Saturday, October 11, 2008

Deep Breath

The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.

The Indian knew how to live without wants, to suffer without complaint, and to die singing.

-- Alexis de Tocqueville

It is almost impossible to imagine a talker who sticks to the facts. Carried away by the sound of his own voice and the applause of the groundlings, he makes inevitably the jump from logic to mere rhetoric.

The more uncivilized the man, the surer he is that he knows precisely what is right and what is wrong.

-- H.L. Mencken

If the past week has taught us anything, it's that keeping your head while others lose theirs is just as important as they say. Panic is driving this bus now, and nothing good ever came of such a situation. People need to step back, settle down, and remember a few crucial things.

Americans have a notoriously dysfunctional relationship with their money -- and everyone else's -- to begin with. We're conditioned to look at it as a source of immediate gratification, rather than a useful means to productive ends. The easiest way to keep people in the throes of joyless consumerism is to perpetuate the gospel of jonesmanship, keep them in the constant pursuit of stuff. Imagine if you were suddenly no longer able to borrow money you can't really pay back in order to buy stuff you don't really need. Just imagine.

Everybody's getting a haircut on this round, but the people who are taking it in the shorts the most are the people who were the most overextended in the first place -- which means the people who shelled out the most phantom money for the least actual value. If you were the sort of doofus who fell for the notion that you could get rich flipping homes indefinitely, chances are you walked away from your foreclosure six months ago, leaving the keys in the mailbox or on the front porch. The sheer degree of overvaluation should have been an instant cue as to the cognitive dissonance going on, but that's usually not enough to supersede innate greed and ignorance.

Here's one thing we might take away from this episode and its repercussions to come: Gravity works.

We can foot the bill for all the glad-handing bailouts and hot-beef liquidity injections we want, but without addressing the very serious degree of income disparity in this country, nothing will change. The economic stratification in the US is something normally associated with old-school junta dictatorships. The CEO-to-worker compensation ratio has skyrocketed, while average and minimum wages have languished or decreased. The average compensation of an oil company CEO was about 518 times that of the average oil company worker in 2006, before the price increase last year. For those of you who went through the American public school system, that means that a production worker would have to work for 1½ years to earn what the CEO does in a day. (And that's just by the calendar year; if you count a 250-day work year, it's over 2 years against one day.)

But at least oil companies are actually creating something of value, whereas finance companies, it turns out, have crafted investment vehicles out of thin air, and gotten their buddies in the insurance companies to underwrite their regression analysis spreadsheets. And these greedy bastards still have the balls to come hat-in-hand for a bailout, while cashing in their perks and bonuses. Why the AIG gang, to cite just one of many egregious examples, have not yet been strung up from the nearest lampposts is a mystery. It would be a respectable start at any rate.

Wage stagnation is what turned the ignition on our little Bus O' Panic here, now careening with an interchangeable cast of fools for would-be drivers. Really, a 1-2% redistributive tax might even be in order to begin setting things aright, but what the hell would we peons do with a ream or so of the paper wealth accumulated by the likes of Hank Paulson? Perhaps we can race wheelbarrows of worthless currency to state-owned bakeries, to wait in line for crusts and toilet paper and such like, returning to our state-owned homes of the sovietized economy we find ourselves entering.

Imagine if George W. Bush didn't have that Harvard MBA. Every catastrophe that has beleaguered this guy's reign of error was, let's keep in mind, the best he could do. Seriously.

Now, for those of us who made the effort to play it smart, live within our means, etc., not losing one's house seems a rather insufficient reward, yet it'll do under the circumstances. I recall when we went to re-fi the house, simply to take advantage of a shift in interest rates and consolidate and lower payments, how the agent actually encouraged us to run a HELOC and use that basically as an ATM. "Go on vacation!", she chirped, as if it would go on forever, and we could all just draw from our houses any time we felt like schlepping to Hawaii.

But a lot of people bought into that shit, didn't see the elements of undercapitalization and overvaluation, overbuilding cutting into that overvaluation, and again their own wage stagnation leaving them unable to keep up with the inevitable adjustment. And it's up to individuals whether they want to use their newfound circumstances -- which, again, were not exactly unforeseen nor impossible to mitigate or even prevent -- as an opportunity to start reconnecting with themselves and their families and the simpler pleasures in life, or an excuse to stoke their nascent xenophobic impulses, blame the convenient Other in their midst, and wallow in it.

It's an underlying theme of what I keep seeing at the McPalin open-air putsches -- people who really do lack so utterly in awareness of themselves and the external factors in their problems, they blindly lash out. "Obama's a terrorist", blah blah blah. Beyond the temptation to reiterate just how dumb that is, there's the very real issue of America's rapidly changing geopolitical role, accelerated now by an expensive, unnecessary desert war and a teetering economy.

These yokels don't realize that if they keep this shit up, theirs will be a future of squalor and dependence. (For many of them, it already is.) Their kids will move to the cities, if their creationist schools haven't scared the shit out of them, to lucrative careers as bellhops for the Euros and the Chinese. Good times.

But again, it's something that can be handled, if people from Wall Street to Main Street just calm down and see what's right in front of them. I'm not sure what sort of moron, while reaching into newly-picked pockets, finds themselves gulled by this booga-booga schtick the McPalins are running, but they are ruining the fucking world at a pace that suggests deliberate intent.

However, in the meantime, the sun still shines, children still play, music still has meaning. The inchoate urge to panic removes the normal sense of balance from its participants -- or maybe they were really always like that. You'd think they'd never enjoyed or even heard of any of the good things in life that are free, like sex or a decent book.


fadograf said...

Again, Bravo.

It's a cloudy, rainy, cold day here in Colorado. I spent it planning a great meal (roast chicken, mashed potatoes and gravy), drinking a Minervois I really couldn't afford, and watching my youngest boy (aet. 15) make movies with his birthday Flip video camera.

Oh and I also was more than suggestive with his mother. Wish me luck....


thedevilzone said...

Speaking of the need for a larger perspective: if you haven't seen this movie yet, Heywood, you absolutely have to. Skip out on work for the rest of the day and go rent it; it's worth it.