i.e. they printed money “Fed Style”. Even now, it remains questionable if we've done enough—all the arguments notwithstanding.

          Our government tells us that we have come out of this recession and are on the road to recovery. Perhaps we have, officially at least. In the United States, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) defines an economic recession as a significant decline in economic activity spread across the economy lasting more than a few months, normally visible in real Gross Domestic Product (GDP), real income, employment, industrial production, and wholesale-retail sales. So our economy, according to the above definition(s), has been increasing for “over three months in a row”. Therefore, the recession is officially over. We are on our way. But, are we really?

Let me call your attention to a few other factors buried in the detail—worms unseen in the woodwork that don’t quite fit into the pretty picture our politicians would like us to see—the picture which they see, ostensibly out of touch with us and reality. Business was laying off people for years before the financial crisis in 2008—layoffs due to union busting, globalization, increasing technology, increases in efficiency, productivity, and another factor, increasing CEO salaries partially financed by reductions in the workforce as well as on the backs of stockholders.

In conjunction with and in addition to the layoffs, our middle and lower classes (that’s you and me), on average, haven’t had, after adjusting for inflation, an increase in income for over a quarter century, the immense inflation during that time notwithstanding. The rich among us are becoming vastly richer, the poor are becoming poorer, and our middleclass is disappearing. In addition, our politicians, i.e. pseudo leaders, have completely immersed themselves into arguing and bickering, playing games over politics, with real issues, the business of the nation, completely neglected and at a standstill. As you might expect, worry, unrest, crime (its decreasing rate notwithstanding), and discontent among our people is rampant. The sale of firearms and ammunition in our country has increased significantly, and the establishment of internment facilities and massive purchases of ammunition by our government’s Federal Emergency Management Agency (FEMA), an agency of the United States Department of Homeland Security has also been reported (Ref: infowars.com).

When the “crash” occurred in 2008, layoffs reached levels approaching 1,000,000 workers a week, forcing real total unemployment to the critical level, at which we find it today. The current published rate of unemployment notwithstanding, which reflects only those receiving benefits and still seeking employment, it does not reflect those who have become discouraged from looking and just given up or the underemployed. Also, it does not reflect those in the original lay-offs who, to this day, many still haven’t found jobs, their old jobs (if filled at all) having been filled by younger workers coming new into the market. We have over twenty million people presently out of work or underemployed; and, in spite of the fact that the economy has begun to turn around, many of these people are in danger of melding into the woodwork, to be forgotten and never again to find a real job as long as they live. Why? And the answer is, and I think I am right when I say this, as a whole, most of those within this group were among the first to be laid off. Being first, they were the most vulnerable, i.e., least desirable, lower skilled, least productive, older, perhaps overweight, i.e. too fat, lacking people skills, unattractive, i.e. not pretty, whatever. Making matters worse, as technology replaces jobs, the new jobs created in the process require higher skill levels, personal as well as technical, most of this group cannot fill. There are so many more currently unemployed than there are available jobs, that the slightest discrepancy in an applicant’s credentials can be cause for rejection. In addition, there is a continuing influx of new job applicants (mentioned above) into the market with whom they must compete. The story goes on, but you get the picture; and, the longer they are unemployed, the more unemployable they become. I digress, but people who fall into this category constitute a major reason why we should not raise age requirements on Social Security, Healthcare, or retirement. To do so at this time is unconscionable and immoral with defacto hiring ages and policies at present levels. I submit that no matter why these people are unemployed, they are God’s creation and they live in our country. They have a right to live. They have a right to food, clothing, shelter, healthcare, and so on, and we have an obligation to help them. They don’t deserve to be forgotten. It’s just not right.

With over twenty million of our people out of work or underemployed, jobs (and money) flowing profusely from our country to nations around the globe, and our Corporatocracy taking advantage of what, in many instances is tantamount to slave labor, hundreds of thousands, if not millions of our people are going to bed at night hungry, unable to make ends meet, their homes in foreclosure, and many others sleeping in cars and, homeless. Even more are on some form of welfare or another–our welfare rolls (state of dependency) have literally exploded. Accordingly, the standard of living of our people and our economy as a whole is in decline, a trend I anticipate will continue for the foreseeable future.

Economically, as the rich among us become increasingly rich, our middle-class is disappearing and our under-class is expanding. Wages and income (in real terms) is decreasing, and the preponderance of our people is in debt up to their ears (personal as well as national debt), the effect of which is exacerbated by the false economy generated in the course of our massive excess spending over the years which created that debt in the first place. We were living “over our heads”, disillusioned, and the adjustment, our comedown, is painful and continuing.

Wait! There’s something else. There are more heavy storm clouds hanging over our heads—all that printed money out there. Our dollar is the reserve currency of the world and it is under attack from many sides. In addition to trillions of inflated dollars, it is reported that there are over $700 Trillion Dollars, nominal value, of Derivatives in circulation worldwide. You remember. Those are the financial securities, i.e. the credit default swaps that our lottery players on Wall Street used to cause our 2008 financial crisis. Think of this in terms of worldwide GWP (Gross World Product) and US GDP (Gross Domestic Product) in 2012. In 2012, the GWP totaled (in terms of U.S. dollars) approximately $84.97 Trillion. That’s for the whole planet, mind you. Compare that with $700 Trillion, nominal value, of derivatives outstanding. Compare our present $18 Trillion U.S. National Debt with our GDP of $71.83 Trillion for 2012. Just think about it. That just about makes us broke or close to it, doesn’t it?

Can you not see where our shadow government by the Corporatocracy and Power Elite has led us? Not only have they stolen our democracy, but also, they have led us to the very edge of bankruptcy. Capitalism has provided us a high standard of living over many years. We certainly need it and don’t want to lose it. It is also, however, out of control and running amuck. In its stark greed, it is consuming itself and leading us to catastrophe, just as Socialism has led others before. In and of themselves, both economic systems are flawed; but, as in most everything, there is good and bad in both. I submit to you, we the people should avail ourselves of the best and most favorable aspects of both. There is a middle ground that is best for all of us, and that’s NOT Socialism. It’s just plain common sense.  Some markets should be free and some should be collective, depending upon the market. Which approach we use should be that which is best for the people and our nation as a whole. Strictly regulated programs such as Social Security, Public Access to Universal Single Payer Healthcare, reasonable Public Welfare, and Public Utilities (including communications) are best suited collective (Do you really believe the average citizen can make objective and intelligent purchasing decisions in these areas?) When we use these programs, it’s not exactly like going to the supermarket. Always, with either choice, the final decision should be in the hands of and decided by the people through their elected representatives—not the Corporatocracy.  Our Corporatocracy should not be allowed to have an influence, in spite of what His Excellency, SCOTUS, says. It should be returned to the status where it belongs, a servant of their customers, i.e. the people. Their focus should be on service and production. Profit must be where it should be, too. Its focus should be that of the investors, the renters, i.e. the landlords. It’s a subtle difference but, nevertheless, critical if our Democratic Republic, our democracy, is to survive.

          I will close this for today, but I want to say one last thing. It may seem, or even be, out of context with this posting at this time, but I think it is very important to our thought processing, economically. That is, unless you have a way to contain it, money is like water. It always seeks its own level. Think about it when you think about globalization and outsourcing of labor. Think deeply.

Ronald Miller

Email me at mtss86@comcast.net