Archive for the 'Debt' Category

SYNDICATED COLUMN: Why Settle for Second Worst?

Tuesday, September 20th, 2011 by Ted Rall

Democratic Party Needs a Democratic Primary Process

What a comedown!

In 2008 Barack Obama ran on hope and change. His reelection bid relies on fear (of Republicans) and stay-the-course (lest said Republicans slash even more Medicare than Obama is willing to give away).

Inspired yet?

Yeah, yeah, anything can happen in one year—the GOP could nominate Bob Dole again—but it’s getting harder to imagine a scenario in which Obama wins reelection. The tsunami of bad economic news has become so relentless that last week’s story that one out of six Americans have fallen below the poverty line came and went with nary a shrug. (On the bright side, we’re just ahead of Indonesia. On the other side, Russia won the Cold War after all.)

Obama’s threat to veto any debt bill that doesn’t include taxes on the rich is supposed to signal a “new, more combative phase of his presidency, one likely to last until next year’s election as he battles for a second term,” as the New York Times puts it. But it’s too nothing, too late.

Tax increases get rolled back; Medicaid cuts are forever.

Rick Perry thinks the earth is a week old and Mitt Romney wears pink underwear and Michele Bachmann has crazy eyes. Unless they fart into the camera on national television, however, any of the leading Republican candidates will likely trounce a president who did nothing while the labor force shrunk by at least six million.

OK, he did stimulate the Martha’s Vineyard golf club economic sector.

On fifth thought, voters might overlook flatulence.

I had been wondering what accomplishments Team Obama planned to point to next year. Times editor Bill Keller helpfully lays it all out (I use the word “all” loosely) in an op/ed: “Lost in the shouting is the fact that Obama pulled the country back from the brink of depression; signed a health care reform law that expands coverage, preserves choice and creates a mechanism for controlling costs; engineered a fairly stringent financial regulatory reform; and authorized the risky mission that got Osama bin Laden.”

Let’s take these Democratic talking points like the trajectory of the U.S. empire: in reverse.

The trouble with assassinating Osama bin Laden is that once you’ve killed Osama bin Laden no one thinks about Osama bin Laden anymore. The Bushies understood this. Putting the Al Qaeda chief on trial would have been smarter politics (not to mention a sop to basic legal principles).

The new banking and securities regulations were too granular and timid for anyone to notice. Show me a president who bans ATM, overdraft and late credit-card fees, on the other hand, and I’ll show you a shoo-in for reelection. Or sainthood.

I don’t know what kind of health plan they offer on 8th & 42nd, but no one—not conservatives, not liberals, not anyone—likes what we know about Obama’s healthcare reform. The Right thinks it’s socialism. The Left wishes it were. What matters is that it doesn’t matter—Obamacare doesn’t going into effect until 2014. You can’t ask for votes of gratitude for a law that no one has experienced—and that many suspect will be repealed by the GOP or overturned by the courts.

Then there’s Keller’s first assertion: “Obama pulled the country back from the brink of depression.”

Um—Bill? Depression? We’re soaking in it.

The real unemployment rate (the way the government calculated it during the 1930s) is over 24 percent. That matches the highest monthly rate during the Great Depression.

But this Depression is worse than the “Great” Depression. You could buy an apple for a nickel back then. Now there’s high inflation too.

Not only are one out of four Americans out of work, the salaries of the employed are stagnant and getting eroded by soaring food and gas prices.

U.S. state-controlled media outlets like the Times are in the president’s corner. But their “without Obama the economy would be even worse” narrative is reducing their man’s chances next November. If there’s anything worse than losing your job, it’s a media that pretends you that you and your reality don’t exist. There never was a recovery; the economy crashed with the dot-coms in 2000 and never came back, what they called a “stimulus” was nothing more than a giveaway to bank CEOs, and now tens of millions of pissed-off people are itching for a chance to make a noise.

This, as Keller should know from reading the polls in his own paper, is why the liberal-progressive base of the Democratic Party is drifting away from Obama. They won’t vote for Perry or whomever, they just won’t vote.

Not since 1980 have the Democrats headed into a reelection campaign with such a weak incumbent president. Which prompts a question: Why is Obama running unopposed? A Democratic Party, it should go without saying, needs a democratic primary process.

A group of liberals led by former Green Party presidential candidate Ralph Nader has issued a call for one or more progressive leaders to run against Obama in the spring primaries. “Without debates by challengers inside the Democratic Party’s presidential primaries, the liberal/majoritarian agenda will be muted and ignored,” Nader said in a press release. “The one-man Democratic primaries will be dull, repetitive, and draining of both voter enthusiasm and real bright lines between the two parties that excite voters.”

It’s a nice thought, though it would be impossible to raise enough money to successfully challenge Obama at this late stage.

So get ready for The Return of the Republicans. I’m no James Carville, but I’ve seen enough presidential politics to know that anger beats fear.

Especially during an Even Greater Depression.

(Ted Rall is the author of “The Anti-American Manifesto.” His website is tedrall.com.)

COPYRIGHT 2011 TED RALL


Consumer Confidence

Monday, August 8th, 2011 by Ted Rall

Consumer Confidence

Consumer confidence hits new lows. Gee, what a surprise–no one has any money, nor any prospect of earning any.


SYNDICATED COLUMN: Thrifty Families and Other Lies

Tuesday, April 26th, 2011 by Ted Rall

Like Their Government, Americans Live on Debt

his State of the Union address President Obama repeated this ancient canard: “We have to confront the fact that our government spends more than it takes in,” he said. “That is not sustainable. Every day, families sacrifice to live within their means. They deserve a government that does the same.”

Republicans have used this “families balance their budgets, so should government” line for years. Now Democrats are doing it too. Everyone is jumping aboard the pseudo-austerity bandwagon. (Why pseudo? Neither party really wants to balance the federal budget because it can only be done by bringing home the troops, shrinking the Pentagon by 90 percent, ending corporate welfare, and soaking the rich—i.e. major campaign donors—with higher taxes.)

The family budget talking point is a fascinating meme that reflects a rarely considered national blind spot. As with other cases of mass denial (we think we’re generous do-gooders around the world, foreigners see us for the crazy mean torturers we also are), we give ourselves more credit than we deserve.

We Americans value thrift and personal responsibility. We believe we should live within our means. These cultural ideals stem from our Puritan history.

But we don’t live up to our ideals. Not even close.

Americans are up to the ears in debt.

Four out of five individuals have at least one credit card. The average family has an outstanding balance of $10,700. It spends 21 percent of its monthly income to pay interest on that balance.

The average American family has assets: It owns a house worth $160,000. But it owes $95,000 to the bank. As the housing market continues to crash, equity shrinks.

Our average family’s savings are virtually nonexistent: $3,800 in the bank, no retirement account whatsoever (for half of families, average retirement savings $35,000 for the other half), no mutual funds, no stocks, no bonds.

The claim that American families live within their means is a joke.

To be fair, it’s not entirely their fault. The typical American family only earns $43,000. It’s hard to buy much of anything, much less the house that embodies the American Dream, with that. And it’s impossible to save.

So they/we borrow.

As grim as a life of indebted servitude may seem, imagine what the American economy would look like if families really did live within their means, spending no more than they earned. No debt. No credit.

Markets for big-ticket items—homes, automobiles, major appliances—would crash and burn. Countless businesses would go under.

According to the National Association of Realtors 23 percent of homebuyers paid cash in January. That’s more than ever before but that still leaves at least 77 percent relying on mortgage financing. (Why “at least”? Most “cash” transactions include money borrowed from banks and credit unions.) Take 77 percent of purchasers out of the buy side of the equation and million-dollar homes would be worth five figures.

Pop! Credit is the biggest bubble of all.

If credit went away, most Americans’ biggest asset would vanish. Everyone would be “under water” to their lenders. The burbs would soon look like Afghanistan.

The same goes for cars: At least 88 percent of buyers take out a loan.

What would happen if these buyers had to save actual cash money before they could hit the showroom? They wouldn’t buy a car. Air would get cleaner but the economic collapse that began in 2008, which has put one out of five Americans out of work, would accelerate dramatically.

Two-thirds of the U.S. economy directly relies on consumer spending. People can only purchase goods and services using one of three sources: income, savings or credit. As we’ve seen, the average American family doesn’t have savings. Its income has been falling since 1968.

That leaves credit. If consumer credit vanished, the corporato-capitalist system currently prevailing in the U.S. would deteriorate from its current, merely unsustainable form into total chaos. Without credit cards and other loans citizens would seethe, trapped between the mutually irreconcilable forces of falling wages and the aggressive advertising and marketing of products they would never be able to afford. There would only be two possible long-term outcomes: revolution, or the ruling classes would be forced to pay substantially higher wages to workers. To corporate elites, the latter choice would be too unpalatable to countenance.

The typical American family cannot live within its means because it cannot earn enough to sustain its lifestyle. Were it to downgrade its living standards to a level it could afford, there wouldn’t be enough consumer spending to drive the economy. This would force further personal austerity. Eventually we’d all be living outside.

You know what’s funny? Unlike the American family, the U.S. government can spend less than it earns. It can increase revenues by raising taxes. Unlike families, it spends trillions of dollars on stuff—wars—that it doesn’t need and actually makes things worse.

It could even use its power to force employers to pay workers what they deserve. If the government did that, families might not need credit.

They could (finally) live within their means.

(Ted Rall is the author of “The Anti-American Manifesto.” His website is tedrall.com.)

COPYRIGHT 2011 TED RALL