A Perfect Storm Stalks American Prosperity

The Nation: Prospect Of An Economic Slowdown A Challenge To Both Parties

(The Nation)  This column was written by the editors of The Nation.

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The skies are darkening, and ominous new considerations are intruding on the politics of 2008. The softening economy, accumulating foreclosures for homeowners, more multibillion-dollar write-offs by major banks, the swooning dollar and stock market, oil prices approaching $100 a barrel - the list goes on, inviting a trendy cliché: the "perfect storm" stalking American prosperity. The Federal Reserve chair will never predict recession - it would be self-fulfilling if he did. But Ben Bernanke came close when he acknowledged to Congress that things are going to get worse before they get better.

Most Americans are ill prepared for a catastrophic reckoning. Everything else aside, the basic fact of our national condition is indebtedness. That means when jobs disappear and wages slump further, the struggle to keep up with the mortgage or rent will intensify for a broad swath of the population. The pain this time will not be confined to a few laid-off "losers."

Presidential candidates have not had much to say about these gloomy realities, but they soon will. A down economy adds another heavy blow to Republican prospects but also presents a challenge for Democrats. The incumbent party takes a serious hit if an election-year recession develops (ask Jimmy Carter, in 1980, or George H.W. Bush, in 1992). But that bad news might encourage Democrats to be even more cautious than they already are. Voters will want to know of a potential president, first, whether he or she grasps what is upon us and, second, what he or she intends to do about it if elected.

What should the candidates be calling for? The first imperative should be short-term measures to salve the pain of those who have lost homes or are drowning in debt. It is good politics, of course, but also an essential first step toward restoring a healthy and equitable economy -- healthy because it is more equitable. Representative Bradley Miller has introduced a bill that would allow bankruptcy judges to ease homeowners' mortgage terms, but it's running into the usual big-money opposition - from both parties. For the longer term, government can enforce tightened mortgage regulation, which has fallen into disuse (Miller, Barney Frank and many others are co-sponsoring a good start). This kind of assistance is not unlike what government does for major corporations and banking institutions when they get into similar trouble. Meanwhile, financial firms should be disciplined - if not indicted - for the reckless behavior that led to the crisis.

Economic stimulus requires the government to get the money moving again in a stalled private sector, pumping up jobs, wages and benefits with emergency spending - and, yes, temporarily larger federal deficits. Taxing wealth and reviving the right to organize unions will start to redress the gross inequalities. The housing industry is not coming back to life anytime soon, but through public works programs we can repair our crumbling national infrastructure. We can restart public employment programs for displaced industrial workers and harder-to-employ inner-city youth. We can send working people back to school with financial aid aimed at community college students.

The point is, the coming storm, whatever its dimensions, is a great opportunity to begin restoring the role of responsive, effective government. The Republicans clearly don't get it. But it's not clear the Democrats do either, or that they have the nerve to embrace the possibilities. Voters should push them to speak to this moment. And then judge them accordingly.

[davidlar2]

That''s right. Use a downturn as the case that America needs to embrace European social democratic policies because all of the evidence in the world is that social democracy creates far more wealth than free markets without government interference. And labor unions opposing technology and flexibility will cement America''s place in the globalized world as a land of high salaried unskilled laborers with secure jobs.

Dream on....

[trillion1]

What prosperity? Wages have been stagnant for years.

[jerr11]

With 1.9 trillion down the ******** called Iraq... guess no one''s to blame for this mess.

[standlee5]

Local governments could do something right NOW to help people and that would be to eliminate the gas tax and roll back property tax assessments to before the housing bubble. They''re making huge profits on our struggle.

[taxguydave]

Yeah. "European socialism" is such a failure that all 15 core Eurozone countries (except Greece, which has the skimpiest social programs) have better economic growth than the US, and have for about 10 years now. The Euro has gone from $0.80 to about $1.50.

Yeah, they''re really struggling over there.

[standlee5]

Good idea. Raise taxes and increase social and entitlement programs.

[standlee5]

"That means when jobs disappear and wages slump further, the struggle to keep up with the mortgage or rent will intensify for a broad swath of the population."

If and when this happens will the govt. lay off workers, cut progrmas and lower taxes. Why don''t do it now and help ward off this perfect storm. Look up a list of federal govt. programs and the costs to taxpayers to keep them running.

[davidlar2]

Has European economic growth come from increasing or decreasing government control over the economy? The wealthiest Eurozone countries like Luxembourg and Ireland score as freer economies than the US. There is a clear link between increasing economic freedom and economic growth.

The view implied by taxguydave that Europe has moved in a more socialist direction and that this has led to increased economic growth is simply wrong. Further the view that the more socialist large European economies like France have a higher wealth (per capita GDP) than the US is also simply wrong (even though the dollar has fallen dramtically).

The US does indeed need serious economic change, but in exactly the opposite direction than the article suggests. Socialist labor union economics have been shown time and again to be a failure, but that doesn''t stop leftists from repackaging the ideas continuously.

See http://www.cato.org/pub_display.php?pub_id=8765 for a more convincing discussion.

[davidlar2]

Taxing wealth= taxing savings?

Great idea for a country that has increasing levels of debt to tax people who try to save for their own futures and redistribute the money to those with credit card and other debts. Also seems "fair" to me, since the people with savings obviously have too much money....

I will never embrace the ideas and worldview of the left. We need to stop the progressively bigger governments of left (and right- see Bush) and re-evaluate where we are going as a country before we end up as Norway, just without the oil money.

[perception5]

All Americans can always count on The Jewish Nation being the "mother of all doom and gloom" liberal magazines.

Not what "most" Americans want at all.

[logicanada]

Well, you people let him get away with it...twice!
Each electorate deserves the government they elect.

[logicanada]

davidlar2....first leap from the nest regarding socio-economics?
Unbending capitalism without social benefit is failing.
It''s about corporate greed, stupid!

[gkc99]

"All Americans can always count on The Jewish Nation being the "mother of all doom and gloom" liberal magazines.
Not what "most" Americans want at all"--Posted by perception5


Oh don''t worry your pretty little head about it, just go back to jerking off to pix of Anne Coulter on the boob tube.

[g-gfather]

Does a economies survial dependent on ever increasing consumption sound illogical and fatally flawed to you??? Does to me....LOVE TO ALL . Greatgrandfather

[rushlimpdrug]

Thanks to the good ol'' American conservative republicans.
But the good news is that gaays are not getting married, right?
Oh, and the "scare me" tactics to give up more liberties.
I have had it with ALL these traitor politicians.

[trillion1]

In the last 7 years this nation has allowed itself to be ruled by fear. They have willingly given up their rights under the Constitution and Bill of Rights. They have allowed an egocentric sociopath to enlarge an already bloated unresponsive goverment and driven us into an historic debt. The number of Americans who put money aside for hard times is now basically zero and hard times are coming.

[ianlou]

The Republicans should remember that only when the middle class is comfortable or scared can they successfully sell their line of ***.
Since they have screwed the middle class out of anything close to comfortable my guess is they will be looking for something to scare us with before the 08 election.

The Republicans should remember that, only when the middle class is scared or relatively comfortable can they successfully sell their line of morality based, trickle down economics based ***.

Since they have screwed the middle class out of anything close to what passed as comfortable in the 1990s, my guess is they will be looking for something to scare us with before the 08 election.

It''s the only trick left in their hat.

[ianlou]

Sorry for the Deja vu all over again post.

[rowdytexan2]

It''ll be a shame won''t it when we can''t buy all their high priced ***. It gives me heart that maybe we''ll bring a few of them down to living manageably also.

However, it''s not going to affect the truly rich much. They''ve made enough off us already to stockpile for years.

Maybe this will make us stick to home a little more, value what we''ve already got, and enjoy our families.

The livings all good when it gets right down to it.

[ianlou]

Thanks RowdyTexan2
Happy Thanksgiving.

[feelfree1]

Re: The Chevron "human energy" campaign.

We know that Chevron profited prior to the latest invasion of Iraq, by giving kickbacks to Saddam in exchange for business favors-

%u201CChevron settles Iraq kickback charges%u201D

%u201CChevron Corp. has agreed to pay $30 million (U.S.) to settle charges it made illegal kickbacks to Iraq for oil purchased in 2001 and 2002 under the United Nation''s oil-for-food program.%u201D

www.thestar.com/printArticle/276611

But I am wondering about this %u201Chuman energy%u201D campaign. By "human energy", is Chevron talking about the energy that it expends to torture, murder and rape people, in their efforts to maximize profits:

"Chevron is one of the largest foreign investors in Burma and is the only remaining major U.S. corporation with a significant presence there. In 2005, Chevron bought the company Unocal weeks after the latter settled a lawsuit accusing it of assisting the Burmese military junta in the torture, murder and rape of villagers during construction of a pipeline."

www.democracynow.org/article.pl?sid=07/10/12/1454252

...or are they proposing the idea of squeezing oil out of humans, directly?

[feelfree1]

Wow!

Even using sweatshop and child labor, the GAP is still suffering, with sales down by 8%.

I''m dreaming of a red-ink Christmas.

[jerr11]

my guess is they will be looking for something to scare us with before the 08 election.

It''''s the only trick left in their hat.


Posted by ianlou at 09:54 PM : Nov 19, 2007


Look out for another video from Osama, coming soon to a neocon outlet near you.

Or maybe, if the neocons are really desperate, they might get Osama to do another hat trick.

911 seemed to do the trick. It got Bush''s numbers up into the stratosphere.

[jetranger7]

Well everybody around here in the Midwest Missouri-Kansas -Oklahoma-Nebraska Iowa, everythings coming to a slow halt, I''ve already seen several Gas Stations close down, 2 Truck Stops, and just within the last 2 months, I''ve seen a fairly decent size Camper sales place close up, and a motorcycle shop, and an Automotive Repair shop close down, and a new FORD Dealership close down, and I know of several trucklines in trouble right now and bout ready to close down. The movie theatres have got to be hutin too, with what it cost to go to movies anymore. Nobody has any money to get their car repaired, MILK here for a gallon has reached $4.25 a gallon. Its not going to Stop till we get somebody in Washington who knows what their doing, and it sure isn''t this IDIOT from Texas !!

[standlee5]

Does a economies survial dependent on ever increasing consumption sound illogical and fatally flawed to you??? Does to me...Posted by G-GFATHER at 08:20 PM : Nov 19, 2007


Yeah, really. That was the argument for not building gas efficient cars. Don''t ever interfere with growth. Conservation impedes growth. Growth at all costs. It serves Wall Street but the rest of us have to live with the pollution, traffic, garbage, crime, and everything else that comes with the massive growth to feed Wall Street investors. Just today someone on CNBC was yapping about why would any consumer want to cut back on Christmas spending when the economy is booming. Huh?

[incog-nito]

People talk about how all the manufacturing jobs have been shipped overseas. Well, it''s not nearly over yet. In fact, it''s just begun, and there''s no end in sight. Just about any job (that pays any money) can be outsourced and will be. We''re talking about technology, engineering, even medical. Your x-ray, ultrasounds, etc. are now being read and diagnosed by somebody out of the country. Programming jobs are already being outsourced to India. If "American" companies cannot outsource certain jobs, they will simply bring workers here from abroad, and pay them cheaper. This is not just another recession with the economy bouncing back at some point. This is a long-term trend that will continue as long as there is cheaper labor elsewhere. In other words, it''s called globalization.

[jetranger7]

Well Standlee, theres some people who work in offices, that are so utterly frickin clueless and Ignorant, they have not a clue whats really going on in the rest of the world, its called living a sheltered life and so dumb and spoiled its pathetic, thats whats wrong with this country anymore, too many idiots spewing out mis-information and creating spin, mainly to increase their stock portofolios, at the expense of everybody else,, cnbc that figures !!

[brianbwb-2009]

Anyone who survived Detroit''s economic meltdown in the 70s will have a distinct sense of Deja vu. Those who were insulated from the effects are in for a very rude awakening.

In a sense, it will be bitterly humorous to hear those "neocon wannabes" who used to dismiss the unemployed as "welfare mothers" or "lazy", having to explain their own appearance amongst the "new underprivileged class", and their sudden urge to demand the government "help" them.

[ianlou]

I can''t help but shake my head when the Retailers start crying about slumping holiday sales, They have never cared where their products were made, only how much they can sell them for, and then they look for someone else to blame when sales sag. I swear, its like watching someone **** up river and then complain about taste of the drinking water.

[incog-nito]

To follow up on my previous post, allowing unfettered illegal immigration into this country is intentional. It is just another form of outsourcing, bringing workers here from abroad for the cheap labor, never mind the social costs. The taxpayer will pick up the tab for that anyway, so why should corporations care?

[Razzl]

America desperately needs to become an enlightened social democracy like the European Union countries--those bastions of peace, prosperity, and social enlightenment that conservatives in this country still deride as stagnant, gloomy social welfare states, as though the clock were stuck at 1965, which we can all see is not the case. Bush and Cheney have knocked the foreign policy leg off the conservative political tripod; when the recession knocks the economic leg off, the country will be ripe for all the reforms that the coming one-party Democratic party government will be able to institute: national health care, prison and justice system reform, reviving organized labor''s place at the corporate table, and creating a new foreign policy not based on wrong assumptions about American military might. Oh, and the green world of alternative energy and ecological responsibility will flourish in a country that once again puts public responsibility ahead of private greed.

Conservatives and Republicans hate any type of optimism about the future, because the only way to get to a better future is to leave their values behind...

[DaveGress]

to razzl -
Excellent points all, I couldn''t agree with you more.

[random_radar]

Why should the rest of us do anything for "those who have lost homes or are drowning in debt?" If I was frugal and bought a home I could afford and cut my expenses to stay solvent, why do my neighbors get to take my money through taxation to pay off their poor choices?

All these years the responsible citizens have lived on less while the idiots spent beyond their means. Now the government is going to take from the responsible and give to the profligate? That''s not justice, that''s robbery.

Let the "those who have lost homes or are drowning in debt" pay the penalty for their sins and learn responsibility. Bailing them out will only teach them that they can take advantage of the rest of us. They will be laughing all the way to the bank at the hardworking Americans who are responsible.

[enriquecaliente]

The True terrorist are the Bankers and lawyers which dream up ways to $crew the average American and then cry for help once their ideas go up in flames. And we all know in who''s pocket the judges and lawmakers are in.

[markangeloo]

The neo cons used controlled low interest rates for

the last 7 years; throwing easy money around to buy

houses,cars,whatever; just so no one would be unhappy

while they were fighting their war. Come on 0% financing.

Who was kidding who. Why save lemmings !!!!!!!!

Bite the bullet. Real interest rates at the moment

should be about nine percent. Why not save me

who has invested in money market funds only to now

see the government & fed still artificially dumbing the

market down.

[noloyalisti]

No one has yet mentioned what wasting a couple trillion dollars on this "war" has done. The "slowdown" was perfectly predictable based on what happened in the 1970''s as a result of all the money wasted on the Vietnam invasion and occupation.

On top of that our "prosperity" has been based on smoke and mirrors and credit since Reagan came in and starting ruining the government.

I hope people wise up, Buy Nothing on Nov 23rd and then start saving money. Stop consuming and we will avoid war and take our country back.

[standlee5]

Posted by random_radar at 11:04 AM : Nov 20, 2007


Great points, I agree with you.