As we are all discovering and about to experience personally, our lack of focus and responsibility as a nation is pushing us to the edge of economic disaster. This casino economy of get rich quick and feel no pain strategies has really back-fired on us all. I have coined this the greatest economic transition in the last 100 years and the strongest test of capitalism in that same-span. This is the advent of the new “Inconvenient Economy.”
Instead of solutions we have buck-passing, even when the bucks are gone. Last week I heard the same Wall Street gurus who have whined for the last 40 years that Big Government needs to get out of the way, now blame this meltdown on a Big Dumb Government that did just that – letting Wall Street have its way. Wall Street cheerleaders, economists, and flaks want us to forget that it was their lobbyists who paid off Washington to reduce regulatory oversight and thereby allow the free market, by their account, to police its own problems.
Now the investment houses and banks are falling like dominoes. We do need a bailout – but not the one about to be implemented. Instead, we need one that is fair to the taxpayers, not just the moguls with the money to buy into a pricey game, bet big and sloppy, and then folded when they couldn’t meet the call.
The castigation of many economic pundits on this week’s talk shows has been directed not at the captains of the financial industry but the sailors below decks – the rest of us. American taxpayers bear culpability in the economic collapse. We did participate in this get-rich- quick easy credit disaster -- the lottery syndrome. Our inherent desire to make an easy buck and find a better life was unfairly exploited by multi-national money merchants and their misleading offers. And no one in government was there to stop them.
We are a society of laws – laws to protect consumers, laws to prevent malfeasance, laws to prevent the powerful, greedy and corrupt from preying upon the rest of society. For a decade we laid those laws on financial responsibility aside while the banking system pursued profits without restriction, without observation, without regulation.
I stood at my son’s school last week for parents and kids flag event and listened to the Pledge of Allegiance, wondering all the while how we as a nation indivisible, a nation of liberty and justice for all can endure if even a national economic crisis can’t shake politicians out of their petty partisan politics. We are in the midst of an economic firestorm rivaled only by the Great Depression, yet like Nero, our leaders only fiddle.
If the American economy goes up in flames, the world will feel the consequences. Americans fuel the global manufacturing engine – we consume 22% of the products sold worldwide. This unparalleled consumer market is what keeps foreign governments financing our mushrooming debt. If our consumerism falls precipitously as it will unavoidably do in an economic disaster, foreign nations’ support that stabilizes our economy, and their own, will crumble.
I call the result of this ruination, the New Dark Ages. The first Dark Ages were brutal times ushered in by the fall of the Western Roman Empire. Ruthless feudal warlords made land grabs and impressed innocent people into their liege service without regard for anything but the power and opulent lifestyle of the ruling class. Perhaps we are already under the spreading penumbra of the new Dark Ages? Certainly we are heading that way.
The Dark Ages were a time of institutionalized brutality. Roving horse-bound invaders charged around the countryside, pillaging and murdering. Religious wars were waged with brutal abandon - Muslims against Christians, Mongols against both. The populous was malnourished, uneducated, wasted by disease and highly exploited for the needs of an elite few. The Roman advances in culture, innovation, and international trade ground to a halt.
Can it happen it again? Our world is becoming, in its own way, no less dark than 1500 years ago. It is an isolating darkness, which afflicts each of us but brings none of us together. All the while those who reject their fiscal, national, community and family responsibilities continue to collaborate and dominate politics, education, and society. Our vaunted innovation, our melting pot of immigration and diversity and higher education is on the decline, our war-making, and religious intolerance on the rise. Without an engine of economic progress, America will fall back on modern day looting – exploiting its military supremacy to grab what its economic vitality can no longer win.
If Americans do not take back responsibility for our national future from our corrupt leaders and our corporations, we cannot begin rebuilding our nation. We can do it. John McCain and Barak Obama cannot. They haven’t the ideas to make the sea-changes our society requires such as true nation rebuilding, nor the will to enforce those changes upon a monetized special interest driven political system which supports them. It is only from our own efforts, that America can become again the best example of how to achieve individual dreams through freedom of opportunity, not by suppressing the rights and hopes of others.
But public trust must be re-established so that by doing so this opportunity for a turn around or work out will not be squandered or worse yet become just another scheme to make those same robber barons that set this up get even wealthier at our expense.
How to begin to restore that trust? Congressional intervention to restore fiscal stability to our financial markets must come with some very steep costs and painful lessons to those who set this in motion. As reported in the New York Times lately, Sweden turned around their credit crisis and saved their own failing banks in 1992. To do so required an investment of nearly 4% of their GDP. If that sounds extreme, consider that our proposed bail-out is going to top more than 5% of our own GDP.
The Swedish solution worked for them fifteen years ago. It can work for us right now. Banking institutions must write down their debts and refinance them at current real market values not inflated numbers from before the real estate bubble birth. Next, the banks must allow those debtors who can afford the lower payments to continue to make them. These write-offs would be absorbed by our government as stock warrants in those companies that can be sold later for a profit, as was the case in Sweden.
The proceeds from the government’s profits can later be used to invest in our next great wave of innovation– fostering the growth of the green energy technology revolution to break our addiction to fossil fuels, empower new manufacturing industries, and rebuilding our crumbling physical infrastructure and improving our homeland security systems. This is true economic nation building. It creates innovative new capacity for people to work and earn a living while creating economic prowess as a nation and acting sensibly to reduce and someday eliminate our addiction to fossil fuels.
By instituting a transactional fee on all stock sales and financial market transactions, as was done in the United Kingdom, we can curb excessive risk-taking on financial derivatives that are not based on sound opportunities. The proceeds of the transaction tax could be used to begin paying down our bloated national debt.
These two steps alone would do much to right our troubled economic ship without imposing significant tax increases on the working population. Our tax code is in need of significant real fixing, so that the rich and corporations pay their fair share. But to tax the working class to pay off Wall Street’s blunders would not only further alienate citizens from government, but further handicap those who can revive our economy.
Are we to take action, and require it of our leaders? Or are we to find ourselves the peons looking in on the gated communities of a wealthy class that believes, to paraphrase Twain, in welfare only when it is for the rich.
The road to a New Dark Age is being paved right now, bailing bad debts out of a sinking Wall Street ship and pouring the money right back in. If we don’t right size the ship of state, we are left to chant a new flag-saluting motto: - “I pledge allegiance to the flag of Un-united States of America, and unto the Republic for which it has been sold to special interests and foreign investors for favors, one nation under duress, with chaos and debt for all.”
But even that simple a eulogy is going to be hard to read in the dark.