The US fiscal crisis just gets worse and worse. The CBPP's latest estimates are that the states will need $180 billion in new funding or additional cuts for fiscal 2010 (the 12 months running from this summer to summer of 2011).
However, this assumes the 2009 Federal stimulus as a baseline -- about $140 billion went to the states. This Federal aid is due to expire in December 2010. If that disappears, then all bets are off.
Why? Because there's nothing, absolutely nothing, driving the US recovery except Federal money. Fresh lending? Nonexistent. Debts? Still unpayable at 376% of GDP, still on the books of the banksters. Export markets? China's got those covered.
Simply, there is no new source of aggregate demand to replace the busted bubble or the massive loss of consumers' home equity and financial assets.
And there's nothing left to cut, because the states have already been cut to the bone. They need the $240 billion simply to stay on life-support. Any more cuts will transform this place into a slightly more expensive version of 1990s Russia -- a decrepit shambles of a former world power, blighted by a decaying infrastructure, mass misery, and the rule of thieving oligarchs bent on looting the country.
It doesn't have to be this way.
Just lopping off a quarter of our outrageously unnecessary trillion dollar war machine would free up enough money to bail out the states. But drone-bombing Afghani/Iraqi/Yemeni/pick-the-Central-Asian-country-of-your-choice villagers and subsidizing Goldman Sachs' bonus pool is just so much more important than having functioning schools, hospitals, or food for American kids, don't you agree?
Thursday, January 28, 2010
Wednesday, January 27, 2010
Inflection Point
One of the central questions facing the post-American era has been, who will replace the US consumer as the source of final demand in the world-system.
Sometime later this year, I think we're going to find out.
In December of 2009, the GDP of the BRIC nations (Brazil, Russia, India, China) reached $9.17 trillion. To put this in perspective, that's about two-thirds the GDP of the US. It's slightly more than half the output of the 27-member European Union, and twice the size of Japan. It's amazing to think that back in 1999, the BRIC economies were only one third of their current size.
If the BRICs continue on their growth path -- and their leading indicators are turning sharply positive -- by 2011 their net additional GDP will roughly equal the comparable US figure (about $700 billion, assuming 2% annual growth).
However, the old model of running up export-surpluses to debt-crazed US consumers won't work anymore. Instead, the BRICs have to rely on internal demand. Not only that, but the BRICs, just like the rest of the planet, urgently need to green their economies, or there won't be a planet for any of us to live on anymore.
In a nutshell, the BRICs have to redirect some of their forex accumulation into indigenous consumption and green infrastructure (about $200 billion per year should do the trick).
Can they pull it off? The BRICs all have heavily regulated financial systems, reasonably effective states, low debt levels -- about 20% of GDP, on average -- and vast savings ($3.3 trillion in foreign exchange reserves). All they need is the political will.
And the BRICs aren't alone: Japan and Europe will help out, too.
Sometime later this year, I think we're going to find out.
In December of 2009, the GDP of the BRIC nations (Brazil, Russia, India, China) reached $9.17 trillion. To put this in perspective, that's about two-thirds the GDP of the US. It's slightly more than half the output of the 27-member European Union, and twice the size of Japan. It's amazing to think that back in 1999, the BRIC economies were only one third of their current size.
If the BRICs continue on their growth path -- and their leading indicators are turning sharply positive -- by 2011 their net additional GDP will roughly equal the comparable US figure (about $700 billion, assuming 2% annual growth).
However, the old model of running up export-surpluses to debt-crazed US consumers won't work anymore. Instead, the BRICs have to rely on internal demand. Not only that, but the BRICs, just like the rest of the planet, urgently need to green their economies, or there won't be a planet for any of us to live on anymore.
In a nutshell, the BRICs have to redirect some of their forex accumulation into indigenous consumption and green infrastructure (about $200 billion per year should do the trick).
Can they pull it off? The BRICs all have heavily regulated financial systems, reasonably effective states, low debt levels -- about 20% of GDP, on average -- and vast savings ($3.3 trillion in foreign exchange reserves). All they need is the political will.
And the BRICs aren't alone: Japan and Europe will help out, too.
Friday, January 22, 2010
We Need Jobs
For years and years, the defenders of neoliberalism (the likes of Bob Rubin, Larry Summers, et. al. -- a.k.a. the fat cats) argued that Bubble-nomics was the best of all possible systems, because even if wealth wasn't trickling down, the US was creating tons of jobs.
Not anymore.
The job-destruction unleashed by the Great Implosion of neoliberalism is staggering. Eight million jobs have been erased since 2008. Alas, the official 10% unemployment rate is the tip of the iceberg, because millions of Americans are dropping out of the workforce entirely. They are going to school, turning to the underground economy, or moving in with family. Add them in, and the unemployment rate easily hits 13% -- a level last seen in the Great Depression.
According to the BLS, the employment-to-population ratio, one of the best indicators of overall job loss, fell from 62.8 in January 2008 down to 58.2 in December 2009 (this is for folks 16 years and older).
58.2 is the lowest figure since 1983, and there's still no sign of a rebound.
When you break down the numbers by gender, it turns out the loss of jobs for male workers has no precedent in post-WW II history. The employment-to-population ratio for men averaged around 82 in the late 1940s and 1950s, before drifting slowly but steadily down over the decades to about 70 in the 1990s and early 2000s. Since 2008, the ratio collapsed down to 63.2.
The comparable figure for female employment was 30 in the 1950s, an era when women were expected to stay at home. Over the next decades, women entered the workforce in increasing numbers, and the ratio rose to an all-time high of 58 in 2000, before falling to the current 53.4 (the lowest since 1988).
In a nutshell, the job market is the worst it has ever been for men in 70 years, and the worst it has been for women in 20 years.
The free market is not going to solve this problem. Only Big Government has the resources to put 8 million people back to work. And there's plenty of work for them to do: our railroads, infrastructure, and schools are in dire need of investment, and our economy desperately needs greening.
Not anymore.
The job-destruction unleashed by the Great Implosion of neoliberalism is staggering. Eight million jobs have been erased since 2008. Alas, the official 10% unemployment rate is the tip of the iceberg, because millions of Americans are dropping out of the workforce entirely. They are going to school, turning to the underground economy, or moving in with family. Add them in, and the unemployment rate easily hits 13% -- a level last seen in the Great Depression.
According to the BLS, the employment-to-population ratio, one of the best indicators of overall job loss, fell from 62.8 in January 2008 down to 58.2 in December 2009 (this is for folks 16 years and older).
58.2 is the lowest figure since 1983, and there's still no sign of a rebound.
When you break down the numbers by gender, it turns out the loss of jobs for male workers has no precedent in post-WW II history. The employment-to-population ratio for men averaged around 82 in the late 1940s and 1950s, before drifting slowly but steadily down over the decades to about 70 in the 1990s and early 2000s. Since 2008, the ratio collapsed down to 63.2.
The comparable figure for female employment was 30 in the 1950s, an era when women were expected to stay at home. Over the next decades, women entered the workforce in increasing numbers, and the ratio rose to an all-time high of 58 in 2000, before falling to the current 53.4 (the lowest since 1988).
In a nutshell, the job market is the worst it has ever been for men in 70 years, and the worst it has been for women in 20 years.
The free market is not going to solve this problem. Only Big Government has the resources to put 8 million people back to work. And there's plenty of work for them to do: our railroads, infrastructure, and schools are in dire need of investment, and our economy desperately needs greening.
Monday, January 11, 2010
Survival
I'm beginning to understand how ordinary Russians survived the meltdown of their Empire: after awhile, so many crises pile on so fast that there's no time to worry about any one of them. You start to realize that all the petty things which used to drive you nuts -- rule-crazy bureaucrats in the USSR, dollar-crazy billing agencies in the US -- are so many mosquitos in the Gloom, to paraphrase Sergei Lukyanenko's "Nightwatch" universe.
Russians lived off their dachas and garden produce for a decade, until Putin and the siloviki launched one of the most stupendous rescue operations of the century. We Americans will have to do something similar, by hunkering down on our foodstamps and government jobs.
Here's a post-Imperial guide to surviving the Great Crumble:
1. It's not you, it's The System. One in eight Americans has no job. One of four American kids isn't getting enough food. Our industrial base doesn't exist anymore. Our housing market is broken. Our media system is broken. Our political system is broken. Our banking system is broken. Our health care system is broken. Do not blame yourself or your unemployed neighbors for any of this stuff: the crash of this system is the crash of an unjust and unsustainable Empire, an Empire of toxic militarism and financial oligarchies. We need to replace it with a fairer, less violent, more democratic and more equitable society.
2. Zombie oligopolies. Right now, about a third of the US economy consists of globally uncompetitive oligopolies, whose main economic skill is buying off US politicians. We have a military-industrial complex (8% of the economy), a pharma-insco complex (8% of the economy), a Wall Street-Treasury complex (6% of the economy), and an automotive-sprawl complex (about 8% of the economy). (And don't get me started on our zombie mass media.) All leech off your tax revenues, some directly ($1 trillion in Federal spending on war) and some indirectly ($14 trillion in credit guarantees for Wall Street, hundreds of billions in tax subsidies for highways and McMansions). Instead of funding dead oligopolies, we should be spending our money on a public school-university complex, a renewable-green energy complex, a local utility-infrastructure complex, and a public media-information complex.
3. Embrace your inner pirate. Don't blow up your TV, use it to surf the web! Can't pay for overpriced, shoddy media? Tired of the lies of the mainstream media? Then don't pay for their lying swill -- download the media and information you want, when you want it, on the device of your choice. Use open source software to create your very own media, and share it with others. With 3 billion people already in the digital commons, and billions more on the way, you can't go wrong!
4. Never underestimate the restorative power of laughter. Being angry at the neoliberals does them too much credit. At this point, I laugh at DMCA take-down notices. I laugh at the mainstream media and its copyright fundamentalism. I laugh when I hear Wall Streeters talk about honesty and good governance. I'm not saying that we shouldn't be angry that neoliberalism completely fleeced us taxpayers. But the first step towards taking back what they stole is preserving our sense of humor -- because humor, as Patrick McGoohan noted all the way back in 1967, is the very essence of a democratic society.
5. Celebrate the joys of the commons. The utopian energies running loose in the traditional forms of the commons, the videogame culture, and the digital commons are simply astounding. More heartening still, these energies are beginning to spill over into the traditional media, loosening the stranglehold of corporate oligopolists and Imperial governments alike.
Russians lived off their dachas and garden produce for a decade, until Putin and the siloviki launched one of the most stupendous rescue operations of the century. We Americans will have to do something similar, by hunkering down on our foodstamps and government jobs.
Here's a post-Imperial guide to surviving the Great Crumble:
1. It's not you, it's The System. One in eight Americans has no job. One of four American kids isn't getting enough food. Our industrial base doesn't exist anymore. Our housing market is broken. Our media system is broken. Our political system is broken. Our banking system is broken. Our health care system is broken. Do not blame yourself or your unemployed neighbors for any of this stuff: the crash of this system is the crash of an unjust and unsustainable Empire, an Empire of toxic militarism and financial oligarchies. We need to replace it with a fairer, less violent, more democratic and more equitable society.
2. Zombie oligopolies. Right now, about a third of the US economy consists of globally uncompetitive oligopolies, whose main economic skill is buying off US politicians. We have a military-industrial complex (8% of the economy), a pharma-insco complex (8% of the economy), a Wall Street-Treasury complex (6% of the economy), and an automotive-sprawl complex (about 8% of the economy). (And don't get me started on our zombie mass media.) All leech off your tax revenues, some directly ($1 trillion in Federal spending on war) and some indirectly ($14 trillion in credit guarantees for Wall Street, hundreds of billions in tax subsidies for highways and McMansions). Instead of funding dead oligopolies, we should be spending our money on a public school-university complex, a renewable-green energy complex, a local utility-infrastructure complex, and a public media-information complex.
3. Embrace your inner pirate. Don't blow up your TV, use it to surf the web! Can't pay for overpriced, shoddy media? Tired of the lies of the mainstream media? Then don't pay for their lying swill -- download the media and information you want, when you want it, on the device of your choice. Use open source software to create your very own media, and share it with others. With 3 billion people already in the digital commons, and billions more on the way, you can't go wrong!
4. Never underestimate the restorative power of laughter. Being angry at the neoliberals does them too much credit. At this point, I laugh at DMCA take-down notices. I laugh at the mainstream media and its copyright fundamentalism. I laugh when I hear Wall Streeters talk about honesty and good governance. I'm not saying that we shouldn't be angry that neoliberalism completely fleeced us taxpayers. But the first step towards taking back what they stole is preserving our sense of humor -- because humor, as Patrick McGoohan noted all the way back in 1967, is the very essence of a democratic society.
5. Celebrate the joys of the commons. The utopian energies running loose in the traditional forms of the commons, the videogame culture, and the digital commons are simply astounding. More heartening still, these energies are beginning to spill over into the traditional media, loosening the stranglehold of corporate oligopolists and Imperial governments alike.
Saturday, January 9, 2010
New Year, New Profile Pic
Presenting the new, improved EyeZilla (Lizardicus Uplinkus Piraticum), now with 56% more poco irony, a 38% increase in post-neoliberal ideology, titanium-strontium teeth, and USB-compatible claws. Despite no apparent source of liquidity, still more creditworthy than the US consumer.
Day jobs: tracking the BRICs, emergent media cultures, and 3D videogames.
Night job: tunnel-surfing.
Likes: espresso, data-monkeys and nanobears.
Dislikes: neoliberals, transnational capitalism.
Sunday, January 3, 2010
Vampire Squid: Still Sucking American Blood
Earned $25,000 last year in honest toil? Prepare to fork over 25% of your income in taxes.
Scammed $2.3 billion through state-subsidized speculation and borrowing from the Federal Reserve at 0% interest and lending to everyone else at 5%? If you're Goldman Sachs, a.k.a. the Vampire Squid, you'll pay only $14 million in taxes, a tax rate of 1%.
Wall Street doesn't even have the buy off government officials anymore. That's because they ARE the government.
Scammed $2.3 billion through state-subsidized speculation and borrowing from the Federal Reserve at 0% interest and lending to everyone else at 5%? If you're Goldman Sachs, a.k.a. the Vampire Squid, you'll pay only $14 million in taxes, a tax rate of 1%.
Wall Street doesn't even have the buy off government officials anymore. That's because they ARE the government.
Subscribe to:
Posts (Atom)