November 24, 2008
How Bad Can It Get? Plenty.
There it sat, snugly between newsertainment
blips concerning Sarah Palin’s turkey
pardon, Madonna’s divorce and a helpful
holiday guide to party games: A rather bland
little announcement that Citigroup, onetime
flagship of the American banking empire, was
readying itself to shed 52,000 jobs, a
number equal to slightly over one-fifth of
Fifty. Two. Thousand.
From one company.
Attracting slightly less notice: A more
generalized announcement that Michigan can
expect to lose 173,000 jobs over the course
of the next couple of years.
One. Hundred. Seventy. Three. Thousand.
A back-of-napkin grand total: 225,000, a
number equivalent to one-sixth of the total
number of jobs lost in the United States
during the final year of George W. Bush’s
reign of error. Meanwhile, financial
“experts” bicker amongst themselves as to
whether or not America is technically
in a recession.
Let’s make this really simple: Behind every
one of the 1.2 million jobs that have
already vanished in the past year, behind
every one of the one-sixth of a million that
are expected to dissolve within Michigan and
behind every one of the 52,000 strategically
planned Citigroup casualties stands an
individual human being. Associated with each
of these, a nuclear and extended family.
Associated with these individuals and
families, a welter of mortgages, automobile
loans, utility payments, cell phone
contracts, cable television bills, credit
cards and sundry other dollar-vacuums whose
flow of greenbacks is about to abruptly
slow, if not cease, resulting in further
layoffs and bankruptcies at said mortgagors
and cable companies, leading in turn to
further exponential magnification of
individual human suffering that this
Things are bad. Worse than bad. But chances
are that, with the national unemployment
rate at “only” about 6 percent and with the
dollar still in a comparative position of
strength in relation to other major world
currencies, the so-called “crises” we face
at present are but a mild foretaste of the
financial tsunami to come. Unheralded amidst
all the economic gloom: The spectacular
collapse in oil prices, to a current $56 per
barrel, down more than 60 percent from their
heights earlier this year. While this
collapse has savaged the portfolios of hedge
fund investors and driven futures traders to
the brink of suicide, their loss has been
the nation’s gain. Dramatically cheaper
transportation and raw materials costs have
lent support to an economy that otherwise
may well have drawn to a complete
standstill. That’s the good news.
But there’s no cure for good news like bad
news, and the bad news is this: The
depressed fuel prices of late November are
as artificially low as the earlier prices
were high, driven to their current depths by
the individuals and institutions that
earlier had propelled them into the
stratosphere. A short sale provides a
managed futures investor with every bit as
much profit potential as a traditional
trade, and a certain group of folks – much
more well-heeled than most of us – are
making a killing sending oil prices into the
cellar. But global demand for oil has not
diminished. To the contrary, on a planet of
seven billion persons, many of whom live in
the emerging economies of China and India,
oil retains as much intrinsic value as ever.
Oil prices will bounce back, and when they
do, we can expect to see the last tottering
supports kicked out from beneath what
remains of the creaking, groaning American
economic superstructure. And as the old
Carly Simon song says, “these are the good
old days;” we will likely live to see a day
when thoughts of single-digit national
unemployment and inflation rates will seem
like beautiful, fanciful dreams.
For all his virtues, Barack Obama is no
Franklin Delano Roosevelt, let alone a
miracle worker. There is little chance that
he will be able to do more during the coming
economic collapse than attempt to staunch
bleeding and mitigate suffering to some
limited degree as Adam Smith’s “invisible
hand” of the marketplace slaps America
firmly into second-tier status on the global
But if and when this collapse comes to pass,
let’s keep in mind one particularly salient
fact: It was the titans of American finance,
abetted by their minions in the Republican
Party, who led us into this abyss. Under no
circumstances should we call upon them to
lead us out.
2008 North Star Writers Group. May not
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