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I.O.U.S.A.

          There is a storm a coming and it looks like it might be the perfect financial storm.  Just like in the roaring 20s when no one could have conceived of bread lines, Hoovervilles, and widespread unemployment, the signs are all there. My fear is we will not have a Franklin Roosevelt in the White House to lead us to safety and even if such a man or woman exists, his or her hands might be held by the poor judgments of our leaders now.  In the waters, it is all there, and it is still a long way out, a decade, maybe more, but it is coming.  I know that saying such things is as welcomed as the guy who comes to your party, puts the lampshade on his head, gropes most of the females, and throws up in the potted plants, but it is true, even if most of you treat my words as those of a modern Cassandra.  There are a diverse number of forces at work, some of which we as a nation have never had to confront before, such as global warming, China’s large, cheap labor force coming on line, an increasingly interconnected world, and skyrocketing oil prices, and others we have seen before, a crumbling infrastructure, 30 years of deregulation, a gilded age mentality in regards to the rich and poor, personal debt, the reduction in investment in the young people, trade imbalances, cheap labor and racial tensions being used by the powerbrokers to suppress middle class wages, new technology replacing workers, and a growing national debt.  It is a witch’s brew of bad news, all little things that could be overcome on their own, but unless we have visionary leadership they will lead to economic disaster. 

          Financially the average American is as fragile as a princess sleeping on a pea.  The average American household is carrying over $8,000 in credit card debt, $5000 more than in the 1990s.  Forty-three percent of families are spending more than they make each year.  Not including mortgage debt, we collectively are in the red well over $2 trillion or about $20,000 per household.  Let’s put it this way, we are spending $1.25 for every dollar we are taking home. This is an almost 50 percent increase in debt in less than a decade.  Throw in the growing mortgage problems and that over 1 million homeowners have three or more mortgages on their homes and more than 2 million have debts totaling more than 100 percent of the value of their homes. Considering Republicans claim to be the party of peace and prosperity, a good chunk of us are going to be like china plates falling from a high shelf if financial skies turn cloudy. Even though wealth in this country has doubled since Reagan, the middle class and lower middle class have lost ground.  Month after month, year after year, health care costs, tuition increases, and the price of gasoline, has dramatically outpaced modest increases in wages and salary.  Dip by dip, like Chinese water torture, how many of you are feeling it now. 

          Every once in a while I feel really, really old.  A few months back, I had to explain to my niece what 8-track tapes were; how her father and I grew up in an era where we had only four television channels, you had to rent VCRs to watch these new fangled things called VHS tapes, the first personal computers worked via cassette tapes, and cell phones, even cordless phones for that matter, did not exist.  She was buying this Siberian world I was telling her about until I told her that a consumer had to shop on the main streets of their town because box stores did not exist and you bought American made products. Foreign cars, refrigerators, televisions, those were the cheap junky stuff that fell apart.  Zenith, Emerson, RCA, and GE made televisions.  Whirlpool, Amana, and GE made American made kitchen products. We made most of our own airplanes, cars, furniture, and other consumer goods.  In less than three decades we have moved from a manufacturing society to a service economy. Which has lead the US trade deficit to reach a level that former Federal Reserve Chairman Paul Volcker calls unsustainable. Even though under the Reagan revolution we went from the biggest creditor nation in the world to the biggest debtor nation, this trade imbalance has not bitten us on the backside yet because the foreigners who are taking our money, have been buying up America willy-nilly and loaning us money, which is why our President George W. Bush has his lips pressed firmly on the backsides of the Saudis, a nation that produced most of the hijackers on 9/11 and most of the foreign fighters in Iraq.  (What kind of voice can we have with countries like China on human rights if they have us by the economic daddy parts?) The problem with a service society is when things tighten up people reduce their uses of said services.  In bad economic times, people go out to eat less, they don’t take that much deserved vacation, re-landscape, fix that creaking floor, remodel their kitchens,  or buy the new needless junk that makes our lives so wonderful and we just got to have.  If you are not selling products that you made to the rest of the world, our society becomes an ever tightening closed system that feeds on itself.  Add to this, in a flat world, white collar jobs that a decade ago could never have been considered being done out of country, even out of your local area, can now be done half a world away for one-tenth, or one-twentieth the cost.  Need a second opinion on an x-ray at the hospital? A doctor in Australia can do it.  Using a big name accounting firm to do your taxes? I can guarantee that the person doing the actual number crunching is in India, not living next door to you.  Need a tutor to improve your kid’s math? There is no waiting for on-line help from China. All the education in the world is not going to be worth squat, when you want that deserved pay raise, when there is a whole world standing outside your door in cyberspace willing to do that job for a lot less. Even if your job is safe, what is it going to mean to your bottom line when Willie from down the street cannot pay his bill or give that donation to charity.  If you are a teacher or city worker and the tax base starts to dry up?  Around and around she goes. Where she stops, who knows? It is the American dream.

          Feeling good now that you know the gingerly position you are in? Now even this would be okay, if we could count on the government to be there when we fall, like Roosevelt was there in the 1930s.  Here is the problem, as bad as the average American has been in saving money, the government has been worse.  Conservatives, who have been in power in Washington for almost 30 years now, hate big government but surprise, surprise, government has grown more under Reagan and Bush than any other Presidents.  Here is the truth.  Everybody, and I mean everybody, is against big government in general until it is the piece of big government that affects you. No President, Senator, or Congressman is going to get rid of one program or project that could cost them their seat. Legitimately government has its place in protecting Americans.  If our government had been doing its job, we would not have had the savings & loan crisis, the home mortgage crisis, the safety problems with our children’s toys and pet food, the levees giving in New Orleans, or the crumbling infrastructure and environmental problems we currently have. So while cutting the size of government is not popular, tax cuts, even if they cost us more in the long run, are always the belle of the ball. While even a liberal icon like Lyndon Johnson knew that you could not have guns and butter, our current leader gets to have his $1 to 2 trillion war and tax cuts at the same time.  At the end of 2007, our nation was in the hole $5 trillion and if intra-governmental debt obligations are thrown in, the debt rises to roughly $9 trillion.  If we were not borrowing from the social security trust fund, you would hate to see the real number. To put it in perspective, if you include state and local governmental debt, your piece in getting us back in the black is $50,000 and not counting all that interest we are going to have to pay.   With more than $45 trillion in future entitlements that we cannot afford, the government is in trouble. Translation: The Republicans might have drowned big government in the bathtub like they have always hoped, just about the time we are really going to need it as it leads to its natural results.  I just wanted to give you something to think about before you get in your car made in Japan, drive home to your television made in China, kick off your shoes made in Indonesia, throw in your dvd made in Mexico, into your player made in Korea, to watch a movie made in Canada, sit down in your chair made in India, loosen your tie made in Taiwan, and enjoy a little wine from France. Just remember, at one time your dreams used to be made in America. 

Verdict: A Documentary You Probably Should See, But Are Probably Living Out