The sound of an economy crumpling

Oh, what a lovely recession

January passed with its drumfire of gloomy figures processed into dreary statistics – mostly records in unemployment rates and factory closings – by the same “protocolistas of the obvious” who used to whoop up the system of total deregulation. From Panasonic to Toyota, from GM to Microsoft, all major industries have lost jobs, thousands of jobs, tens of thousands of jobs. It's called downsizing, but don't let that fool you, it's good old pinkslipping. And I, for one, have the nasty idea that the multinationals and other feudal lords of our economic system are using the recession as a smokescreen to dump a few extra workers and whup the others into shape using "optimization processes." By the same token, the downturn in demand is real and it is gradually rippling through economies like some vigorous tsunami not yet rising to full size in shallow waters to form a horrid and lethal wave... Even the high-rpm engines in China and India have suddenly slowed down as well, brave little Switzerland, with its heavy reliance on exports and generally robust economy is feeling the cold. Still, the Swiss government doesn’t dare take a stick to UBS and other banks that squandered billions in high-risk financial adventures and have been paying out bonuses to bankers, presumably to shut them up. The whole system has become so infantile, one wonders whether these men and some women ever grew up.

Meanwhile, President Obama tried to move money into the American system in a somewhat sustainable manner, i.e. putting it into enterprises like weatherizing homes, improving schools, bridges, roads, or simply dumping it into states. Spreading it, in other words. Real stuff for a real economy. And it is desperately needed, has been for decades, but the ultimately-liberated market gurus wanted to drown government in a bathtub, n'est-ce-pas Mr. Nofziger? We remember that the investment economy tried to make money out of money with all sorts of schemes some of which were not more or less bogus than Madoff's Ponzi scheme. This makes France's Third Republic in the last decades of the 19th century look like a paragon of rectitude.
Naturally, Obama is experiencing static from the Republicans, who are still feeling their collective bile rising at having lost to the pipsqueak Senator from Illinois. They still repeat the mantra of tax cuts for the rich like some hideous Baptist tchotchke that keeps repeating "What would Jesus do?" They have obviously run out of any constructive ideas and in the vacuum has stepped the grand gasbag Rush Limbaugh. This should sink what’s left of the old GOP in a few months, unless some more reasonable politicians like Olympia Snowe from Maine show up on the podium to give Boehner and Co. a whack on the fanny. But astoundingly, they managed to nitpick it to the point where it might not, in fact, be terribly effective.... As a friend who suffered testicular cancer once told me: "The pump still works, but the well's run dry." That, at any rate, is Paul Krugman's view in the NY Times today.

As for Limbaugh (and his colleagues like Beck, Savage, Boortz, Coulter, etc.) he is an overpaid, ignorant, narcissistic and somewhat obscene attention-seeker, a kind of fat, old and male version of Britney Spears. She, at least, managed to put two kids into the world and still has a chance to change her ways. Limbaugh, on the other hand, actually seems to believe his own bilge and is sclerotically repeating it in the hopes that the "base," meaning the lunatic fringe, will keep on supporting him. And it is, it is. In the US, frauds still make money. In fact, if you want to even sell a good idea, package it in fraudian garb (a topic I shall return to, no doubt).

But let us not focus on the symptoms too much. After all, what more could the GOP do but attract attention in one of the venerated American ways, by being vulgar, ugly and aggressively imbecilic.

This still leaves Obama having to use a fair amount of force to push through a bill over some resistance. And the bill’s popularity has been dwindling according to a Rasmussen poll. This may have to do indirectly with Tom Daschle’s tax woes, or rather, the fact that he forgot to pay taxes on some limousine he was using. The Great Unwashed does tend to cross-pollinate data, I am afraid. (Chatty footnote: Back in the mid 80s, when the Reaganauts were ranting against both miniature, allegedly Communist Nicaragua and Moslem Lybia, about 60% of people in a poll in Florida believed that the dominant religion in Nicaragua was Islam...) The other problem may well be a failure to learn a fundamental lesson from the financial fiasco. Let us put the "ownership society" back on the slab for a moment. But this time, let us not forget its cohorts: personal debt and the notion of instant gratification. The latter is another concept that used to be widely discussed, but seems to have gone the way of Vance Packard and the social critics of a generation ago.

Gimmee

There's a reason why it's called piggybank

Owning a house, a car, perhaps having some creature comforts in life is fine. But just because your neighbor has it is not reason enough.

People were even warned by the very gurus of the fast buck: There is no free lunch. And fast food is not healthy. Brokers only managed to sell cheap mortgages to low- or no-income people because of the pervasive notion that anyone can strike it rich easily, because that is the American way. It's not. The American way is to make the rich richer, and the less well-off be damned. This plain fact has been documented over and over again for decades. It can be read in Richard Hofstadter’s Anti-Intellectualism in American Life (1962), for example. This myth is still swallowed as gospel by millions of Americans every day, and at times it even crosses the Atlantic and infects people's brains in Europe.

Take it easy

It took at least 30 years at least to get into this phenomenal mess. The way out is going to take some time, and it will require not only intelligent and firm navigating on the part of the Obama administration, but also a new paradigm for Americans in general. Patience is one solution. The other is: coming down to earth and being satisfied with less, otherwise you will become the prey of slick-mouthed salesmen. And the first step is recognizing the problems of addiction…. To be continued…

Re-booty

More thoughts on oil and cars. It may be time to restore the system to an earlier date. And why is it that we always have to feel the pain of mega-industries?

Barack Obama rode to power on a car running on green fuel and with gasoline becoming more expensive than milk. And so his message of energy savings and independence did find receptive ears, obviously. By November 4, the shock of $145 plus per barrel of oil was still reverberating in the bones of the car-addicted, even while the sinking economy was beginning to drag down energy prices as well. Within a week of launching his presidency, Obama already put the issue on the table as an early priority. And it makes sense, given that the Big Three failed miserably to devise sustainable strategies in the past and now their gradual demise may well squeeze the entire supplier industry. So what did President Obama have to say?

"We will commit ourselves to steady, focused, pragmatic pursuit of an America
that is freed from our energy dependence, and empowered by a new energy economy
that puts millions of our citizens to work. … Now is the time to meet the
challenge of this crossroads of history, by choosing a future safer for our
country, prosperous for our planet, and sustainable."

Turn up the volume
The reaction from the auto industry was predictable. As David Cole, chairman of the Center for Automotive Research (CAR) told the New York Times: “It would have a devastating effect on everybody, and not just the domestics.” The auto industry has always, consistently and vociferously resisted changing its polluting and gas-guzzling ways for decades and decades. And they have done so by spending vast amounts of money on lobbyists (such as the CAR) that would have been better spent developing new technology. But the bucks were rolling in, and a vast nation of sheep was out there purchasing those ridiculous SUVs blithely ignoring the plain fact that the stuff running their car was coming from foreign soil and was not doing the atmosphere any good. In fact, a whole lobby was created to explain that pollution doesn't exist nor has it an effect on people and the environment. Well, that will sell to people who are willing to believe that dinosaurs stalked the earth with humans 6000 years ago.

The issue of energy dependence or independence is hardly a new one. But in a world in which anyone over 50 is considered a rusting hulk at the bottom of the ocean, and most young people clamp their brains between ear buds that blast them full of commercial thumping, a certain transfer of data has gone missing. Thirty-one years ago, then President Carter had this to say at his State of the Union Address:

“Never again should we neglect a growing crisis like the shortage of energy,
where further delay will only lead to more harsh and painful solutions…. Now we
know what we must do, increase production. We must cut down on waste. And we
must use more of those fuels which are plentiful and more permanent. We must be
fair to people, and we must not disrupt our Nation's economy and our budget.”

The path of least resistance
Then came Whitewash Reagan and suddenly Carter’s good intentions went out the window, alas. In the Happy Days mode, Americans felt it was OK to "move on" and live for the day, buying any car they liked, any car that Detroit wanted to foist upon them. Thus, every Tom, Dick and Jane with an inferiority complex could buy some huge device made for chasing terrorists in the desert and ride from home to the general store, shop and never witch off their engine. Anyone suggesting that this was absurd, that pollution was a real danger, that such vehicles were unnecessary or, heaven forbid, more money should be invested in public transportation, was laughed off the map or even called a Commie or Socialist. The latter two buzzwords, by the way, are always pulled out of the hat when someone feels humungous profits threatened, or some redneck is trying to sound smart. Most would not even recognize Communism if it came out of the corn syrup dispenser at House of Pancakes. Let's face it.

The price of oil was so cheap that innovation could no longer be marketed properly. That was the message from the scientific community, at any rate. At the Research Institutes in Garching, some scientists had found a very effective method to recycle heat using heat pumps and a silicate. But with oil at $12 or so a barrel, no way to get the system into the market where it belonged.

1+1=3
Indeed, in the 30 years between the oil shocks of the 70s and now, the entire world has changed. There can be no doubt that given the right leadership, human endeavor would have easily found a viable alternative to the internal combustion engine (the research was being done, there is no doubt, but it was kept away from the public, since the old system was working so well). But for that, it would have taken real leaders in power, not industry shills and professional deskmen with deep pockets like the class of pol that has risen to the top. Because the problem is not just in the USA. The German and French auto industries also jumped on the gas-guzzle bandwagon and hollered foul each time it was asked to mend its ways. The ADAC, Germany’s automobile club, has consistently lobbied against any regulation, for example. And the CAR equivalent in Germany, the VDA, has done nothing but put on the brakes. In the 70s, attempts were made to limit speeds on German highways, which are to this day the last bastion of official motoring hooliganism in Europe (barring country roads in places like Croatia, Hungary and Serbia, where the momma’s boys are also plentiful and need to counteract their inherent anger by driving big cars and stepping on the gas). These attempts were reversed by the groundswell of conservatism that swept the nation as of 1983. What a shame. By now, we would be used to going slower.

So we have to reboot to a different time, to an era in which we had a chance, like the 1970s. And the industry will squeak. It is doing so already. At an environmental forum in July in Magedeburg, Germany, hosted by Daimler, among others, all the lobbyists were present, sweating away for their masters, pleading to let the free market do its magic. The time may have come to let them grovel and plead. The last time we gave in to them, they ran off with the cash register and trashed the place.

(More to come on this topic, of course… so stay posted)