09/26/2011 09:11 am ET Updated Jan 09, 2012

Zombie Economy Eating Our Brains

Even my handyman Ray -- a fine guy in every way, but no expert in high finance -- knows we're heading over a financial cliff. And the so-called giants bestride our economy have no better ideas of how to deal with that than Ray does.

The problems we face are immense, and deepening. There's probably no easy way out. Between a business sector on life support, a paralyzed political sector, a central bank out of tricks, enormous structural problems left unaddressed, and a building disaster in the Eurozone, it would take divine intervention to avoid a global downturn. And it's my guess that this one will make what we've been dealing with already look like a rehearsal.

I'm not alone, either. In a depressing interview published over the weekend on Bloomberg, Mohamed El-Erian, CEO of the world's largest bond fund, Pacific Investment Management, predicted the major economies will slow to a standstill next year. That's zero growth to you, meaning among other things no jobs growth.

El-Erian, who's been beating the drum about how things are bad and getting worse, points most alarmingly at the deteriorating Eurozone crisis. That festering sore is being worsened by a European Central Bank dithering about how to address the likely default of Greece -- not to mention Italy and Spain -- while conditions continue to decay. But things in this country hardly seem better.

Congress, for instance, is about to prove that Standard & Poor's was right when it downgraded our debt in August because, it said, we lack the political cohesion to address our financial problems; as you read this, Congress is bickering over a routine continuing resolution to fund the government through November that must be passed by Sept. 30th. And as it happens, S&P said it would downgrade us again if we didn't get our act together.

This is being played out against the backdrop of the deliberations of the supercommittee, born in the August debt ceiling crisis. The predictable stumbling block: taxes. The Republicans on the committee have all proclaimed they'll have none of them, meaning that for them, it's cut, or nothing. Democrats, meanwhile point out that when you can't pay your bills, you get a second job.

That august body, widely regarded as a mere sop to avoid an immediate US default -- even when it was formed -- is already showing disturbing signs it won't produce the necessary package to avoid 10 percent across-the-board budget cuts next year.

Hanging in the balance is only the future of the US economy, which won't get $217 billion in revenues -- 10 % of 2011's $2.17 trillion federal budget.

What does that mean to you and me? In February, Goldman Sachs said a $50 billion cut in government spending would cut GDP growth by as much as 2 percent. That, against expectations of low-to-no growth anyway.

The only good news here: the country seems willing to blame the whole thing on the Tea Party -- driven by ideas right out of the John Birch Society playbook -- which has no idea of compromise on any subject, however small or crucial. The result is likely to be its demise, along, one hopes, with the hysterical, apocalyptic rhetoric that's been poisoning the body politic and preventing it from coming to grips with problems that affect all of us.

That's going to be small comfort, though, for a country that's been enduring two years of what's still being called the "Great Recession," and is about to face something worse. Obviously, things can't go on this way. But the country seems to have run out of ideas.

In this pass, we could do worse than remember Lincoln's 1862 Message to Congress, given as the nation was realizing it was looking at a long, bloody war for survival.

"The dogmas of the quiet past," wrote Lincoln, "are inadequate to the stormy present. The occasion is piled high with difficulty, and we must rise with the occasion. As our case is new, so we must think anew, and act anew. We must disenthrall ourselves, and then we shall save our country."

"Fellow-citizens, we cannot escape history," he continued. "We of this Congress and this administration, will be remembered in spite of ourselves. No personal significance, or insignificance, can spare one or another of us. The fiery trial through which we pass, will light us down, in honor or dishonor, to the latest generation."