April 11th, 2009


The Rich Get Richer, The Poor Disappear

I was intriged by these articles from Barbara Ehrenreich, exploring different aspects of the economic implosion:

Rich Get Poorer, Poor Disappear
Alright, I’m a journalist and I understand how the media work. When a millionaire cuts back on his crème fraiche and caviar consumption, you have a touching human interest story. But pitch a story about a laid-off roofer who loses his trailer home and you’re likely to get a big editorial yawn. “Poor Get Poorer” is just not an eye-grabbing headline, even when the evidence is overwhelming. Food stamp applications, for example, are rising toward a historic record; calls to one DC-area hunger hotline have jumped 248 percent in the last six months, most of them from people who have never needed food aid before. And for the first time since 1996, there’s been a marked upswing in the number of people seeking cash assistance from TANF (Temporary Aid to Needy Families), the exsanguinated version of welfare left by welfare “reform.” Too bad for them that TANF is essentially a wage-supplement program based on the assumption that the poor would always be able to find jobs, and that it pays, at most, less than half the federal poverty level.

This first article looks at how poor and middle class people are struggling for survival in a country that largely doesn't care if they fail and die. It had better care, because that's the majority of the population circling the drain, and the economy will not get fixed until they are able to make a living.

How Positive Thinking Wrecked the Economy
Greed – and its crafty sibling, speculation – are the designated culprits for the ongoing financial crisis, but another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking. As promoted by Oprah, scores of megachurch pastors, and an endless flow of self-help bestsellers, the idea is to firmly belief that you will get what you want, not only because it will make you feel better to do so, but because thinking things, “visualizing” them  – ardently and with concentration – actually makes them happen. You will be able to pay that adjustable rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits, the reasoning goes, if only you truly believe that you can.

Delusional thinking, whether too positive or too negative, is a bad thing. It blinds you to what is really going on around you. Hmm ... I wonder if this is aided by the last couple decades' worth of pushing prescription happy-pills on everyone who expresses anxiety or unhappiness? People need to keep at least one foot in concensus reality, because sometimes it throws challenges at you.

You mean like this?

I was beboggled by this post, which attempts to blame the current economic disaster on liberal principles ...

The ultimate result of takingfrom those who produce desired goods and services and giving to those who do not produce desired goods and services.... 

....is a society in which the production and distribution of desired goods and services grinds to a halt [because "it's not worth the pain"] and is replaced by economic misery, widespread poverty, and the rise to power of thugs.

... you mean like what just happened, when the rich people creamed off all the profits of the last economic boom from poor and middle class people who didn't have the power to protect themselves, and then the entire economy went kerflop after 8-20 years of running on neoconservative principles?

It's worrisome because, when people are using the same terms and evidence to point blame at each other, it's very easy for real problems to crawl under the carpet and eat the house down.

So, it's bad to have people sitting around being unproductive. Work doesn't get done and the people feel miserable and useless. There's a lot of that right now, and it needs to stop. It's also bad to have an economy where large numbers of people can't afford to meet their basic needs. The system can't function without enough money to cycle through it -- like a person dying of blood loss. So, people need access not just to work, but reliable work that earns enough for them to pay ordinary bills and have some extra to save or invest. We don't have much of that either.

The bottom line is: it doesn't matter who does the creaming or what political idealogy drives it, creaming kills the economy.

Eco Alarm of the Day ... 1:70

I found this disturbing tidbit on Lazy Green People today:

For every one garbage can you put out at the curb, 70 cans were filled by all the processes needed in order to make it.

It does not come with supporting citations, and it sounds like a lot. But when you stop to think about everything that goes into all the stuff we use ... it's probably in the right ballpark.

On the bright side, it illustrates that every little bit you reduce your consumption on this end creates a big impact on the far end, especially if you're cutting down on disposable items and/or things with lots of unnecessary packaging.

Canadian Banks: Conservatism That Works

I found this article about the success and stability of Canadian banks:

Healthy Canadian Banks
The Canadian financial market is a bit like the country: low-key and a little boring. Today, it is the envy of the rest of the world. Its biggest bank, the Royal Bank of Canada, is now the 11th biggest bank in the world by market capitalization. Its market capitalization is about three times that of Citigroup and 30 percent higher than that of UBS or Credit Suisse. There are now three Canadian banks among the 30 largest in market capitalization in the world. Obviously, this is due to the fact that their American, English and Swiss counterparts' capitalization has melted away like snow in the sunshine. Of course, the Canadian banks' profits have dropped considerably, but they remain positive. Why is the Canadian financial system considered the most solid in the world at the present time?

It seems that the Canadian banking system has stuck with some classic conservative principles, including "Don't take big risks with money you can't afford to lose," "Banks should have secure sources of funding," and "Don't overdo debt." When risks are paying off, people will laugh at you for being sensible and staying out of the gambling game. But the point to risks is that eventually, they will hit hard. When that happens, suddenly everyone who is losing their shirts becomes envious of the sensible folks.

Hopefully, America will learn some lessons from the current economic collapse.