The Next Great Depression Is Here... If We're Lucky
Don't panic — this is just a speed bump. You want to ride this one out. Think long-term. It's a marathon, not a sprint. Keep your money where it is — trust the market. The worst thing you can do is panic.
Reassuring words, which can all be traced, ultimately, to the same dudes who ringed our noses and walked us to the edge of this particular ravine in the first place. The Dow is literally in freefall as we speak, plunging beneath a five-year-low, with no bottom in sight. So here's my open question: Are you guys sure we shouldn't panic?
You know, not that we don't trust you absolutely anymore.
I, for one, think this is an excellent time to panic. I'm strongly considering curling up in the corner over there and rocking like a freaked-out autistic kid.
The challenges we face as a nation grow more complex every day, and every day, America's superstrength weakens. Our financial institutions — the only corner of industry we haven't already sent overseas — are imploding. Every day our political process grows more absurdly corrupt, while our watchdog media slumbers, dreaming of Britney. Our families are virtually all fractured; our prisons are teeming; our schools are churning out violent morons.
How bad does the state of the nation have to get before we will be advised it's okay to panic?
Collectively and individually, we are already enslaved to a diminished future by decades of unrestrained gluttony and greed. And we are getting fatter, stupider, and more indebted by the moment. I'm not being judgmental; that's just a sober read of the stats. One in five Americans today believes the sun revolves around the earth. One in four read no books at all last year. One in three believes in UFOs.
Kind of makes you wonder who we are, anymore. I think we've been bellied up just a little too long at the all-you-can-eat buffet of the world. You probably think I mean that figuratively. But one out of five Americans is overweight now, and one in four of us is clinically obese. Yowsa! One in four!! We are not just the fattest people on Earth, we're the fattest people in the history of people. We're so fat our favorite color is gravy. We're so fat that when our beeper goes off, other countries think we're backing up.
But I digress.
Time to put two and two together, people, whatever THAT adds up to, and take a good hard look at what we've let ourselves become. Not too long ago, America led the world in things like energy production, automobiles, cotton, hope. Today we lead the world in substance abuse, incarceration, bulimia, and serial killers. America's #1 export today is — this is true; can anyone guess?
Debt.
As esteemed philosopher Dean Wormer of Faber College once noted, "Fat, drunk, and stupid is no way to go through life." Yet here we are, living that immature dream, inspiring nobody.
When you're driving as fast and recklessly as you can, a 'speed bump' is quite sufficient to wreck a car. I say it's time to panic. And rejoice. Because things are going to get a hell of a lot worse before they get better. And that may be exactly what this country needs.
The Great Depression was no barrel of laughs, by all accounts. Poverty, despair, unemployment, hunger, and hopelessness are harsh mistresses. But in retrospect, they raised us right. The Depression built character on a national scale, taught us virtues like self-reliance and sacrifice and compassion, brought families together. Roll your postmodern eyes at the quaint earnestness of it all, but it truly did make our nation strong.
And just as the Great Depression brought out the best in us, our postwar prosperity has surely brought out the worst. Our blissful blinkered indolence has left us thoroughly unprepared for the challenges of the new millennium, challenges which couldn't be more immediate or acute. Iran is twenty-two seconds from becoming a nuclear power. Russian warships are steaming toward Venezuela, literally, as you read this. And here, right at the moment when we could really use the Greatest Generation, we find ourselves armed with...the Me Generation.
D'oh!
I modestly propose that a new Great Depression is exactly what America needs to wake ourselves up, put some moral fiber back in our diet, and give us some breathing room so we can catch up to the rest of the world again. We got ourselves into this mess, and it's high time we got ourselves out, by deliberately provoking a painful and protracted worldwide financial calamity. We did it to them in 1929, and by God we can do it again.
It shouldn't be that hard... These are fragile times, and information moves at the speed of light, and we have the herd effect on our side. Does anything seem unsinkable this week?
Consider this scenario: A local TV pundit half-jokingly suggests, after some next bit of bad financial news, that maybe we'd better pull our money out now, before all the ATMs stop working. A few people take him seriously; they tell their Facebook friends. A news chopper films the line forming outside some local bank; Fox News picks it up for the national feed, and next thing you know your spouse is calling you at work, saying 'Honey, they are closing banks and there's cops everywhere..."
The FDIC 'insures' your $3 trillion in consumer deposits with just $45 billion in assets...that's just one and a half cents per dollar. Won't take much to empty that box — WaMu alone was projected to cost the FDIC $24 billion, so you do the math. Math is hard! The FDIC will have to take the collection plate to Treasury, who'll have to go to China, who'll tell us to screw off. Or to turn the other way while they take Taiwan out back for a beatdown.
There's no question in my mind that America can be strong and resourceful and self-reliant again. But it's going to take an actual catastrophic system failure to drive those lessons home. Sure, maybe we can heed this 'dress rehearsal' warning and wise up and put ourselves back on track, but the smart money's on no fricking way. You know us; we're going to fall right back into our crack-addict habits as soon as the credit lines open up again. There are just too many suits in cahoots working to keep us spellbound, too little in the way of countervailing force. Brace yourself to resist the messaging this winter, as retailers try to shore up The.Worst.Christmas.Season.Ever.
You know what'll probably make you feel better about this whole thing? A new iPod Touch. Click here to buy it right now, and make no payments for the first six months!!
I'm not saying a new Great Depression is definitely coming, I'm just saying put what's left of your money in a mattress, plant apple trees in your backyard, and buy a gun. And bullets — don't forget bullets! To be first in line for the run on a bank is irresponsible to your country. But to be last in line is irresponsible to your family.
Don't let anyone tell you to relax...That's how they walked us off the cliff in 1929. Embrace your fear. Fear makes you smart; fear makes you strong. It's the only proper mindset to face the coming storm. In fact, why not practice? As an experiment, try to live within your means, just for a week. Buy only some things you absolutely don't need, and try eating only 50 or 60% more than your body can possibly process. Put a couple of dollars in a box and see if they're still there at the end of the week. Try it! Just for fun!
The only thing to trust is fear itself. Because the reality is, if we all choose to get a little leaner and hungrier, it might not hurt quite so bad later this year or early next year, when that choice is taken from us.
Follow Keith Blanchard on Twitter: www.twitter.com/KeithBlanchard
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Feel better now...I hope so. If you need to curl up in the corner....then go for it. But understand that while another Depression will certainly build character, it will also lead to an explosion in violence.
A Depression would be no joke in a country far differen than it was in 1929. In those days, most of us still lived on farms or in small rural towns. Those days are gone. The specter of mass starvation in our cities is no small thing.
For better of worse, we need to keep the ship from hitting the rocks. While there are many who would survive the sinking...you and I might not be one of them. So let's calm down and encourage the pilot that he or she can indeed reach the port.
KS I totally agree. My mom and dad were teenagers and newlyweds during the worst of it. But back then 80% of the people still knew how to grow food. Even 10-15% unemployed would mean tens of millions of homeless, hungry, angry people. Scares the be-jesus out of me.
I've never had to stand in a bread line before. I'm sure when we're there in 2010, we can all chat about how good we used to have it.
The bonding will be a wonderful experience.
I've never stood in a bread line -- but I have seen them. They are scary. I mean, I've seen them this year.
An economist was on TV the other day, talking about how the Bush stimulus package last year was a failure, because too many people used the money to pay off credit cards instead of buying more junk.
The economy depends on consumers buying more and more junk. On one hand, we Americans are scorned for our low savings rates, and on the other hand we are exhorted to buy more consumer good to keep the economy going.
It doesn't take a genius to conclude that this is an unworkable system that it bound to collapse under its own weight.
We rely on economic growth to sustain our system. Suppose a 20 year old man weighing 200 lbs grew at a rate of 3% ( average rate of growth for a 'healthy' economy).
At 30, he would weigh 268 lbs
At 40, he would weigh 361 lbs.
At 50, he would weigh 485 lbs.
At 60, he would weigh 652 lbs
This is not healthy, for people, or for economies...
You're talking about debt, not economic growth
true, but one can not gain economic growth through spending or credit.
credit comes from savings and production.
we have a monetary system that encourages neither.
end the fed
this is not the beginning of another great depression, this is the beginning of the new dark ages. a worldwide financial implosion. rome didn't fall in a day, neither will we, but it's a done deal. lol
Unless Edva's UFOs intervene and save us from ourselves!
depression is the collapse of illusion in the face of reality.
wilhelm reich. 1922
Keith: This is a brilliant article. While we struggle with the reality of deflation, followed by hyperinflation, most Americans will experience a lot less toys and a forced diet. Probably a smaller home, one less car, no private school - perhaps even homeschooling out of necessity. The possibilities are endless! Ahhh, America. We shouldn't miss this opportunity!
And that brings me to this: We musn't miss this opportunity to say "public flogging" to the perpetrators, come red or blue face paint. Lets regulate the hell out of things. Three things: The Federal Reserve, The Presidential Working Group on financial markets and the currency trust.
"Allow me to issue and control a nation's money and I care not who writes its laws!". Amshell Rothschild
When is the last time panic was the solution to any problem?
Stop hyperventilating and breath deeply; you'll feel better.
Are you going to become a breatharian when the bread lines start forming?
Bread lines are already here -- they've been here. You just haven't seen them.
Speaking of UFO's, it is certainly not outside the realm of possibility to imagine that the ET's are watching this election too - and if Obama gets in, they may decide we're worthy of contact, and the help we so obviously need. If not, ................
Remember in the beginning of the campaign, when Obama would say "we're going to change the world...." Could happen. I know this may sound way too far-fetched for some. But, think about it, perhaps next time you're in church, or reading your bible, or...........
Fear is ALWAYS counterproductive. Reason and caution are better advice. Fear 1) makes people STUPID, 2) is a poor motivator, and 3) the cumulative American psyche has had enough fear. The mood now is anticipation and building anger at the GOP.
I think Keith is speaking about instinctual fear, not propoganda fear. Since I've been at the other end of a barrel I understand where he is coming from. Real fear can motivate you to act at your basic survival level. Manufactured fear can lessen it.
No, PANIC is always counter productive.
Fear can be a GREAT motivator ... if you don't let it turn to panic. It's panic as well that makes people stupid, assuming they weren't stupid to begin with, since stupidity is one of the things that leads fear into panic.
Physically, fear pumps adrenaline into your system, damps your pain reflex and psyches you up so you can move yourself out of danger. But you have to use your fear, not wallow in it.
Without fear, there can be no bravery. Fear can open your eyes so you can see what needs to be done.
This is an instance where some healthy fear clarifies the mind and prepares the body for action.
If fear motivates you beyond the need to take immediate measures against physical danger, I feel sorry for you. Fear is nothing and no, it's not a good motivator. Certainly it's a motivator, but not a good one. It's ultimately self harming - it impairs logic and is a control mechanism others will exploit if you let them. It is inside your mind. A reaction that only you control. Beyond the basest physical survival part of the fear mechanism, it is a relic of evolution. It is reason and logic that separates us from non-technological animals and is the basis of civilization. Not fear. You can scare horses into running off a cliff. They are animals bereft of reason. You can run off the cliff with them all you like. I'm going to sit here and watch, maybe read a book by turning the pages with my thumb.
America's "superstrength" is relative and actually appears to have strengthened signficantly in the past few weeks as other world markets and economies have imploded much more so than ours. Iceland is bankrupt. Pakistan is close to bankrupt, as it the Ukraine, many Eastern European countries, and even South Korea. The Japanese market has imploded much worse than ours and people have been fleeing the yen for the dollar in droves. They also have a much higher debt relative to GDP than the US. The British economy is a disaster and the W European countries are behind us in the recession causing money to flee for the dollar. China has completely imploded. Their stock market is down over 70% and their economy appears to have disintegrated much much worse than ours. Brazil and Russia are in a total panic as they depend on commodity prices. Bonds for companies in emerging markets dropped more yesterday than in the first trading day after 911, one of the worst days ever. Everybody is fleeing for the dollar and buying US treasuries. The US appears to be the safest place to be. The proof is in the pudding. We are still #1, and more so today than in a long time.
And they don't even have the decency to thank us for exporting our Corporate Capitalism to their shores!
As for the scramble for dollars, yep, the rats always run to the top of the mast, just before the ship goes down.
Yeah, screw America and capitalism! I hope it all goes to pieces! Yeah, that would be good!
Nice, balanced outlook.
So we aren't sinking as fast as the rest so everything is great?
Fine call Mr. Debt=Income!
interesting post, with a lot of truth leavened by a small dash of humor.
The problem we are facing is the inescable end result of going "all in" on the Capitalist System, the very essence of which is greed, consumption, and to-the-death competition. It can't be sustained, by it's own measure. IF we survive, then eventually all citizens of Earth must work together for the common good of the whole society, not the massively unbalanced enrichment of the lucky, the greedy, and the ruthless at the expense of everyone and everything else. Hell yes, SPREAD THE WEALTH AROUND. that's the only viable future for life on this planet. Sorry, rich folk, but your way doesn't work.
I know this won't be a popular comment on HuffPost... believe I do believe that most of the "new rich", that did not inherit their money, got it through hard work and contributing something back to mankind. Hard to believe for those really far to the left, but there is something to the profit motive and competition. It is a pretty natural system, when you think about it.
Of course, all of our modern systems are so abstract it's hard to call them "natural", but some are more than others. I believe capitalism is just fine, but we do need to be kinder to each other and learn that there ARE more important things in life than money and stuff.
No, hedge fund managers and stock brokers did not work hard. They dreamed up ways to make money -- with fraud.
"...all citizens of Earth must work together..." Oh. I get it. You are refering to "The Day the Earth Stood Still".
I'm a communitarian at heart -- but there is something to be said for people being able to benefit for their hard work and creativity. If I write a novel that's a best seller should I benefit anymore than someone who writes one no one wants to read -- or someone who doesn't write any at all? If I study hard, get into a top school, put myself through college, take the low paying jobs and work my way up the ladder to higher management, should I be able to expect more than someone who chose to pass on the struggle? I know this isn't always the case -- that many people never have the opportunities other people enjoy -- and some people are just born with natural gifts that allow them to excell where others will never be able to compete -- but what is the motivation? Few people are altruistic enough to work that hard for the betterment of all -- no matter how beautiful a dream that may be. What's the option? A race to the bottom (if I can get everything everyone else gets without having to do anything) or doing enough to just get by? Of course, there are people who will create beautiful music and delve into the hidden mysteries of science because it's what they love and where they find their passion. But is that enough? Maybe so. Might be nice to find out.
My take:
First, We need to cut our national gasoline consumption by 10%. We need to work together to make this happen.
Second, Obama should immediately institute a $1 per gallon tax on gasoline. According to the latest statictics, we as a nation consume 390 million gallons per DAY! That equals a government windfall of 142 billion dollars in one year. Use every penny (minus administation costs of maybe 1%) towards the development of alternatives, hybrid rebates, and American alternative energy manufacturing development .
Third, make crude oil futures trading illeagle.
I don't believe our friends from OPEC could stop us if we hold strong. I'm not privy to the their bottom line imact if they cut production by another million barrels (3 million total after Novembers cut), but I bet it would be difficult for them to cut it much more considering world demand.
Well, you're headed in the proper direction. The only sustainable future is one which abandons the anachronistic and toxic fossil-fuel paradigm, and moves with critical life-or-death urgency toward green energy, most likely solar. That then has to be spread around the world. Once the battle for energy doesn't need to be fought anymore, and once we stop fouling the nest, then perhaps we can make it.......
I agree with your tax proposal, metalpipe.
Thanks, but no thanks. By the way, the jab at the Me Generation... like it or not, it was created by your generation. I have a feeling that the so called Me Generation will rise to the occasion and clean up the mess they have been handed.
Does that shoe pinch? Tsk.
In an Egyptian tomb, there's an inscription that translates roughly as: "The younger generation is going to the dogs." The obverse of that is: "The older generation had a perfect world and made a mess of it."
Well, I'm not a boomer, 1936 was when I started orbiting the sun on this less-than-perfect world.
You might contemplate the world before I was born -- no income tax, no Federal Reserve, no war. But in 1910 the collusion was hatched that became reality on Dec 23, 1913. And it's been 95 years downhill for the U.S. dollar.
Believing in UFOs is OK (i.e. UNIDENTIFIED flying objects). Believing they are alien visitors is not so OK.
Thank you oh mighty wizard, knower of all. If you say so, then it must be so.
It is you who claim something must be so without proof. I've seen UFOs. I just don't know what the f@#k they are. I'm sure glad you know!
If you don't know what they ARE, since you admit they are UNIDENTIFIED, how do you know they're NOT alien visitors?
Just asking. ;-P
I don't KNOW. I just DOUBT. It's called CRITICAL THINKING. Do you know they ARE alien visitors?
What are morals?
We are little frogs in a big pot of water being slowly brought to a boil. The water is actually boiling in some places in the country already. If you listen real hard you can hear their little cries of pain! But the rest of the frogs are not listening. Good luck little frogs!
Nice writing. I liked it.
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