The Decline and Fall of the American Empire

It's never a good sign when a nation's currency is on the skids and inflation accelerates. The architect of Reagonomics, Alan Greenspan, has come in for a lot of criticism lately. As well he should. It looks like replacing all those manufacturing jobs with stock and mortgage broker jobs wasn't such a good idea after all. What has been called the financialization of the US has led directly to the pauperization of the US. It's one thing for government officials to lie to us about war; it's quite another to lie to us about our breadbasket. As they use statistics to cover their asses, it just gets silly to argue about whether or not we're actually in a recession. "Oh, you couldn't prove it by me. We might be in one or we might just be in a slowdown or we might be in a downturn, but who knows." The thing is they've defined "recession" in such a way that we can never know we're in one till it's over! How convenient!

The good news is that underwater homeowners can still "walk away" from their homes without their mortgage debt following them for the rest of their lives. Student loan debters aren't anywhere near as lucky! Investors are going, "Aw, shucks. Didn't they change the law so that they wouldn't be able to do that? How can we reliably rate bonds triple A without that kind of investor protection?" Banks have been lobbying Congress to prevent consumers from walking away from credit card debt by declaring bankruptcy. Instructively, holders of student loan debt have already had the laws changed to prevent students from walking away from student loan debt by declaring bankruptcy. Those debts will follow them for the rest of their lives. Bondholders, whose securities are mortgage backed, are out of luck as the recent sub-prime crisis illustrates. Homeowners simply walked away. Banks lost billions. They won't make that mistake next time unless the Democrats simply roll back the sanctions against bankruptcy. The Republicans will seek to roll them forward as part of their plan to create a debtor class out of the middle class.

As the US dollar falls, the Finns legislate days off for shagging:

Gspan's new paradigm would have continued if cheap (read: slave) wages in China stayed in the sub-50 cent per hour range allowing Wal-Mart to continue offering; 'Every Day Low Prices That Save You $1 at the Cash Register But Cost You $2 In Pay.' But starting last summer, when interest rates began moving higher - after wages in China and India bottomed - the unbearable lightness of America's Zeppelin economy found a lead lining and started to sink - taking with it the U.S. dollar, the illusion of cheap imports, and high productivity gains (in reality, just Chinese slaves sewing American flags for pennies a day). Digression and Rhetorical Foreshadowing Alert: One of the lies U.S. government statisticians tell Americans is that Europeans are less productive. In fact, Europeans are equally, and in many cases more productive than the average American worker. The difference is that Europeans invest their productivity gains into time off while Americans invest their gains in consumption. Getting back to Gspan's nightmare, his Philosopher's bong-pipe smoking FOMC (Fed Open Market Committee) circle jerks thought that copper, lead, zinc, oil, gold, corn, wheat, rice, coffee and milk were never going to rise in price ever again. Now we've all got the munchies, but nobody can afford beer or pretzels. The zombies and shills on CNBC and Fox Business News keep jabbering away trying to inflate Gspan's busted new paradigm lead balloon with the force of their own hyperbole even while it gets pricked with rumors and negative bets from titanic currency speculators and spiteful Sovereign Wealth Funds. James Cramer can blow only so much hot air. Greenspan wrongly thought that 'financial services' could permanently replace manufacturing in America. Imagine a nation of 100 million stock brokers trying to sell stocks and bonds to each other; i.e., Atlanta Georgia times 10,000 (before the recent collapse). Now that the value of financial services are collapsing along with the dollar, Americans are being asked to step up to the plate and forget all about financial services. The Fed's got a new idea; manufactured synthetic financial memories. Bernanke says inflation is not really a problem. He says the problem is people's expectation of inflation. To fix the economy people have to remember a time when inflation wasn't such a big problem and then inflation will go away - even though Goldilocks has been replaced with Charles Bukowski - and is lying in the gutter too drunk to remember his own name - much less $20 a barrel oil. Americans think their financial collapse is going to take the whole world down with them. No way. Aside from the world benefiting from a bankrupt America that can no longer bomb people for sport and oil, the other major benefit of an evaporated U.S. is the removal of the globe's no. 1 waste producer. The U.S. has only 4.5% of the world's population yet generates 25% of its garbage. And Americans themselves might benefit too. As the price of food skyrockets America's obesity problems should dissipate. Greenspan will write a new book; "From Turbulence to Starvation: Lose Weight and Money at the Same Time." The rest of world (the parts of it the U.S. isn't bombing-for-dollars) doesn't see any risk in a collapsed U.S. America as the brand that is America just isn't cool any more. As an ideology, American style democracy faded as a world leading beacon along with Katrina and the Abu Ghraib photos. Add to the mix preemptive wars, expanded death penalties, NSA, FBI, CIA, wire tapping, and rigged elections. No, the Europeans are not worried. Take the Finns for example. Typical of their high productivity European counterparts they live in a huge economic zone with a strong currency, less unemployment than the U.S. (as pointed out in a recent HuffPost Blog, America's Government Lies -- Adjusted unemployment number is 12% not 5.1%), and enjoy a higher quality of life, and higher human and civil rights too. But there is never enough of a good thing, so the Finns are looking to pass a new law that gives couples a paid week off per year to shag.

Want a solution to the mortgage and credit crises? Reinstitute the Glass-Steagle Act! Nobody's talking about that. The repeal of Glass-Steagle led directly to the sub-prime mortgage crisis, but now all they're talking about is more regulation and oversight - by the Fed. Note that the Fed has no oversight by any democratic body such as the US House or Senate, and we're going to look to them to prevent any future banking crisis? The fox guarding the henhouse? Why doesn't Congress get involved and put Glass-Steagle back into effect. That would put the firewall back between commercial and investment banking and tend to definancializise the US. I think that is just what we need. It would take away all the hedge fund managers' toys though. Oh nooooo. On second thought we can't have that.