As Americans head into the annual holiday shopping orgy, it is a good time to explore how our excessive spending damages us. The ten busiest shopping days of the year are between the day after Thanksgiving and two days before Christmas.
From Thanksgiving to New Years many Americans binge and gorge themselves—on food, drinking, toys, gadgets, machines, and other objects. We consume precious resources like water and non-essentials as if they are infinite and there are no limits. The American Dream is excess—bigger cars, bigger houses, and bigger everything. Swimming pools, golf courses, pampered lawns and guzzling Hummers create a false illusion of prosperity beneath which a declining economy hides. But the hidden costs and limits to growth are catching up with us.
“War is too important to leave to the generals,” I remember hearing as a young officer in the US Army during the l960s. “The economy is too important to leave to the economists” I have been thinking recently, as we experience the decline and possible fall of the US economy. Yet there is little analysis in the mass media about what is really happening to the US economy.
Professional economists writing in and quoted by the mainstream media tend to use mild words like “correction,” “slowdown” and “troubled” to describe the increasingly volatile US economy. They often reassure us that we are just in a normal cycle. Denial persists, in spite of the gloomy outlook for the US dollar, debt, housing, banks, stocks, airlines, and other key economic indicators.
Our nation and many of its households have gross debts. People are spending beyond their means, buying on credit beyond what they can pay back, as the recent subprime mortgage fall reveals. “Pay as you go,” the economist Scott Nearing used to say when I visited him at this farm in Maine during the l970s. We need to get back to this old-fashioned wisdom.
US MEDIA ECONOMISTS CONCEAL
US media economists are more eager to prop up a failing economy than to help us prepare for the ongoing deterioration and its multiple consequences. They seek to reduce fear so that people will continue to over-consume, buy, spend, and shop, rather than take direct actions as citizens that could address the underlying systemic problems. Our excessive spending habits are exhausting our human and environmental resources, such as fossil fuels and water. Our excesses come at high, hidden costs. Our over-consumption fuels the increasingly chaotic, extreme climate.
A good way to prepare for an uncertain economic future would be to refrain from excessive spending on holiday items. At least wait and see how things unfold in the weeks to come. Prices will drop drastically, not only for real estate. You won’t read suggestions like this in the buy-now, sell-products corporate media, which makes money from advertising and hyper-consumption.
Reading the foreign press, which has fewer vested interests and can be more objective on the US, provides a wider view of the US economy. For example, an Associated Press article on Nov. 20 mentions in passing the important meeting of OPEC (Organization of Petroleum Exporting Countries) the weekend before as follows: “”Iranian President Mahmoud Ahmadinejad and Venezuelan President Hugo Chavez called for oil to be listed for sale in a currency other than the dollar.” The AP assures readers that this “was widely viewed as little more than America-bashing.”
In Europe this story got more attention with important details reported. London’s authoritative daily Guardian (observer.guardian.co.uk/print/0,,331295242-119093,00.html) noted that the call to abandon the US dollar was made in a private meeting that was not supposed to be made public. A technical mistake was made that broadcast half an hour of that meeting.
Saudia Arabia, a US ally, vetoed the proposal, warning “that even the mere mention to journalists of the fact that leaders were discussing the weak dollar would cause the US currency to plummet,” reports the Nov. 18 Guardian. The US dollar has become so frail that the Guardian uses words like “battered” and “crippled” to describe it. “A further drop in the dollar is likely to be accompanied by a rise in oil prices,” the Guardian concludes.
I do not mean to predict specifically what is going to happen with the US economy or when. I do want to note some of its fault lines and instability that could create a crash. Economic predictions are difficult to make with any real certainty. I do want to connect some of the dots and sound an alarm while people may still have time to make some changes in our own personal economies and make preparations to weather the fierce coming storms.
The Arlington Institute (www.arlingtoninstitute.org), however, specializes in predicting future events. Its CEO, John L. Petersen, sent out a report titled “Major Financial Disruption” on Nov. 14 which begain, “It appears that the world in general and the United States in particular are on the edge of a major disruption in the global financial system.”
Consumer credit card foreclosures were up 470% in the third quarter and “will be up over 500% this coming quarter (4th),” according to the report. Since “as much as 40% of retail sales are done in the 4th quarter of the year,” the predicted disruption may come soon. The Arlington Institute reports the “effort by China to convert its $1.4 trillion U.S. Treasury holdings into euros.” The prediction is that “they’ll dump them on the market” in February. It concludes, “March is when we realize that the dollar doesn’t come back.”
A RUSSIAN COMPARES THE USA & USSR ECONOMIES
An article at www.energybulletin.net by a Russian now living in the US, recently came to my attention. In an excerpt from what has expanded into a book to be published next Spring Dmitry Orlov writes, “I watched the Soviet Union collapse, and this has given me insights to describe what the American collapse will look like.” Orlov’s pending book is entitled “Reinventing Collapse: The Soviet Experience and American Prospects.” (www.newsociety.com) “Collapse” seems appropriate to describe where the US economy may be headed.
Orlov reveals various ingredients in the collapse of “modern military-industrial superpowers,” including a shortfall in the production of crude oil, foreign trade deficit, runaway military budget, and a ballooning foreign debt. He compares the USSR and the USA on these matters, adding the importance of “a humiliating military defeat.” Iraq may be to the USA what Afghanistan was to the USSR. Even with its $1 trillion military budget–larger than those of all the rest of the world combined–the US has been unable to subdue small, weak Iraq. Imagine what might happen with the much larger and more powerful Iran.
Yet Washington escalates its threats to expand war-making to Iran. “Any attack (on Iran) would probably double the price of oil,” writes Stanford University Professor Joel Brinkley in “What If the US Bombed Iran?” in the Nov. 18 San Francisco Chronicle (www.sfgate.com). This would “drive US gasoline prices well above $5 per gallon,” Brinkley asserts. The de-stabilizing consequences to the US economy of just one of the many factors that threaten our oil supply could be devastating. Many military analysts think that a US attack on Iran is likely. US war-making creates an insecure and unstable economy. Arms manufacturers profit, but at the expense of the rest of us.
A series of dominos are falling and more are likely to fall. The subprime mortgage collapse, for example, has threatened some of the US’s largest banks and financial entities. As our Earth’s climate gets more chaotic, that will further impact many elements of the economy, including the environment on which it is dependent. Modern industrial societies are based on fossil fuels; as these supplies diminish and as the demand for them increases—especially in rapidly industrializing China and India–many aspects of contemporary life will be impacted, especially our food, which has become so dependent upon oil.
As the US economy has been declining in recent years, those of other nations have been accelerating. The European Union’s strengthening of that region’s economy can be seen in their currency. Whereas the euro and the dollar were on a par five years ago, today the euro is already worth about one and a half times as much as the dollar and the gap grows. The US is at risk that the countries that it owes money to, like China, will call in those debts, thus deepening our downward spiral. Even some people in the US are asking to be paid in and opening up bank accounts in euros.
So how do the mainstream newsweeklies cover the changing US economy? The U.S. News and World Report’s editor-in-chief Mortimer Zuckerman wrote “The Yellow-Light Economy” on Oct. 22. “The August panic seems like ancient history,” he assured us. He must be color blind, since a month later that light is now red and may cause a screeching halt.
Three weeks later, in the Nov. 12 Newsweek Robert Samuelson wrote “Our Great Recession Obsession.” At least he uses the R word, which many economists have been avoiding. He details some threats—the housing “collapse” (he does use the word), oil prices, and credit problems. He leaves out a few little details, like the declining value of the US dollar.
Orlov writes about “a worthless national currency, and unhappy international creditors unwilling to extend further credit.” The US economy and many households are living off credit for which they do not have the collateral. Samuelson fails to mention that the US is already the world’s largest debtor nation. It’s not a pretty picture for the US economy, regardless of how cheerleading economists try to spin it. How much further in debt can we go without crashing?
Samuelson assures us that “by and large, recessions are problems, but not tragedies.” Tell that to older people on fixed incomes. He reassures us that “since World War II, there have been 10 of them, or one about every six years. On average, they’ve lasted 10 months.” He even gleefully talks about the “often-overlooked benefits” of recessions. How come I am not reassured?
“We’ve been there before,” Samuelson calmly asserts. In fact, the US and the world economies have never been to where we currently are and where the trends are leading us. We even have a US president and vice-president openly talking about World War III and the use of nuclear weapons. Talk about damage.
“The market for existing homes is ‘hitting the low right now,’” a Nov. 14 Cox News article quotes the hopeful “chief economist for the National Association of Realtors as saying at the group’s recent annual conference.” He predicts a “modest recovery.” Yet a Dow Jones News report on the same day starts as follows, “The chaos in the mortgage market is only going to get worse in 2008.” Which economic forecast to believe?
“Stiff upper lip” are more words that come back from my military training, which was designed to make me obey, rather than think. We need to think outside the box these days and respond to the mass media about how it distorts reality, including that of our worsening economy, in order to cheerlead for consumption, especially during the holiday spending spree.
A house of cards appears on the cover of Richard Heinberg’s new book Peak Everything: Waking Up to the Century of Decline (www.richardheinberg.com). It is an apt image for the US economy. We may be living in what has been described as a “false economy” and as a “façade” that may soon topple. There are many blows that could cause the fragile house to fall down.
(Dr. Shepherd Bliss, [email protected], teaches at Sonoma State University and has run Kokopelli Farm for most of the last 15 years. He has contributed to over 20 books, most recently to Veterans of War, Veterans of Peace, www.vowvop.org.)