The unraveling has begun, watching the talking heads the only thing they seem to agree on is the money being pumped in by central banks around the world isn’t getting to where it needs to go. That’s an easy one, everyone wants to help the leper’s but no one wants to go do it personally.
But for George Herbert Hoover Bush this is his moment in the sun, his hour of redemption. During hurricane Katrina Bush was accused of ignoring the suffering of the residents of Louisiana because they were poor and black. Now he’s proving to the world that it was not so, this time he’s ignoring bankers who are rich and white. Trapped on the rooftops of failing banks as the economic levees collapse and the castles made of sand wash away all while George tunes up his air guitar.
Not that they wouldn’t help if they could but no one has the answer. The philosophy of when in doubt do nothing reigns supreme. The Fed working in relatively small increments pours money in then sits back and watches. The European central banks alone have poured in more than double the amount of the US Federal Reserve and the problem is in America not Europe. Proof positive the smart money boys are lost like a ball in high weeds.
During the Three Mile Island accident the plant operators went through the manual and yet everything they tried just made the problem worse. The problem was that they didn’t understand the problem in the first place. This was a new problem that wasn’t in the manual. Our economic wizards will tell you the problem is liquidity in the sub prime mortgage market.
But missed in the economic floodwaters among the flotsam was the waterlogged performance of Wal-Mart. The home of low prices and lower wages is in a crisis mode as store sales are flat. They have tried to attract newer more upscale customers but they prefer to stay segregated from the great unwashed. Wal-Marts customers are generally the lower strata of the economic ladder, those of us who are all ready under the floodwaters.
There is a section of the population myself included that won’t shop at Wal-Mart because of their policies and practices and that demographic is growing. Wal-Mart stock suffered from reduced profit expectations do to shrinkage. Theft, Wal-Mart estimates 47% of shrinkage is caused by employees, funny isn’t it. No one hates Wal-Mart more than your friendly Wal-Mart associate does. A 44% annual turn over of employee’s leads to employee’s who don’t know or don’t care or don’t want to know and won’t ever care.
Maybe you saw your co worker put a camera or DVD player in the trash on his way out what do you care it’s not worth the trouble. It’s not like the company would appreciate you or something. But in reading about Wal-Marts troubles I read something that disturbed me greatly, so much that I went looking for corroboration. The theft problems at Wal-Mart weren’t camera’s or DVD players or sneakers or rap music CD’s but food!
Food from Wal-Mart grocery stores was among the leaders, the canary in the coal mine. Teenagers steal sneakers and video games the elderly steal Poly Grip or Preparation H to stretch their Social Security checks. But food crosses all lines hungry people steal food, they don’t brag about it nor are they proud of it they don’t do it to impress their friends or to be thought of as cool.
I was shocked to read it but I bet the boys at the Fed don’t know about it yet. George Herbert Hoover Bush doesn’t know it and I bet the traders in the money pits on Wall Street don’t know about it either. If the economic talking head guru’s on TV know about it mums the word. But as they pontificate about the nations largest mortgage lender becoming insolvent can they miss the significance of the nations largest retailer losing millions of dollars in stolen food! Duh! Just doesn’t seem to cover it.
Globalization has brought lower wages to the middle class and even to the upper middle class and two days of hunger can undo a lifetime of thou shall not steal. Civilization is a voluntary organization and people priced out of it and pushed out of it don’t care about it any more than Wal-Mart associates care about stock forecasts.But they do understand that working two jobs isn’t full employment but empty life.A life of struggle and hardship of doing and doing and doing without.
But those at the top really believe if you pour enough money in it will trickle down but the evidence says other wise. Globalism was sold to us that it would bring jobs and prosperity but the evidence says other wise. The exportation of manufacturing and the outsourcing of technical jobs has left a hole in our economy and it is exacerbated by 20 million illegal aliens driving down wages even more. Any good Republican can tell you it’s not about racism its about supply and demand.
But the housing bubble or any bubble is built on the expectation that it will continue to expand. But when a nation export's it’s manufacturing base and outsources technical jobs and forces down wages what else can mortgage lenders do? But lower standards after all they will pass that paper on anyway and their income is dependent on how much paper they pass. Just as the homebuilders is on how many homes they sell and they material suppliers depend on them selling as well.
But forgotten in the formula is low wages and no health insurance force people out of the home buying market. People stealing food at Wal-Mart don’t buy houses in fact they don’t buy much of anything. The illegal alien carpenter building those new homes sends his money home to Mexico or Guatemala where globalism and free trade have brought even more misery.
It’s the great global disconnect, high corporate profits does not prosperity make. The Chinaman earning five dollars a day might look great on the balance sheet but it doesn’t help Pittsburgh or Portland and since the corporation uses a mail drop in the Caribbean it doesn’t add one dollar of tax revenue to the local economy. You’ll just have to make up that tax revenue from the Wal-Mart associates or maybe add a penny of sales tax.
Duh! I wonder why bridges are falling in? I wonder why those levees failed? I wonder why our jails are full? I wonder why do those kids want to sell drugs?
Push has come to shove, the bubble burst not because of easy credit or action by the Federal reserve, or mortgage lenders but by the strangulation of the American working class. The pinprick of reality the one time wealthiest consumer in the world now steals food from Wal-Mart, where one income was once enough now it takes three or more.
There is a cynical guilty pleasure in watching the smart boys struggle to swim against the current, trying to handle the crisis. I know it’s wrong, but for so many years they had all the answers and spoke of the working class in their academic abstractions of lowered expectations and short term economic pain. Eat some of your own lowered expectations and short term economic pain fellas it’s called humble pie. Maybe the wife can get a job, I hear Wal-Mart’s hiring or maybe if you work more hours or live in a smaller house this will all go away.
But it won’t go away, last week the experts called it a correction yesterday the used the word bank failure. Last week Country Wide mortgage said they had $187 billion in reserves but the reserves are in those same depreciated dollars that force Americans to steal food from Wal-Mart. The weakness isn’t at the top it’s at the bottom, a con perpetrated on the American people to pay for wars and tax cuts when they didn’t need either.
We seem to need to relearn the lesson every few generations, that the top of the economy is supported by the bottom. That wealth comes from the bottom up that there has never been an economy where the working class has done well that has collapsed. The wreckage from economies manipulated to move wealth to the top of societies litter history books pages. Maybe now we can go back to business building products rather than stock prices and making money by making things. And by paying decent wages to the people so they can buy those products.
If your answer is that can’t be done, then start swimming Capitalism is finished.
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