Rude Awakening

by Stephen Lendman


In 2008, a protracted global depression began, criminally manufactured by Wall Street and Washington scoundrels, complicit with major European partners.

Why? To permit greater financial and other corporate consolidation, more power, and ability to buy favored assets cheap, profiting hugely at the expense of millions of working households.

At the same time, Washington’s got it own agenda. As White House chief of staff, Rahm Emanuel (now Chicago’s mayor) told the Wall Street Journal on November 6, 2008:

“You never want to let a serious crisis go to waste. What I mean by that is that’s an opportunity to do things you couldn’t do before.”

He didn’t mean populist ones. He meant hardline neoliberal austerity to make working Americans bear the burden of bailing out banks, responsible for what trends analyst Gerald Celente calls the Greatest Depression.

How? The usual IMF way, including layoffs, wage freezes or cuts, fewer benefits, less social spending, tax cuts for the rich and corporations, crushing trade unionism, mass privatizations, deregulation, and harsh repression against opposition to a system incompatible with social democracy, civil and human rights.

In the 1980s, it was Reaganomics, trickle down, and Thatcherism. Today it’s “shock therapy” called austerity, a destructive dead end, the same scheme pitting capital against people – disposable workers tossed out for big money’s gain.

It’s how predatory capitalism works, harming many for so few – snake oil masquerading as good policies, corrupted politicians and central bankers force-feeding harmful ones, wrecking economies and human lives so corporate favorites benefit. Their short-term losses, in fact, are considered investments for greater gains.

As a result, expect rising unemployment, growing poverty, greater human deprivation, and accelerated transfers of more wealth from working households to corporate favorites and elites.

Destroying America’s social contract also is planned, incrementally with multiple cuts for perhaps years. Principally, Social Security, Medicare, Medicaid and publicly funded pensions are on the chopping block for elimination.

Also targeted are all other New Deal/Great Society programs to return America to 19th century harshness. An Obama-led bipartisan conspiracy assures it. In fact, he was chosen to do what no Republican would dare – a classic reverse Nixon goes to China moment, pulled off at the 11th hour as planned. The fix was in, theatrically orchestrated, then consummated as both sides agreed.

At the same time, on August 4, the specter of 2008 repeating hit global financial markets hard, plunging on fears of a a greater economic crisis ahead.

On July 31, Boston-based GMO investment analyst Edward Chancellor headlined his Financial Times article, “A hapless union has lost its direction,” saying:

“There are many economic challenges around the world today. The US teeters on the brink of default (in fact, decline because of years of bad policies), deleveraging continues across the west, cracks are appearing in China’s fixed asset investment boom, Japan remains stuck in the deflationary doldrums (its economy heading south), while inflation is picking up in emerging markets. None of these problems, however, are as intractable as those facing the eurozone.”

At issue are nations like Greece, Ireland, Portugal, Spain and Italy vulnerable to default from over-indebtedness, besides numerous other problems at a time global contraction seems imminent.

Moreover, “(a)fter a little more than a decade, the European Monetary Union resembles a very unhappy marriage.” However, its members “find the prospect of divorce even more traumatic. No one, it seems, quite knows where this hapless union is heading,” or perhaps America as well, based on plunging August 4 financial markets, awakening belately perhaps to a reality earlier unacknowledged.

Whether so or not, only time will tell, but what’s clear is that bad policy begets bad results. Only their timing, duration, and degree are uncertain.

On August 5, New York Times writers Matthew Saltmarsh and Bettina Wassener headlined, “Markets Fall as Global Worries Multiply,” saying:

“Stock markets dropped again Friday in Europe following sharp sell-offs in Asia and on Wall Street, as fears about weak growth in the United States piled onto longstanding worries about debt levels in the euro area.”

Nonsensically, a Murdoch-owned Wall Street Journal editorial headlined, “The Global Rout,” blaming it on failed Keynesians, saying they “fired all their ammo and here we are.”

In fact, they “fired” $16.1 trillion to Wall Street and global banks (producing no economic growth), and trillions more to the Pentagon and war profiteers, producing death and destruction – harmful, not productive, “bang for the buck.”

The combined weak economic data, growing layoffs, rising unemployment, consumer pessimism, a European sovereign debt crisis, and counterproductive policies assuring much worse to come, awakened investors to fear hard times, despite rosy scenario analysts saying a repeat of 2008 is unlikely.

They’re the same ones saying then that good times were straight ahead after a normal market correction that, in fact, turned into a rout, teetering world economies on the brink of collapse. As a result, they can’t admit that what’s ahead may prove more disastrous because policies chosen papered over grave problems, assuring greater ones perhaps arriving sooner than expected.

July employment numbers provided more clues, less rosy than the headline 117,000 jobs gained and U-3 unemployment falling to 9.1% (belying nearly 23% unemployment based how calculated in 1980).

In fact, the broader Household Survey showed 38,000 jobs lost, putting employment at its lowest level since fall 2007. In addition, 200,000 discouraged workers stopped looking. Notably, from when Obama took office until now, Americans aged 16 or older out of the labor force increased by nearly 3.6 million – a clear sign of economic deterioration, not recovery, growth, or a good sign for what’s coming.

On August 2, economist Paul Craig Roberts titled his article, “The Decline and Fall of the American Empire,” covering some salient issues, including:

(1) Waiting until the 11th hour to raise its debt limit left world nations “worr(ying) about the judgment and sanity of the country with the largest nuclear arsenal in the world,” putting politics above sound policy.

(2) America’s public debt is rising because its economy isn’t, “but war expenditures are.”

(3) Economic decline results from offshoring manufacturing and key service sectors to low wage countries, hollowing out America in the process.

(4) Only Wall Street, other corporations, and investors benefit at the expense of trashing America over time.

(5) Deregulating the fire sector (finance, insurance and real estate) was “(t)he other destroyer of American economic prospects.” Out-of-control speculation followed, reckless casino capitalism, assuring eventual economic chaos, perhaps collapse, bankruptcy and ruin.

(6) “So in America, the light unto the world, American citizens are thrown out of their homes,” so banks can “bulldoze” them, leaving them homeless like in third world countries.

Notably, the multi-trillions of dollars America spends waging wars, bailing out banks, and enriching other corporate favorites could have been used productively for economic growth, more employment, higher wages, decent benefits, shoring up education, providing other essential services, and making the nation a model for others.

Instead, policy makers destroyed the America that was by policies guaranteed to fail. It’s only a matter of when the chickens come home to roost. Rest assured they will, hurting ordinary people hardest.

A Final Comment

In his book titled, “Capitalism, Socialism and Democracy,” economist Joseph Schumpeter (1883 – 1950) coined the term “creative destruction” to denote “a process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

He defined capitalism as an evolutionary process “brought about by innovation,” what he called “Economic Evolution.” From it, he believed progress results, living standards rise, and improved technologies create new industries and developments over time. “There is no reason to expect slackening of the rate of output through exhaustion of technological possibilities,” he said.

As a result, “(c)apitalism’s greatest accomplishment is that it progressively raises the living standards of the masses. Nobody ever got rich selling just to the rich. (Prosperity depends on) mak(ing) your product affordable to the masses….raising the general welfare.”

Schumpeter called intellectuals capitalism’s greatest enemy. His “paradoxical conclusion” was that it was being killed by its achievements, that it “inevitably educates and subsidizes a vested interest in social unrest.”

Could he have imagined what’s ongoing today, a much different process than he envisioned. Capitalism’s greatest enemies are within, gaming the system destructively, wrecking economies for short-term gains, bribing politicians to go along for their own self-interest, and leaving future ones and CEOs to clean up perhaps an unfixable mess.

Moreover, devolution, not evolution, is happening. General welfare is absent. Living standards aren’t rising, they’re declining, and with that growing human suffering. Blame unchecked greed and Lord Acton’s prescient warning that, “Power corrupts, and absolute power corrupts absolutely.”

Reaping the whirlwind results, affecting ordinary people most, not perpetrators, their fortunes secure in offshore tax havens.

Serious economic trouble and decline are assured. Only their timing, duration and degree can’t be predicted, nor can policy measures implemented as a result.

Given how destructive they’ve been so far, expect nothing better ahead, not for working households for sure. They’re on their own and out of luck under America’s first Black president promising change. He didn’t explain what kind or who’d benefit.

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