What will America look like after this recession?

This series of articles speculations about our future based on history and the almost inevitable re-balancing of global economy (i.e., end of unconstrained borrowing by US).  The elections are only three eight months away, perhaps our last chance to influence these developments.

I.  This is a government failure on two levels, despite many warnings from major institutions that the US could not forever borrow without inevitable and painful consequences.

  1. The US government let it happen, failure of the massive government regulatory apparatus.
  2. The US government, esp. the Fed staff, did not model this scenario, despite the warnings.  The Fed’s legendary “500 PhD economists” and their supercomputers could have provided valuable analysis of alternative steps to mitigate this financial and soon-to-be economic collapse.  “Surprise is an event that takes place in the mind of a commander” – and represents a personal failure.

As a result of these two failures, US government decision-making has lapsed into a failure-prone mode:  brain-storming by senior leaders.  Old men, whose operational experience was either long-ago or zero (e.g., academics and politicos), operating under time pressure, without research and advice from professional staff.

II.  The insane borrowing by US businesses and households took place in plain sight, to widespread applause. No child will be christened “Alan” in America for the next five generations – and rightly so — but in a Republic the ultimate responsibility for such folly is ours.

III.  The next few years will likely see the nationalization (partial or complete, de facto or de jure) of the US financial and health care sectors, the largest expansion of the US State since the 1930’s.

Despite the growing hysteria, this will not mean the end of America.  Today our governing elites are trading away our economy’s vibrancy and adaptability — which requires allowing private entities (individuals and businesses) to fail — in exchange for security and stability.  This represents a failure of the free-market system, as the fall of the Soviet Union was failure of government-controlled economies.  The only remaining models are “third way” systems like those of Asia and the EU, with substantial government control of both culture and economics. 

So the US will soon look like France or Germany.  I doubt that our governing elites consider that a bad thing.  Two generations from now American children will not understand why their grand-parents make such a big deal out of the events of “2008-10.”

IV.  This downturn will not destroy American’s physical wealth (natural resources, buildings).  It will concentrate wealth in fewer hands.  A “middle class” accumulates wealth during periods of stability.  Periods of instability — both inflation and deflation– shift wealth to elites (they own real property, not just the paper assets of the middle class).   To see this in action, watch the bank run scene in the movie It’s A Wonderful Life — when the fat, rich Mr. Potter buys up the town of Bedford Falls.

When the going gets tough, the rich get manicures.

V.  The poorest Americans will suffer the most. That is one aspect of what it means to be poor.

VI.  As a result of this downturn, America will lose wealth and income, as the US dollar declines so that American workers wages (in real terms) fall so that our goods and services again become competitive on world markets.  Wages will not fall to 2nd or 3rd world levels, as our productivity is far higher than theirs.

We will export more — earning the income needed to pay our foreign debts – and import less (foreign goods become more expensive).  Our trade deficit will shrink, perhaps even becoming a small surplus.

VII.  As we lose economic and military supremacy the US will no longer have the resources to act as global hegemon.  The fall of the US dollar reduces our relative economic strength.  By missing the shift to 4GW we have lost effective military supremacy.  We will become just another Empire which fell due to internal mismanagement.  Our time as a superpower will be considered unusual only as we failed to generate any substantial gains from it.

Admiral Fallon may be the last of our pro-counsels will to stride the world stage as giants (as Barnett describes here). 

VIII.  The US will need the cooperation of foreign governments to stabilize the US economy.  At the very least, our creditors must continue to roll over our bonds despite massive foreign exchange losses.  Some governments may do so in the spirit of past alliances and a shared future.  Others might set a price for their aid.  Some might set a high price.  This negotiating process could get interesting (questions of survival are always interesting).

IX.  The world will shift to a multi-polar system, probably with regional leaders.  Since so much of our work as global cop was consider unwanted or actively destabilizing, the multi-polar system will probably run more-or-less smoothly.  Nukes will become more common, which means only few and small wars (perhaps with an occasional city getting melted by State or non-state actors).  Non-state actors will continue to grow and thrive, with or without the US as hegemon.

Eventually a new hegemon will emerge, although this may take decades.

X.  The world’s weaker nations will likely suffer most from this transition to a multi-polar system.  As a valuable source said (quoted with permission):

Another Big Kahuma theme: the shift away from the US banking system as the global controller of liquidity and the US as the arbiter of global economic decisions. … No one controls liquidity; it is a free for all. Places that need it cannot get it. Not like the old days when the Fed could more or less force liquidity into certain areas. The larger ramification is the loss of political control and the end of certain borders. And this means that the weaker economic entities or countries get crushed and become seeding grounds for hostility/revolution/instability.

Summary 

These things appear inevitable so long as we stay on our present course.  But there are other possible futures for America, depending on our actions.  Nothing is written. 

For more information from the FM site

To read other articles about these things, see the FM reference page on the right side menu bar. Of esp relevance to this topic:

Reference pages about other topics appear on the right side menu bar, including About the FM website page.

Some posts discussing solutions:

Afterword

Please share your comments by posting below.  Per the FM site’s Comment Policy, please make them brief (250 word max), civil and relevant to this post.  Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).

31 thoughts on “What will America look like after this recession?

  1. I agree with your comments up to 8 and 9. There will be a global thermo nuclear war as Americans resist their enslavement. Those seeing one world government will enlist millions from Asia to try to crush the USA. They will fail, but not before a significant portion of the earths population is dead. Having food storage and the ability to be self sufficient will be valuable personal assets.
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    Fabius Maximus replies: Take a deep breath and cheer up. It is a safe bet that all of your forecasts are wrong, as is usually the case for such extreme forecasts (of course, we are all guessing — probably we are all wrong!). The US becoming more like the EU is hardly “enslavement.” Paying our debts is hardly “enslavement.” Neither of these things is likely to result in America launching nukes at anybody. Since there are no states with sufficient power to replace the US as hegemon, we will likely have the opposite of a “world government”. Indeed the current international institutions, being creations of the US, might lose power as we weaken (see my last point).

  2. Seems to me you have generated a reasonable scenario. I quarrel with one comment: “We will export more…”

    I think this will be true only to a limited extent. The problems lies not with the principle but with the fact that over the last few decades, the US has stopped producing things. We have “nothing” (an exaggeration of course, but this captures the big picture) to export.

    The US is the primary consumer for the world, and only a marginal producer. We do a great job of marketing and sales, buying things others produce and reselling them to the US consumer. We’ve outsourced and off-shored production. As the US consumer stops buying, China and India can turn to inner markets (not a bad idea under any scenario), Europe can do the same (particularly now as it rebuilds central Europe), and the developing world will be better off doing the same (the third world represents a bigger and more accessible market for other third world countries and their products than does the first world).

    This reinforces your notion of the emergence of a multi-polar, regional world. This also draws on the development model that focuses on import-substitution rather than exports to fuel development.

    An optimistic aspect of this model will be its focus on substituting locally produced energy (an abundant and not a scarce resource) for imports. Going local and going small, the world can produce abundant, cheap energy to fuel development globally — solar heaters, photo voltaic cells, and small windmills on every roof-top; small hydro plants on all streams and rivers; ocean wave power plants….

    The end result will be increasingly self-resilient communities and regions that are inter-related rather than inter-dependent.
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    Fabius Maximus: We have not “produced less.” Rather our mfg has grown less rapidly than the overall economy, so that mfg is a smaller share. I have discussed this several times in the comments, with links. The history of exchange rates shows that folks often say that fx rates do not matter, that changes will not influence trade — and are always proven wrong (and quite rapidly so). As for the rest, there may be a shift to autarky (aka self-reliant communities), but I doubt it. The empirical case for this is weak, as transporation costs for products are a small fraction of end prices. I hope you are wrong about hydropower, as all those small dams will have horrific ecological effects.

  3. Yes, the rich will own everything, but what good will it do them? I saw a BBC story of a Braz. businessman in Sao Paolo. He flew from rooftop to rooftop in a chopper. He was met on the ground by 2 heavily armed vans that carried him to his appointment. A German CEO was in an armored car when a copper plate from a parked bike came crashing through his bulletproof windows. The rich will get richer, but will they be able to walk the streets? Will they be forced to hire lots of Blackwater types to accompany them to the beach?

    Yes, the poor will get poorer, but when you are already near the bottom, how far can you fall? The people I fear most are the yuppies who have had a taste of the good life and now find themselves penniless. Also, the rednecks (with the gun hanging in the pickup) who were doing well with construction work and now suddenly find themselves out in the cold. As these types take matters into their own hands using 4GW tactics, how will the authorities be able to stop them? Don’t forget, that as foreclosures increase, so will property tax defaults. Communities will find themselves cash strapped.

    I do not look forward to the future.
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    Fabius Maximus: what nation are you discussing? Most of the poor in America are near the middle on a global scale of wealth and income; hence they can fall a long way (but I doubt that they will). As for the trauma of recession, of course it will hurt. But the post-WWII average was one every 5 years (more precisely, 1 in 5 quarters); folks just lived through them. Even the two worst since the 1930’s, 1973-75 and 1980-82, were nothing like the conditions you describe. After 25 years of sunshine, a little rain is the absolute end. Bad things will happen, but let’s not work ourselves into hysterics.

  4. Great analysis. I have, however, some doubts about if the American elite will give up their world position peacefully. I hope you don’t take that as a sign of anti-americanism, but most empires don’t die quietly. Dying empires have instead a tendency of going down violently, guns blazing. Remember the First World War? Indochina? Suez? Algier? The main exception was the Soviet Union and that constitutes a real conumdrum: Why didn’t the Soviet leadership use their vast military when they could? I suppose they realized they couldn’t win a war against NATO. If so it doesn’t really change my argument, because the United States still has a military second to none in the world, which would make it more tempting to use the military option. I hope I am wrong, but I am not sure if a president Clinton, McCain or Obama won’t strike will they still can in order to reverse or slowing down the death of the American hegemony.

  5. I.
    Poor leaders have always been a problem. The policies of Mao where not exactly helpful for the economic development of China. But as can be seen from China it doesn’t necessarily create insurmountable problems for the future.
    II.
    insane borrowing – I would rephrase it as insane lending. One can’t expect people offered cheap loans not to make use of an attractive offer. It’s the regulators/political leaders who need to keep a tight grip on the banking sector. There will always be bankers willing to gamble with their shareholders’ money in order to make huge bonuses for themselves in any society.
    IV-VIII.
    Rather too pessimistic, I think. The problems facing the US are not that devastating, just unpleasant. The US government debt level is on level with that of the UK, France, Germany. All that is required is higher taxes and a reduction in unnecessary spending (agree with you on the reduced military. What are the economic returns on it?).

    You do have one huge advantage compared with other nations who have found themselves in debt. You can pay in your own currency. In any negotiation with creditors the threat of inflation can be used. How would say, the Chinese, rid themselves of $500 billion worth of US bonds if they can only find buyers who are willing to pay 15 cent to the dollar. Not an option for nations who need foreign currency to pay creditors.

    As for the consumer.
    Yes they are tapped out. Over a prolonged period the US consumers have decided to increase present consumption at the expense of future consumption aka borrowing. So they will have to rediscover the virtues of saving but is that so bad in the long run?
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    Fabius Maximus: I wish you were right. The immediate borrowing problem in the US is excess business and household debt, not government.

    On a longer-term perspective the government is also insolvent. You are looking at government obligations on a “cash basis”, which is statutory fraud in most places because it does not include all liabilities (e.g., promises of pension and medical benefits). Including these the US government’s liabilities are over $50 trillion; including the States pushes the total to even more absurd levels. Since the boomers are already retiring, with not much in aggregate savings, this is rapidly becoming a serious factor.

  6. That’s a great question:

    The collapse of the US dollar is now inevitable. Irregardless of the Fed, the world must abandon the dollar or continue to import inflation and lose money on dollar denominated assets. This mass selloff of bonds, dollars, and securities will create inflation, as will the skyrocketing price of imported oil and manufactured goods.

    As one of the comments notes, at least this will solve our debt problems. We will simply pay off our debts with worthless paper. The US economy is no longer a manufacturing power, so at best it will take years to rebuild the US standard of living we enjoy today.

    That’s bad enough, but we are also at war. When the Soviet Union collapsed, they could not even afford to remove their military units from East Germany. So what happens to our Armies in Iraq and Afghanistan?

    If we attempt to stay in Iraq, we will be paying alot more in real terms to support our military, in addition to paying our soldiers in useless dollars. Unless some other power wants to subsidize our occupation of Iraq. If we pull out, Iran and Shia Iraq will form a new Persian Empire, with nuclear weapons.

    As for economic solutions, there are two obvious ways out. One is National money like Lincoln’s greenback or Hitler’s Reichemarks. The other is to simply raise taxes on the rich.

    I’ve heard the term “third way” before although I dont claim to know exactly what it means. When you say the US could become like the EU, do you mean a Parliamentary system, or a larger public sector?
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    Fabius Maximus replies: Nothing is inevitable, except death. We are just speculating about the future, an error-prone by necessary exercise. Broad, certain statements are totally inappropriate here — except by God (except for a bit of rhetoric, to spice the discussion). Nor are our options so limited as you describe; please see my past posts for a wider range of alternatives. For example, deflation is as likely as inflation. Last, I meant that the US seems likely to become more like the EU structurally following nationalization of the finanical and health care sectors.

  7. Are those obligations/welfare benefits unavoidable? It seems a rather rigid system. Coming from a Scandinavian welfare state like Denmark, we Danes know that all welfare benefits are subject to immediate revision by the majority of parliament.
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    Fabius Maximus: Some are, some are not. The retirement benefits due to government employees (municipal, state, federal) are contractual — cannot be altered with changing our system of laws. On the other hand, Courts have consistently ruled, I am told, that government benefits (e.g., social security, medicare) are set by and can be changed at will by Congress (upon the President’s signature, of course). And I expect that they will be changed, probably reduced and means-tested. But the existence of social security promises has reduced our household savings rate to zero or below — why save if you consider the promised benefits enough and have more urgent needs/desires? The lower three wealth quintiles have almost zero savings, so they will require Federal retirement payments. This sets a lower range on the Federal government’s liabilities.

  8. “The elections are only three months away, perhaps our last chance to influence these developments.” What elections are you talking about?
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    Fabius Maximus replies: The November elections, held in 8 months (poor handwriting, looked like a “3”). Nice to know that somebody actually reads these. Thanks!

  9. I’d also add two other factors to consider:

    1. Rising Commodity Costs – energy costs have gone through the roof. Diesel is over $4 a gallon now. My home electric bill – for a 2200 square foot house built four years ago – approaches $500 a month despite some drastic measures to cut energy consumption. Add in rising costs of food – because crude oil is used in many feeds and fertilizers, not to mention transportation costs from one point to another (or harvesting costs for grain).

    2. Rising Fees and Taxes – my wastewater and sewage bill went up %15 in January. The state I live in is in fiscal crises and have been raising fees and taxes and cutting services. This also takes a great deal of money out of consumers hands, and causes resentment – how many times have you heard the complaint “I’m paying taxes or fees for things I don’t use or get any benefit from.”

  10. Well, after a rather busy and interesting (in the bad sense) week or so I’ve had a chance to look over the data. I admit, at first I was more optimistic (I know, unusual for me) than I am now, after reviewing previous collapses. There are simply no parallels in history to what we are facing now. This is not the UK after WW2.

    The nearest anaology (weakly) is the USSR. Despite that, the differences are so immense as to make any comparisons meaningless. The USSR went quietly, the military/industrial complex folded quickly and (with a few noises here and there) quietly. Russia flirted with gangstarism (heavily subsidised by the US & UK), but, (I should say as usual) when it really hit the fan they started to come back. Long way to go but the signs are (despite negative US and UK comments) are actually positive. Good luck to them and maybe, just maybe, an important part of the EU is (say) 10 years?

    The US is so different. The Military/Industrial/Financial complex is not going to go down quirtly, it will fight to the last dollar (and maybe life) of every US and World citizen.

    On the financial side it will use every dollar, squander every normal persons’ $ to try to (failingly) hold up the financial system design created in the 80’s. There are too many people in the elite with too many vested intertests to let it go. Foreign money will dry up so normal US people will be raided (actually this is happening right now).

    The M/I industry will not go down quietly as well. Again too many vested interests. They will buy their F-22’s, FCS, subs, etc, whatever. They will stay in Iraq for much longer than anyone here expects, they will have to be totally beaten militarily and totally broke before they will move. They will continue to expand war in all dimensions, space is the growing frontier at the moment, they will not back down.

    American citizens will suffer, but that will not matter. The entire political system is against them. Those that try to dissent will end up in the ‘new’ detention centres that have been built, or the ‘normal’ prisons (which look increasingly to an outsider like concentration camps anyway). Torture will be authorised against US citizens (actually it already has been), not to get any information, but as the usual tactic to spread terror and fear in the population. The normal police system will continue the ‘take the gloves off’ approach that it has started to show (children handcuffed, etc). The ‘special forces’ will be much worse.

    Now there is another 5-15 years of this to go through. Neither Clinton (who agrees with this) or Obama (who sort of doesn’t maybe) will be elected because they are frankly unelectable. McCain will be the next President, his one and only only threat is if Gore steps in, but I expect Gore will not, or will die.

    Yes the Democrats will control the Senate and Reps but that will make no difference, because their top boys agree with this approach (hey look at them they are all millionaires). So nothing will change.

    As the money runs out, the Govt will become more repressive and more expansionist. Yes there will be more wars, yes there will be more repression internally.

    Yes there are risks of another Liebensraum moment (lets face it, that was Iraq so the precedent is set), but for money and resources, not land. Yes there are risks of a nuclear war. The US is not going to stop ‘containing’ (translated setting up for a first strike) Russia and China. In fact it is not going to stop any military move that have been happening over the last 20 years or so. Yes it will back the nutcases (not the smart and sane) in Israel to the hilt.

    No the US, come whatever election, will keep right on the great neo-con plan (who are much smarter than most people think, as they know the difference between direct power and setting the agenda and creating the mental model and language that everyone conforms to .. the entire US elite conforms to the neo-con agenda now.. heck they are Trotkyists after all they know how to do this).

    A military disaster and a Depression is not a disaster for them, it is an opportunity. Think more like Hitler (but don’t overuse the analogies, there are a few similarities only), the ultimate Trotkyist in many ways. Chaos is an opportunity, chaos created by you is an even better opportunity.

  11. I think OldSkeptic’s right. Don’t mean to parrot him but that’s the way things have been going since aeons past. We can probably expect worse in the near future,despite what optimists like Thomas Barnett believe or say.

    So many Benjamins to be made out of the military-industrial complex. Reaps in profits for the movie industry and Disneyland as well. Well, at least for the next two or three generations of Americans.
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    Fabius Maximus: Perhaps. Drawing trendlines and projecting them into the future is an easy method of forecasting. It is almost always wrong over long periods, and misses ALL major inflection points. History is made by those periods when trends change.

  12. Inflection points? Are we all experiencing real genuine change for the better or is it just a sea-change? What trends are you speaking of?
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    Fabius Maximus replies: Oldskeptic’s nightmare results to a large degree from extrapolating past trends — only the bad ones — into the future. Strength of the miltiary-industrial complex. An economy based on debt accumpulation and speculation. Increasing government powers. etc

    At any point in history one can run this exercise and conclude all is lost, which is why I refer to it as a nightmare. There is no mention of positive trends, no recognition that trends can change. It is just a dirge, another person walking around with a sign saying “The end is near.”

    People with such views are always with us. They provide a useful warning that prosperity and liberty — even civilization itself — are fragile things, that must be rebuilt with every generation. They are society’s guard against complacency, reminding us that “this too will pass away.”

  13. Touche! Let us light a candle as we walk, lest we fear what lies ahead. We can’t all be Cassandras,or there’s simply little hope left for anything at all. What are we all basically living for? If not for the mere belief that tomorrow can be a brighter day.

    Of course, we must be wary of all that can destroy whatever progress civilization has made, especially those fifth columns and opportunists found in basically every nation; viz. the warmongers, right-wing fascists (I’m not talking about Bill Lind!) war profiteers, amongst others.

    Though I’m not American,I pray for the happiness and well-being of her citizens.

  14. I have been reading your post, and I am student. I am wondering with economy in such bad shape, how do you think recession will affect the school system?
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    Fabius Maximus replies: I have no idea. There is much evidence that school funding is a relatively minor factor in the performance of educational systems. Adopting effective methods and school leadership are far more powerful factors. Funding constraints might force beneficial systemic changes, as the current public ed systems are to a large extent disfunctional in many areas.

  15. We can all speculate, but the reality is, we have no idea what is happening “behind the scenes”. To suggest that we can disseminate public information and come to the conclusion as to what politicians and global financiers will do (or have already done) to shape the global economic map would probably not be accurate. Speculating is interesting though.

  16. FM: “We have not ‘produced less.’ Rather our mfg has grown less rapidly than the overall economy…

    A decade-old book still worth reading is In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the key to Future Prosperity by Eamonn Fingleton. Fingleton’s thesis is that the much-ballyhooed strengths of the post-industrial information economy are not all they are trumped up to be, and that manufacturing, adapted to the high-tech age, is the key to future prosperity. Rather than recapitulate his arguments in depth, interested readers can see a synopsis {Chapter One of the book} here.
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    FM Note: Here is the NY Times book review, 12 September 2009. It’s an interesting theory, over my pay grade to comment on.

  17. There will be a slow motion retreat from empire necessitated by declining aggregate wealth. We will not be able to afford endless war any longer 10-25 years on. The Pentagon will insist that their budget be maintained but the resources will not be available to maintain.
    The working stiff will experience a decline in standard of living – being hit with the double whammy of declining dollar and declining wages. The uneducated young will be the vanguard of the “throw-away generation” being unemployable as part of the coming paradigm. There will no longer exist the middle working class. Their shortlived prosperity of the fifties – seventies is already nothing more than a memory as their remnants ooze slowly back down into poverty. The wealthy will live as before – many of them actually unaware of the economic carnage beneath.
    I’m going to bed now. Sweet dreams will be a relief from this grim vision.
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    Fabius Maximus replies: When depressed I recommend visiting the FM Reference Page Good news about America, a collection of articles! Lots of material there to cheer you up. I list it in the “for more information” section of most depressing posts.

  18. Well looking at my original post (March 2008 no less) you are still tracking along the trend.

    What I got wrong:

    Obama won. But I expected a difference if he was elected and nothing has changed so lets call that one a draw.

    The F-22 was cancelled: But the F-35 is still going. One against me.
    Though the military budget still increases, so overall I was right.

    Calling the Trend:

    “The US is so different. The Military/Industrial/Financial complex is not going to go down quietly, it will fight to the last dollar (and maybe life) of every US and World citizen.”.

    Still on track, even more wars now. The ‘war on terror’ is now the ‘long war’. Pakistan is now a basket case and the pro-consul for there is taking over in the new huge US ’embassy’ .. the ‘real Govt’.

    “. They will continue to expand war in all dimensions, space is the growing frontier at the moment, they will not back down.” .. right.

    “American citizens will suffer, but that will not matter. The entire political system is against them. Those that try to dissent will end up in the ‘new’ detention centres that have been built, or the ‘normal’ prisons (which look increasingly to an outsider like concentration camps anyway). Torture will be authorised against US citizens (actually it already has been), not to get any information, but as the usual tactic to spread terror and fear in the population. The normal police system will continue the ‘take the gloves off’ approach that it has started to show (children handcuffed, etc). The ’special forces’ will be much worse”.

    Again right on the trend line. You’re not all the way there yet .. but getting close as you continually act as sheep.

    “Yes the Democrats will control the Senate and Reps but that will make no difference, because their top boys agree with this approach (hey look at them they are all millionaires). So nothing will change.”.

    Right again.

    “As the money runs out, the Govt will become more repressive and more expansionist. Yes there will be more wars, yes there will be more repression internally.”.

    Again right.

    “Yes there are risks of a nuclear war. The US is not going to stop ‘containing’ (translated setting up for a first strike) Russia and China. In fact it is not going to stop any military move that have been happening over the last 20 years or so. Yes it will back the nutcases (not the smart and sane) in Israel to the hilt.”

    Trying to find where I’m wrong on this one. Yep the pull back on East European “anti-missile’ defences happened .. but they just replaced that with other, similar ideas. A setback but still on the trendline.

    “No the US, come whatever election, will keep right on the great neo-con plan (who are much smarter than most people think, as they know the difference between direct power and setting the agenda and creating the mental model and language that everyone conforms to .. the entire US elite conforms to the neo-con agenda now.. heck they are Trotkyists after all they know how to do this).”

    Again trying to find where I was wrong on this, written in March 2008 no less. You are all neo-cons now.

    Leaving Iraq … not the Pentagon’s plan.

    As long as you stay sheep then you will conform to this ‘elite’ trend. Which is why the rest of the World will eventually, possibly too late, dump you.

  19. FM, your predictions were wrong on two counts: nationalization of finance and health care. Just the opposite has occurred. You were influenced by conservative bogey men in these fears. The danger is not the national government, but the private wealth that owns the government. Our elected representatives are by and large puppets, who are simply clinging to their priviledged positions. We should be looking at the puppet-masters.
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    Fabius Maximus replies: You appear to have read few posts on this site. Nationalization of failed banks IMO was the logical step. Instead we did a bailout, gifting untold fortunes to private interests. Theft on a scale never before seen in this country, resulting from a raw application of political power. For details see section 7 “7.Theft pretending to be solutions” of Financial crisis – what’s happening? how will this end?.

    “your predictions were wrong on two counts: nationalization of finance and health care. Just the opposite has occurred”

    What do you mean by “the opposite has occured”. Less federal regulation than before? Hardly.
    * Aprox 80% of residential mortgages are either financied or guaranteed by a government or government-owned entity.
    * FHA is almost the only subprime lender left.
    * AIG, one of the world’s largest insurance companies, was nationalized.
    And I suspect the down cycle has not yet ended, so the fate of the financial and health care sectors remains unknown.

  20. “The Pentagon will insist that their budget be maintained but the resources will not be available to maintain.”

    In one of his “On War” columns William S. Lind wrote that the Pentagon’s extravagance would end when the money ran out. Looks like that day will be soon. Perhaps the United States military will then have to go to Beijing with a tin cup and beg from the Chinese – kind of like how drug addicts end up begging on a street corner after they squander their assets and become homeless.

  21. “You appear to have read few posts on this site.”
    You require a large expenditure of time (dozens of hours?) for people in order to participate in your blog, or understand your proposals. This lack of accessibility divides your readership into the long-established and knowledgeable commenters, and the the ignorant new comers who you profess annoyance with.

    I don’t think that’s quite fair.
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    Fabius Maximus replies: First, it’s not a criticism to say you have not read many posts on this site.

    (2) Your comment #23: “You were influenced by conservative bogey men in these fears.”

    That’s a strong statement to make based on 3 sentences in this post, esp after reading so little on this site. Hence my comment.

    (3) “You require a large expenditure of time (dozens of hours?) for people in order to participate in your blog”

    I disagree. Each post is explictily written as a stand-alone, with a tight focus. Readers needs no knowledge of other posts, unless they wish to make broad statements about the author or his views.

  22. Nexus, FM is correct. What you have is nationalisation .. without the benefits of nationalisation.

    Nationalisation has become a dirty word, but there are strong aruments under certain circumstances, e.g.:

    (1)It is of critical national importance, such as health, defense, power, food, etc.
    (2)There is a current private monopoly/oligoply that is causing ecomomic damage to the rest of the economy/society .. hmm Wall Street Banks come to mind.
    (3)The private sector has failed/collapsed in a critical area (see (1) ) … Banks again or public transport.

    Note nationalisation doesn’t have to be forever, in case (2) then a nationalisation, followed by a selling back to the private sector a broken up entity is quite a sensible tactic.

    But it has to be proper nationalisation. The current top level is kicked out, others put in place, it is mananged by the Govt (hopefully in our best interests, but by that stage it really cannot be any worse). You introduce public sector pay levels. Profits are returned to the taxpayer, etc, etc. Plus they do what they are told to do in the National interest.

    You have de-facto nationalisation in many cases in the US, sadly:

    (1) The ones that created the problem are still there.
    (2) They continue to suck money from the taxpayers.
    (3) Their salaries are well out of line with public sector guidelines.
    (4) They persue their own agenda, e.g banks told to lend to business say ‘sod off’ and speculate and put the profits into their own pockets. ‘Don’t forclose’ and they are creating more homeless refugees than the Pentagon .. which is a real feat in itself.

    So you have the worst of all things, paid the money without any of the the benefits.

  23. Mikyo, the standard definition is just a 1,000 year northern/imperialist/communist/facist/Catholic/Protestant/corporate/etc conspiracy that makes the Illuminati look like amatures. Faking the moon landings (and manufacturing all that ‘evidence’ that the Earth goes round the Sun)was nothing compared to making sure every map in the World has been wrong over the centuries.

    Everyone knows that the true top of the World is Australia. See: http://flourish.org/upsidedownmap/

  24. Yep, his house is and the rest of Oz is millions of times bigger.

    Why every time I look out at my million hectares backyard (everage here) I think … oh god its going to cost me another fortune to drive to work, I’ll just have to dig up some more gold ;)

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