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Vox Day links an article describing eighteen economic similarities to 2008 that are present in today's economy.
The crash in 2008 was bad, but it was exacerbated by bad economic policy both before and after the actual crash.
Comments to that post are optimistic in that some of the commentors believe that this time the people will understand what is happening!
...I don't think they will. Too many people are listening to the economists and government statistics, faithfully pumped by the mainstream media. The party line is that the recession ended in 2010 and we've been in an (admittedly weak) economic recovery.
But it's not so. There has been no recovery because the entire expansion/recession metric is based on a faulty number; the number is too easily gamed to be accurate even without the "double counting" that's going on. (Read Karl Denninger's various discussions on debt versus GDP. Short form: there has been no real economic growth since 1980.)
That issue is the core of the problem we face now. I've seen it three different places, now, arrived at using three different methods, and the simple fact is it fits what we're seeing: we've fueled our economic growth on debt rather than economic surplus, and like all pyramid schemes it is coming to a rather abrupt end.
I was resistant to the thesis (first promulgated by Denninger) because his numbers demonstrate this has been happening since 1980. 1981 was when Reagan took office and he was a true fiscal conservative; I resisted the thesis because Reagan's brain didn't work that way. But Reagan wasn't a dictator and he had Congress to contend with. Congress has never cut spending such that year-on-year the numbers got smaller. No Congress has ever done that, not even when Newt Gingrich was putting his Contract With America into effect.
This idea explains a hell of a lot. For one thing, it answers the question so many of my age cohort find themselves asking: why can't I afford to DO anything my parents did at my age?
One answer is that our tax burden is simply higher than it was thirty years ago. Rates are lower, but exemptions are smaller and there are fewer of them. But that's not the whole story.
Another factor is that the issuance of so much credit (debt) has devalued the dollar. A family car cost $10,000 in 1980, and a similar car is $30,000 today. Higher option levels don't account for much of the increase, not enough to explain a threefold increase in price; since actual hardware has gotten cheaper to manufacture much of that price rise is due solely to inflation.
I mean, WTF: a home computer was $1,000 in 1980. Today you can get about 1,000x the computer for half the price, in dollars that are worth less to boot; my current desktop can emulate, in real time, the fastest computer available in 1980. It cost about $500 and was new in March of 2007. ("Fastest computer available" meaning anywhere. Cray-2, 1.9 gigaflops. My computer: 16 gigaflops. The Cray 2 came out in 1985, though.) Though electronics is the only industry which has seen this magnitude of price contraction, the technological expansion has made it cheaper to make all sorts of things. A refrigerator that cost $1,000 in 1983 costs $1,000 in 2013, even though the 2013 dollar is worth so much less than the 1983 dollar was.
Another factor: government spending consumes wealth. When government takes a dollar from someone with a net economic surplus (ie a producer, someone whose activity generates economic value) and gives it to someone who produces nothing, that is consumption: the government is getting nothing for giving that dollar away. (This is not a discussion of whether or not welfare is desirable; it is merely a description of the economic consequences.)
And the last factor I'm going to mention right now: illegal immigration has kept wage growth flat. The first amnesty law was put into effect in 1986, and since then there have periodically been similar laws promulgated. This had the effect of legalizing ad hoc immigration and we now have a permanent (or semi-permanent) cadre of low-cost laborers. This makes labor cheaper, tending to depress wages, so not only is each dollar worth less as you progress through the decades, but individual earning power has also been kept low. Sure, a dollar buys you more computer than it did thirty years ago, but that only serves to disguise the trend.
Okay: my Dad had no trouble buying a brand new pickup truck in 1988 even though that pickup truck had a sticker price three times higher than the new sedan he bought in 1975. In fact, from 1970 until the end of his life my father bought exactly three used cars: the Plymouth Fury my Mom drove when I was in grade school, the Mercury Zephyr he drove when I was in high school, and the MGB that currently sits in my garage, awaiting my attention. Every other car he bought was brand new, including the 1980 Camaro he bought for my brother as a reward for getting a scholarship to college. Yeah.
I don't know anyone who can do that, other than my brother who--as an OB/GYN--earns approximately $400 an hour. My brother has never bought a used car, or in fact a used anything. (Even his freaking houses have been brand new, never lived in.) But my brother is the exception rather than the rule; the last time a friend gave me a ride in his new car was ten years ago, 1993, and I haven't owned a new car myself since 1996.
Compare that with the 1970s, when a person making minimum wage and living with his parents could pay for college--at a really good school, to boot!--and buy a new car without going seriously into debt. Try doing that now; your part-time job would have to be brain surgery for you to do that. When state universities charge $15,000 per year tuition? Are you kidding me?
Too much of our economic expansion has been fueled by borrowing, and that means that we haven't so much expanded our economy as sunk ourselves into debt up to our eyeballs.
The official party line--"slow, jobless recovery"--will be pushed right up until things go sideways again, at which point there will be grudging admission that things suck. The government will scramble to keep the party going by having an emergency vote to raise the debt ceiling again, and the concomitant expansion of government spending will bump GDP into "barely positive" territory, thus allowing the government economists to claim the recession has ended.
(Official definition of recession: two or more consecutive quarters with zero or negative economic growth. If you have a year where the quarterly GDPs were -2%, -1%, +0.001%, -1%, then the official recession was two quarters long even though total GDP for the year was -3.999%. The government will do everything in its power to make the numbers reflect that.)
...the end result of all this nonsense will be--four years from now--reporters talking about "the continuing slow recovery" unless Republicans regain control of both houses of Congress and the White House in 2016. Once the GOP is in charge the press will finally acknowledge that we're in a full-blown depression, but they will date that depression to election day 2016 rather than the real beginning in 2008.
Not that the GOP has done anything to stem the tide. As I said above, even when the GOP was in charge of both houses of Congress, year-on-year spending didn't decrease. It never has, and won't, because money is power and there's never been a politician born who would voluntarily vote to reduce his power, just because It Is The Right Thing To Do. It can be argued that the GOP has largely been complicit in fomenting the economic disaster we face.
The good thing is, we're not looking at a "Mad Max" scenario where gangs of outlaw bikers roam the crumbling wastes, preying on the innocent. What we're looking at is a decade or so of economic depression exactly like the depressions which have happened before. There'll probably be a mighty big war in the mix somewhere, too; if history is any guide that's unavoidable, nuclear weapons notwithstanding--but even that won't end up being a doomsday scenario because none of the likely actors in such a war are batshit crazy. You start lobbing nukes around and things will get ugly really fast, and I have faith that no one is going to want to start down that road.
Still--it's not going to be good, not in the near term. The debts have to be paid, and we have to fix the things we've screwed up in the last fifty years. It means a decade of relative privation and hardship (think "depression" and "war years") and hard work.
But on the plus side? It means the end of stupid navel-gazing crap like "womyn's studies" and environmentalism and global warming and the rest of the PC multiculti bullshit. We're not going to have the time or the money for that happy horseshit.
...at least until the next time.