David B.




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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 its workforce.


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 entails.


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 economic stage.


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 be republished without permission.


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