The 1929 stock market collapse left a legacy of suffering the world will likely never forget, unless the current $60 trillion debacle overshadows it. If the $700 billon bailout which has already balloned to a trillion thanks to a handful of asshole senators that simply couldn’t help but add some tainted pork to such an important bill; if it doesn’t keep the collapse from happening, what will the next generation inherit and what will they remember?
I taught at a prep school a few years back and didn’t find too many kids that thought too far beyond getting into college, but todays teens may already be worrying about if they’ll go to college. Most kids don’t follow current events, don’t read the paper or even visit news sites or watch the nightly news. Even so, I’d be willing to bet they have an inkling that something isn’t right, that there’s something about the economy that has everyone worried, but what and how serious is still unclear to them as it is to everyone else. That’s too bad, because if things go sour, if our so called leaders can’t unravel the massive pile of financial crap created by the crooks on Wall Street, they’ll be saddled with the task of rebuilding the economy after we finally shake off a depression worse than the 1930s. This depression will be worse, much worse. It will be worse because there are far more of us and we are far more unprepared to deal with it as individuals, we are far more dependant on various social systems and big businesses and transportation systems and information networks and communications and big government. If all that collapses, as well it may, we can’t grow our own food, we can’t provide our own gasoline, we can’ heat our homes with wood, we can’t pump our own water, and in many cases we can’t even walk to town since most of non-urban society is no longer oriented around a nearby town and what towns there are are little more than a strip mall with a convenienece store and a gas station.
The teenagers of today are depending on a functioning financial, social, and economic system to make their assumptions about the future a reality. They assume that there will be jobs available for most of the people willing to work; yet we foolishly allowed the geniuses of yesteryear to bet that we could turn over our manufacturing to off-shore sources and build a service economy based on selling phoney finance and telecommunications and the exchange of information without any hard infrastructure to go with it.
The U.S. used to be a leader in steel, not any more. We used to be a leader in all forms of manufacturering, not any more. We used to be a leader in food export, not any more, we import more than we export. We were leaders in nearly everything and the only thing we lead in now is the creation of wealth for the fat cats at the top of our corporations while the rest of us get stuck with the bill. I’ve said it before, we, you and I, allowed this to happen. We bought their products and paid the prices that allowed the guys at the top of rake in tens of millions each. We believed the lies about a stable economy, about the sustainability of an economy based on nothing more than paper wealth that isn’t based on anything tangible. At one time every dollar was backed up by gold or silver which implied that at the very least there was something tangible somewhere. Now dollars are printed and require little but faith to give them value. The financial mess we see today is based on supposedly smart people placing side bets on bad morgages, and then placing side bets on the side bets and on and on. There are now $60 trillion worth of securities floating around Wall Street that nobody understands and most of those in the know believe have little or no value. Nobody seems to understand what the implication of $60 trillion of bad paper means, but I think everyone agrees that the service economy is now seen for the fraud it really is.
Because we have allowed our manufacturing base to erode and have shipped those jobs overseas, the teenagers of today will be the ones to have to start rebuilding those factories and competing with laborers in Viet Nam and India and China and Africa. With the collapse of Wall Street came the collapse of a phoney economy. With the death of $60 trillion in phoney value overnight, we need to begin to create an economy based on something of value, something tangible. It will take decades and decades before people become sangune enough to start investing in obtuse financial instruments, instead those that have money to invest will only be willing to invest in something tangible, something they can benefit from, something they can understand from beginning to end.
As all this unforlds, we will be hit with the reality of the immense energy problem our leaders have chosen to ignore for at least 35 years. This will provide an opportunity to start manufacturing wind turbines, solar panels, solar towers, ocean hydro generators, etc; but that is only if we can find the capital and the will to do it and do it now. Right now, most of that stuff is manufacturered elsewhere. The largest renewable energy manufacturers aren’t U.S. based companies, yet we are the largest consumer of energy in the world. What does that tell you? Do the words negative balance of trade ring a bell? Our current fossil fuel economy is simply unsustainable. The $5 trillion cost to change the U.S. economy from one based on fossil fuels to renewable energy may offer us a one time chance to benefit from the current financial calamity by uniting the country in a single purpose. If each and ever one of us dedictaed ourselves to a war-like effort to re-tool America and move in the same direction; we could possibly do it, but it will take concessions and demand an end to the infighting we seem so fond of. Because of the enormous cost of the financial bailout and the high cost of building an all new infrastructure, we no longer have the luxury of talking about doing it all, oil, gas, coal, nuclear and renewable. Now they really are mutually exclusive where just a month ago that may not have been true. Clean coal, if it is even possible, will cost billions in possibly unproductive reasearch. Nuclear is way too expensive as I have pointed out in several previous articles. We already know that oil is expensive for any number of reasons and we also know that we will need to end up with renewables in the end, so why not get started today and just do it while we still can. If this mess continues we may not be able to afford to do anything, anything at all. Nuclear is a bad bet for another reason, Uranium is a finite resource and some predict that it could be in short supply in a little as fifty years, about ten to twenty years after the first reactor might be expected to come on-line. If we bet on nuclear and twenty years later we have to shutter the plants, we’ve blown a whole lot of money and squandered 50 years.
For 35 years we’ve known we have needed to address our energy problem with renewable energy and we know it today, yet we are still divided on if we should do it or not. At least today nobody is saying we don’t need renewable energy, its now a matter of how long we can put if off. The opponoents are saying it is too expensive. Check out Profitable Reneable Energy for a means of not only making that unture, but making it profitable. Profitablility is no longer a valid excuse anythow, its now a matter of economic survival. We’ve extablished that our entire economy is a fraud and it is based on an unsustainable financial model, an unsustainable economic model, and an unsustainable energy model and we need to change all three at once. We can’t rely on investments for the sake of investments, we can’t rely on the ludicrous notion of a service economy and we can’t rely on fossil fuel and an economy wholely dependant on it.
The task before us is immense, the problems with the economy are more than immense, and it seems clear that our leaders are wholely incompetent, the financiers are crooks and incompetent, and our economic engine is a fraud. So what do we do?
We ignore our troubles as best we can, put them behind us as much as possible, and each and every one of us dedicate ourselves to the task of taking back our country from the corrupt leaders and greedy corporations and start building the society I think we all know is possible. The society I think we’d all like to have is one where it is sustainable, that nobody goes to bed hungry, where everyone can find a job and one where most things make sense. The life we want is one where we can be happy most of the time, where wars are unthinkable, where most of us don’t have to worry about tomorrow because there is no need to worry about it. Life on earth is perilous enough with what nature can do to us, we can only control the devastation mankind creates, so maybe we should try that.
The adults of today will need to start the process, but it is the kids that will bear the brunt of the transition and it is they that should demand it starting today. Kids in high school and college need to start to understand what is happening in the economy, the environment, in society and politics and work hard at really understanding it, then work even harder on formulating and refining plans to fix it. The next generations are being left one hell of a mess and if they start today and start to demand change all across the board, they can sway elections, they can change spending habbits, they can topple greedy corporations, they can make far more happen then they ever dreamed of.
The top ten highest paid CEOs of the hundredss of Wall Street giants that created this mess were collectively rewarded for their genius to the tune of $1 billion, the worst of whom, Dick Fuld, was paid 1/4 of the total ($256 million). We paid that, and now we’re paying it again and our kids will be paying it too, and their kids too. Why do we let them get away with it? Is there really anyone on planet earth worth $256 million dollars? Certainly not this guy. To garner sympathy when he testified that after he finished bankrupting Lehman Brothers, he didn’t get any severance pay, no golden parachute, nothing. I almost cried, poor guy. He said he didn’t see this coming, didn’t have any idea, and he and the other overpaid execs tried as hard as they could to avoid it too. Gosh, I guess that makes it all better, because after collecting $256 million dollars he finally decided to try real hard.
The next generation is being left holding the bag for Dick Fuld, Jr.’s excesses and the excesses of tens of thousands of overpaid executives just like him. If we skate by this disaster and a depression doesn’t hit, which seems unlikely, what rises out of the ashes will need to be based on smarter consumers that simply don’t place their dollar votes for the likes of Dick Fuld. Even if Fuld were competent, he shouldn’t have been paid any more than $1 million, nobody should. I realize that $1 million is an arbitrary number, but we, the consumers, need to draw a line and allow that to be our measure of if we should shop at their stores, buy their products, and invest in their banks. This may mean paying higher prices for a while as we shop in stores that simply can’t compete with the Wal Marts of the world, but in the end, we’ll pay less, far less.
When I mentioned this idea of not shopping at the Wal Marts and giant stores where the CEOs get paid millions to a firend, the argument they presented in response was that some people can’t afford not to shop at WalMart; they barely make ends meet as it is. My response was, they are also the first ones to get laid off as jobs get shipped overseas, so by shopping at WalMart they are paying to get themselves unemployed. It’s true, those low prices and high executive compensation are part of the formula to continue to ship job overseas.
We are told that globalization is a good thing, free markets doing their magic. I believe this to be true, but perhaps that’s not what we want. Free markets seek out the cheapest and most exploitable labor which implies that unless we make our labor cheaper and more exploitable than Viet Nam and Africa, we can’t compete; which obviously we can’t since manufacturing jobs are fleeing the country as are high tech jobs. In many communities that had once been quite prosperous, the only jobs available are near minimum wage jobs at WalMart. The thing is, we voted for this by electing the wrong people, by not understanding the issues, and by not understanding the power of our dollar votes. If you live in a rural community with a thriving downtown and then WalMart moves in and they provide all the same goods that dozens of merchants also provide but sell them for less, if everyone shops at WalMart, they are voting to leave Main Street boarded up and bankrupt. It has happened time and time again, it’s part of the business model. If people like living in small town America, they need to vote for it with their values, their dollars, and their ballots. What has happened on Wall Street was inevitable and the sterile, cheap, and boring cookie cutter shopping centers repeated ad nausium in town after town are what we asked for, what we voted for as a replacement for the locals shops and merchants. They wouldn’t have been replicated if their business model didn’t work. Maybe the older generation is too far gone to do anything, but the kids, all they need to do is alter their spending habits and before too long, market forces will shift to meet their demands. The sad truth is that we need to start thinking about what impact our individual choices make every time we spend a dollar. The argument as to why main street is disappearing is that it simply is no longer competitive, but I disagree. We have failed to recognise that the price of a cup of coffee isn’t just the amount we hand over to the cashier, it what happens to those dollars once they are deposited in the bank. Handing over $5 to Starbucks pays the CEO of Starbucks, a half dozen executives, a team of marketeers to fogure out how to screw you out of even more money and an entire empire to ensure that they have no competition. When you by that same cup of coffee from Peggy’s diner, it may cost more or may cost less, but the money you pay her stays in your community and helps buy groceries, pay the paper boy, purchases a rake from the guy at the hardware store and on and on. Those dollars, if they get spent in the community, also strengthen it. Our communities are dying and we’re voting for it by our spending habbits and we’re also voting to be dependant on the financial giants like the ones run by the Dick Fulds of the world.
A 2007 Forbes magazine articles stated “The chief executives of America’s 500 biggest companies got a collective 38% pay raise last year, to $7.5 billion. That’s an average $15.2 million apiece. Exercised stock options again account for the main component of pay, 48%. The average stock gain was $7.3 million.” We paid those salaries and issued those lucrative stock options. Without us that couldn’t have happened. If the American people don’t sanction such greed, executives will either retire or settle for more reasonable compensation.
