Whoever would have expected? (h/t Agonist)
U.S. banks posted last year their sharpest decline in lending since 1942
Of course, this is exactly what we warned would happen.
Can you say Japanification? Sure you can. Banks are impaired. Badly. So they don’t want to lend. To get lending going again it was necessary to take over bankrupt banks, to siphon off bad loans, to force both bondholders and stockholders to take their losses.
Larger banks are doing better than smaller banks, which should be no surprise as they’re the ones the Feds concentrated on bailing out because if you bailed out small banks they couldn’t be bought up for cents on the dollar by Geithner and Bernanke’s friends in the financial industry.
Refusing to do the right thing has consequences. This is one of them.
1) employment is not going to recover to pre-great recession levels for at least a generation, maybe more, in terms of % of people employed. The late Clinton economy is the best you or I will see in our working lives.
2) Politics will continue to be dominated by monied interests and that dominance will increase, rather than decrease. They will use their power to fight over the shrinking pie, rather than to increase it, and will make any real systemic restructuring of the economy essentially impossible.
3) a right wing “populist” will get in after Obama. Since the only sort of stimulus they can do is war stimulus, they will pick a war with someone. Who, I’m not sure. In economic terms they will have all the wrong solutions to various real problems.
4) Under both Democrats and Republicans the deterioration of civil liberties will continue.
5) Median standards of living will take at least a 20% drop within 10 years or so. Maybe more. Not sure exactly when, but if anything, the % may be an underestimate.
6) Resource nationalism will continue to rise as will 1/1 deals between countries. China has already restricted rare earth sales, for example. Countries will start insisting on doing the value add in their own countries rather than shipping raw materials overseas, if they have the ability to do this.
7) As state and local governments loose their ability to govern (a process which will proceed in cycles), there will be cyclical of cuts in basic services, including police, road repair, schooling and so on. Get thee to a very affluent neighbourhood, if you can.
8) Entitlements will be cut, perhaps openly, perhaps through statistical tricks, but it will be done. There is a bipartisan consensus on this, and when Republicans get in charge they will be able to find enough Dems to sign off this time. (If Obama can, he’ll do it before then, but Republicans want to use this against him.)
9) There will be another major economic crisis, probably within 8 years. In principle it could happen within a year, the timing depends on political actions I’m not sure how to predict. I consider this nearly inevitable.
10) I expect an end to the war on some drugs, because States are going to want to tax the drug trade and need to. Likewise the prison-industrial complex is likely to suffer. Its constituency is not as powerful as some other important constituencies.
11) New Oh yes, I should mention that I expect an actual population decrease when things get really bad, a la Russia’s collapse.
In the longer term I expect severe water shortages, for both people and crops, in large areas of the world including big chunks of the US, China and India. Climate instability will continue to increase, and in about 10 years (according to a friend whose judgement has been good on this) various sinks will be overloaded and we’ll start seeing some really serious global warming increases on top of the instability. Expect food to be short and much more expensive, expect inland areas to devolve back towards local manufacturing and for megashops to start collapsing. Expect coastal vs. inland to a big division, until global warming starts wiping out coast areas.
Americans will put off cutting the military, I think, till they’ve gutted virtually everything else. I expect the military will probably win the fight against financial interests when the moment comes, though we’ll see.
There will be various break-points along the way, where decisions can be made which will make a difference but I think it’s close to impossible to avoid a failed Obama presidency and a right wing backlash against that Presidency. Once the right wing fails, there will be another chance, a slight one, to turn things around.
Let’s talk about the American way in the context of the assassination strategy used against the Taliban, for the last 8 years.
First, a simple fact: this strategy hasn’t worked worth a damn against the Taliban. They’re winning, the US is losing.
The argument for it would be that killing leaders messes up the Taliban. This is marginally true at best. Loss of a leader may cause a slight delay and occasional fights within the Taliban, but it doesn’t stop them from getting stronger and continuing to win.
Americans think that good leaders are hard to come by because modern America produces bad leaders regularly, and rarely produces even marginally competent leaders.
Or, to be more accurate, average leaders are not sufficient to make anything in America work because America is set up to force people to do the wrong thing and people who care about doing the right thing are systematically kept out and forced out if they make it in.
The Taliban doesn’t need brilliant leaders, all it needs is leaders able to execute its strategy, and its’ strategy is simple enough that your average leader can implement it, whereas the US strategy couldn’t be executed by a Napoleon.
Killing leaders at the cost of bombing weddings and funerals and killing civilians does not work in the context of counter-insurgency unless your strategy is scorched earth, which the US’s is not. There is also an opportunity cost to anys treategy.
This is the same strategy the Israelis have used for decades against the Palestinians and Hezbollah
You’ll notice that the problem has not gone away.
Americans think leaders matter far more than they actually do. In the context of an actual ideological movement with substantial popular support, there’s always another one. And, in fact, he’s somewhat more likely to be competent than whoever he replaced.
Take a look at the evolution of Hezbollah’s leadership to see how this works. The leadership keeps getting more competent, not less competent, as does the organization. The Israelis act as a nice Darwinian force, making sure the most able wind up on top and that strategies which don’t work end, because the people executing them die. Likewise the Taliban is more deadly now than it was 2 years ago, 2 years ago it was more deadly than 2 years before that, and so forth.
The war should have ended years ago, and the assassination strategy is not producing results.
But by all means, keep trying a strategy which hasn’t worked for 8 years. It’s the American way, if at first, second, third, fourth, tenth a strategy doesn’t work—do it harder. Doesn’t matter whether it’s taxes, warmaking, healthcare or anything else: the easy stupid way is always the right way, even after it hasn’t worked, over and over again.
Wonderful.
Would it be ok for the Taliban, which is at war with the US, who invaded their country, to bomb a wedding or funeral the President, a cabinet minister or other US leader was at, even if that meant many innocent civilian casualties?
The debate about the US’s penchant for murdering people in foreign countries has become tiresome. At this point, with no meaningful declaration’s of war, a “war” against a tactic, the assumption the US can kill anyone anywhere, who cares? The US is just the biggest bully on the block, declaring “we can violate international law and sovereignty, and kill tons of civilians during our assassination attempts, because we’re too strong for you to do anything about it.”
Oh, and so many “leaders” of “al-Qaeda” have been killed over the years that I always put quotation marks around both words in my head.
America is very good at assassinating people.
So’s Israel.
I notice that neither of them are succesful at solving the actual problem they’re supposedly trying to address.
Maybe the US should stop copying tactics and strategies that don’t work.
Amanda Marcotte has up an article on why women’s happiness has dropped relative to men’s over the last 30 years. I think she has some interesting observations, but I don’t think the piece quite comes together. But I wish to tackle a side issue: an anecdote about a woman being told by a man that not having children is “selfish”. Amanda and the author she’s referring to, Ariel Gore, seem to think this has something to do with being female, but I’ve been told this multiple times, and I’m a guy.
Instead, this is the default assumption in large parts of society that your goal as a human being is to have and raise children, and that by not doing so, you’re selfish.
And maybe you are, because the research on happiness and children is unequivocal: couples with children are less happy than couples without children. They are happier before they have kids, and when the kids leave the house, their happiness soars back up to pre-happiness levels.
Oh sure, parents will tell you that kids make them happy, are the best things that every happened to them, etc… but when you actually ask them how happy they are, day in day out, without referring to their children, they’re less happy than before they had kids, or couples without kids.
So perhaps not having kids is selfish, assuming kids are necessary (which, I guess, in certain numbers, they are.)
In short, the way students are treated in college trains them for the social position they will occupy once they get out. At schools like Cleveland State, they’re being trained for positions somewhere in the middle of the class system, in the depths of one bureaucracy or another. They’re being conditioned for lives with few second chances, no extensions, little support, narrow opportunity—lives of subordination, supervision, and control, lives of deadlines, not guidelines. At places like Yale, of course, it’s the reverse. The elite like to think of themselves as belonging to a meritocracy, but that’s true only up to a point. Getting through the gate is very difficult, but once you’re in, there’s almost nothing you can do to get kicked out. Not the most abject academic failure, not the most heinous act of plagiarism, not even threatening a fellow student with bodily harm—I’ve heard of all three—will get you expelled. The feeling is that, by gosh, it just wouldn’t be fair—in other words, the self-protectiveness of the old-boy network, even if it now includes girls. Elite schools nurture excellence, but they also nurture what a former Yale graduate student I know calls “entitled mediocrity.” A is the mark of excellence; A- is the mark of entitled mediocrity. It’s another one of those metaphors, not so much a grade as a promise. It means, don’t worry, we’ll take care of you. You may not be all that good, but you’re good enough.
This is EXACTLY how we see the elites treat themselves at the highest pinnacles of power. Blew up the economy, invaded a country based on big lie propaganda and shredded the constitution? A- old chap, and we would never think of holding you to account. Go retire in luxury, old fellow.
Don Peck at the Atlantic has noticed that employment is unlikely to recover to pre-great recession levels (let alone Clintonian levels) for a long, long time. This was totally predictable, and predicted. He also notes that even people like Paul Krugman really have no idea how to fix it.
Yes. Employment as a percentage of the workforce will not recover for a generation. And my bet is that median real income won’t either.
As for how you fix it, first you need to have a model for why it happened in the first place. I’m not going to give that model today (read Wealth and Democracy, by Kevin Phillips, he has a big chunk of it). Instead I’m going to say what needs to be done.
Fixing America
Because any economic growth right now increases the prices of oil, which then strangles the economy, you must reduce dependence on oil, or you can’t fix your problems.
Because banks aren’t lending, and because they are a net drag on the economy having destroyed more wealth than they created, you must break up the major banks or take other similiar actions to the same ends, or you don’t fix your problems.
Because defense spending is essentially un-productive you must end the American empire, cutting “defense” spending by at least half, and “intelligence” spending by three-quarters, or you don’t fix America.
Because education is the backbone of modern economies and good education is what allows democracies to work, as the founders understood, you must fix education, so that everyone who is qualified can get a degree without being burdened by a decade of debt and so that the the lower class is able to get through university again, or you don’t fix your problems.
For the same reasons you must fix education at the primary and secondary levels by removing it from the property tax base, or you don’t fix your problems.
Because oligopolies strangle innovation, produce inferior services and soak up oligopoly profits they haven’t earned break up your major oligopolies outside the banks, starting with the telecom companies, or you don’t fix your problems.
Because government is now a bidding operation in which monied interests buy the policies that are good for them and not for America you must fix campaign finance, or you don’t fix your problems.
Because a lopsided wealth and income distribution leads to deep social pathologies, reduction in real demand, short term risk taking and looting by the financial class and the destruction of functional democracy you must reinstitute steep progressive taxes on the 1950’s level, or you don’t fix your problems.
Because locking up more people per capita than any other nation in the world is massively economically inefficient and causes severe social pathologies you must break up the prison-industrial complex, or you don’t fix your problems.
Because police states are not efficient, and for the sake of your own souls, you must end the drug war and the paramilitarization of US police forces, or you don’t fix your problems.
Because real modern infrastructure is one of the keystones to economic growth and competitiveness you must build out proper transportation (high speed rail) and internet (cheap, un-metered high speed to every home) or you don’t fix your problems.
Because intellectual property laws are strangling rather than aiding innovation and are locking culture beind walls, you must reform reform your intellectual property laws, or you don’t fix your problems.
Because the US can’t afford to be wasting 6% of GDP, not insuring many of its people and getting awful results even for the insured, you must move to a rational form of comprehensive insurance like single payer, or you don’t fix your problems.
Because the US and many other countries in the world cannot flourish in a world trade system which allows massive trade and money flow deficits, the world trade system, and most especially the free movement of money needs to be heavily reformed, starting with a Tobin/Pigou tax which scales the cost of currency changes to carbon output, or you don’t fix your problems.
And, sadly, this is a partial list.
Which is to say, the problem in the US right now is that virtually nothing of any significance works. Not the military, who with 50% of the world military budget is being fought to a draw by ragtag militias, not the political system, and definitely not the economic system.
Fixing this, fixing America, is a literally monumental task, like building pyramids. It will take a generation, perhaps two, of very committed people.
I fear that those people don’t exist in large enough numbers, at least not in any position of power or able to seize power.
I hope Americans prove me wrong.
