We are currently in the midst of a Fourth Turning. This twenty year Crisis began during the 2005 – 2008 timeframe with the collapse of the housing bubble and subsequent repercussions on the worldwide financial system. It is progressing as expected, with the financial crisis deepening and leading to tensions across the world. It will eventually morph into military conflict, as all prior Fourth Turnings have. The progression from High to Awakening through the Unraveling took from 1946 until 2006. The most treacherous period of the Saeculm is upon us. The intensity of a Crisis is very much dependent upon how a country and its citizens prepare for the Crisis during the final years of the Unraveling. The last Unraveling period in U.S. history from 1984 through 2005 was symbolized by Boomer greed, materialism, debt and selfishness. When Michael Lewis graduated from Princeton University in 1985 and joined Salomon Brothers, I’m sure he didn’t realize that he would end up book-ending the Unraveling period in his two best-selling books about Wall Street.
In his latest book, The Big Short: Inside the Doomsday Machine, Lewis seems bewildered by the fact that his first book Liar’s Poker, written in 1989, didn’t dissuade college students from pursuing careers on Wall Street. If Lewis had read The Fourth Turning by Strauss & Howe when it was published in 1997, he would have understood why the people on Wall Street couldn’t change. The generations were just acting out their part in a grand never ending cycle. Lewis explains what he thought would happen:
“I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous—which is one of the reasons the money was so easy to walk away from. I figured the situation was unsustainable. Sooner rather than later, someone was going to identify me, along with a lot of people more or less like me, as a fraud. Sooner rather than later, there would come a Great Reckoning when Wall Street would wake up and hundreds if not thousands of young people like me, who had no business making huge bets with other people’s money, would be expelled from finance.”
Michael Lewis was a 24 year old Generation X Ivy League graduate who ended up on Wall Street at the outset of the Unraveling. He was flabbergasted by how clueless youngsters could pretend to know what they were doing while taking home phenomenal amounts of money. He was sure it would end in short order. But he was wrong. It built to a decadent crescendo two decades later. It took longer than he expected, but the rebellion is beginning now:
“I thought I was writing a period piece about the 1980s in America. Not for a moment did I suspect that the financial 1980s would last two full decades longer or that the difference in degree between Wall Street and ordinary life would swell into a difference in kind. In the two decades since then, I had been waiting for the end of Wall Street. The outrageous bonuses, the slender returns to shareholders, the never-ending scandals, the bursting of the internet bubble, the crisis following the collapse of Long-Term Capital Management: Over and over again, the big Wall Street investment banks would be, in some narrow way, discredited. Yet they just kept on growing, along with the sums of money that they doled out to 26-year-olds to perform tasks of no obvious social utility. The rebellion by American youth against the money culture never happened. Why bother to overturn your parents’ world when you can buy it, slice it up into tranches, and sell off the pieces? At some point, I gave up waiting for the end. There was no scandal or reversal, I assumed, that could sink the system.”
The period from 1984 until 2005 was classified by Strauss & Howe as the Third Turning Culture Wars. They describe this period in the following terms:
“The Unraveling opened with triumphant “Morning in America” individualism, and slowly drifted toward pessimism. Personal confidence remained high, and few national problems demanded immediate action. But the public reflected darkly on growing violence and incivility, widening inequality, pervasive distrust of institutions and leaders, and a debased popular culture. National consensus split into competing “values” camps.”
Deregulation Decade
“The crew of the space shuttle Challenger honored us by the manner in which they lived their lives. We will never forget them, nor the last time we saw them, this morning, as they prepared for their journey and waved goodbye and slipped the surly bonds of earth to touch the face of God.” – Ronald Reagan
The Unraveling began during the 2nd Reagan term with the “Morning in America” feel good landslide re-election campaign. The Dow Jones Average on January 1,1984 was 1,259. The National Debt was $1.6 trillion. The oldest Baby Boomer turned forty-one in 1984, with the youngest just twenty-four years old. This generation of 76 million over-indulged spoiled social activists is the proverbial pig in a python. Whatever path this generation chooses to take transforms the country for better or worse. The term Yuppie was coined in the early 1980’s as the egocentric Boomers poured onto Wall Street beginning their upwardly mobile perfectionist careers. The country was exhausted from the 1960s turmoil and the depressing 1970s. Failed presidencies, oil shortages, raging inflation, and American hostages had left an America that was looking for a renaissance. Ronald Reagan’s first term required extreme measures by Federal Reserve Chairman Paul Volcker to break the back of inflation. By raising interest rates to 18%, Volcker set the stage for a 20 year bull market in stocks and bonds. Reagan survived an assassination attempt, the U.S. military conducted a successful operation in Grenada, Reagan fired 11,000 air traffic controllers, and an unprecedented peace time military buildup was initiated. This created an atmosphere for economic revival, led by the Boomers.
A new laissez faire era heralded by Ronald Reagan was based on his belief that government was the problem, not the solution. His goal was to cut the size of government while slashing taxes and unleashing the animal spirits of the free market. Reagan was a rhetorical genius. It is a shame that his soaring rhetoric did not match what actually ensued. The basis of Reaganomics was:
- Reduce government spending,
- Reduce income and capital gains marginal tax rates,
- Reduce government regulation of the economy,
- Control the money supply to reduce inflation.
Reagan undoubtedly succeeded in radically cutting the top rates on individuals from 70% to 28%. Of course, the only people affected by the top marginal rates are the rich. These tax cuts did not benefit the middle and lower classes. The benefits were supposed to trickle down to these people.
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Corporate tax rates were decreased from 50% to 38% by the end of Reagan’s term. Corporate America was delighted. The tax savings permitted profits to soar. This additional capital could have been used to invest in the business. The Harvard trained CEOs decided it was more beneficial to pay them outrageously high compensation and to buy back their own stock in order to inflate EPS.
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The tone for the next twenty years had been set. Reagan’s policies did reignite the animal spirits of America. Reagan’s defense buildup increased annual spending from $303 billion in 1980 to $426 billion in 1988, a 40% surge. This most certainly contributed to the collapse of the Soviet Union. They were a hollowed out oak tree and Reagan’s defense buildup was the gust of wind that blew the rotting tree over. His achievements were great, but his failure to reduce government spending will haunt the country for decades and planted the seeds of economic disaster. The Federal Government spent $590 billion in 1980. In 1988, Federal Spending had grown to $1.064 trillion. Rhetoric did not translate into action. Politicians have always been good at following through on promises that buy them votes. The tough stuff can be pushed off to the next guy.
http://en.wikipedia.org/wiki/File:CBO_Revenues_Outlays_Percentage_GDP.svg
The reality is that government debt as a % of GDP was on a downward trajectory for 30 years, bottoming in the late 1970s at 45%. Reagan cut taxes and doubled spending during his eight year reign. This initiated the launch procedure for a US government debt rocket. It sent a message to the world and to its citizens that debt was not a bad thing. Interest rates were in the midst of a quarter century long decline, so the debt became more serviceable as time progressed. There was no reason to save and invest when government and consumers could borrow and buy what they wanted today. This was the attitude that began to emanate during the early 1980s. Total government debt as a % of GDP skyrocketed from 45% to 80% during Reagan’s eight year presidency. The National Debt grew from $908 billion to $2.6 trillion, a 286% increase. The massive increase in debt without apparent negative consequences gave politicians and Baby Boomers the green light to live it up today and not worry about tomorrow.
The 1980’s proved to be a confidence building decade after two decades of tumult. With the most egocentric self centered generation in the history of the world entering the prime of their careers, a double shot of renewed confidence and debt accumulation began a cycle of greed and hubris like none ever seen on earth.
Fragmenting Culture
“I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA” – Michael Douglas as Gordon Gekko
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The self-absorbed yuppies’ goal of wealth, power, and material possessions was captured accurately in the 1987 movie Wall Street and Thomas Wolfe’s fantastic 1987 novel Bonfire of the Vanities. It seems that 1987 marked the high point of the Unraveling period. The Dow Jones Industrial Average had grown from 824 at the beginning of the decade to 2,700 by September 1987. The Boomer heroes of unbridled greed were Michael Milken, Ivan Boesky, Carl Icahn and Boone Pickens. Leveraged buyouts, where corporate raiders used huge amounts of debt to takeover companies, taking them private, firing thousands of workers, spinning it off as an IPO, and reaping enormous profits, were hailed as the savior of free markets by Wall Street. These deals generated gigantic fees for the firms advising on the LBOs. This Boomer led societal mood of wealth accumulation at the cost of gutting corporations and screwing the working class became ingrained in the fabric of America.
More Wall Street “inventions” like program trading, portfolio insurance, and arbitrage combined with hype and hubris to cause a 508 point crash on October 19, 1987. This 22.6% one day drop was the largest percentage decline in history. This once in a lifetime event scared the average investor out of the market for years. This event also unleashed a 20 year reign of banking terror, as the Greenspan Put was born. Alan Greenspan became Federal Reserve Chairman in August 1987. His 1st major act was to pour billions of liquidity into the market after the Crash. This was the 1st of many risk enhancing acts by Greenspan over the next two decades.
http://en.wikipedia.org/wiki/File:Black_Monday_Dow_Jones.svg
Oliver Stone completed his film Wall Street before the crash. He captured the battle between Boomer gluttony and the work ethic of the average American worker. It was essentially a morality play between the slick oily Gordon Gekko and the old union leader looking out for the best interests of his fellow workers. They battle for the soul of Charlie Sheen’s Bud Fox character. The film goes in depth into the immoral culture of Wall Street. Inside trading on non-public information is business as usual. Companies aren’t seen as a productive part of society, but as pawns in a giant game of chess played by the “Big Swinging Dicks” on Wall Street. The workers are seen as liabilities that can be shed in order to boost short-term profits. Maximizing returns as soon as possible was all that mattered to Gekko and real life sharks on Wall Street. The movie’s message was clear. Unrestrained free-market capitalism with no principles is destructive for society. The movie isn’t anti-capitalism. It distinguishes between the cynical, quick buck culture of the Boomers and the moral hard working culture which had built America. Both Oliver Stone and Michael Lewis thought that their works of art would deter young people from vapid careers on Wall Street. Instead, young MBA students saw these stories of greed as an exciting beckoning to riches, morality be damned.
Thomas Wolfe’s novel Bonfire of the Vanities addresses the lack of control anyone has over their lives regardless of their wealth, wisdom or success. He captured the yuppie Boomer excesses of New York City and Wall Street in his brilliant novel. Beneath Wall Street’s veneer of achievement, the New York City was a hot-bed of racial and cultural tension. Homelessness and crime in the city were soaring. Several high-profile racial incidents polarized the city, particularly two black men who were murdered in white neighborhoods. Bernie Goetz became a folk-hero in the city for shooting a group of black punks who tried to rob him in the subway. The chasm between the haves and have-nots had grown immense. In Wolfe’s New York, venal self-interest motivates everyone but the suckers, while ethnic and racial bigotry is extreme. Men use women for little other than sexual gratification, and women use men almost entirely for monetary or social gain.
Those in power fail to represent the disinterested abstractions (justice, civil rights, truth) that they ostensibly represent. The manipulation of truth and justice by the news media, show Wolfe’s cynical view of these flawed apparatuses of human society. Tom Wolfe ruthlessly exposes the superficiality of 1980s culture. Wolfe directs his most serious criticism to the very rich, with their extravagant dinner parties, 6-block hired-car rides which cost $250, and thousand-dollar flower arrangements. Hypocrisy is rife in this novel, and most evident in the two leaders depicted on opposing sides, Reverend Bacon and the Mayor of New York. Neither of these men is truly concerned with the people of New York, but rather with their own advancement and profit. Each, in his way, is racist, but decries racism at every turn. Each purports to be “of the people” but uses his position of power for monetary gain. Wolfe captured the worst traits of America during the early years of the Unraveling.
The 1980’s proceeded as expected with strengthening individualism and weakening institutions. The GI Generation Heroes began to depart from the scene. This steady, cautious, risk adverse generation that built American industry and finance were being pushed into retirement by the Baby Boomer Generation. The old civic order was cast aside and the cultural revolutionaries stormed the gates. Baby Boomers seized control of Wall Street, having never experienced a bear market, never faced adversity, and never having to care about anyone but themselves. A brooding sense of pessimism began to creep into the mood of the country. Fiduciary responsibility towards your clients and proper risk management was considered old school. Maximizing profits, generating fees, and getting rich was the mantra of the new Wall Street generation. As the Boomers grew rich and cynical on the street of dreams, moralistic charlatan frauds like Jesse Jackson and Al Sharpton exacted their share of profits for themselves and their constituents. The working middle class sunk deeper into despair as their wages continued a two decade long stagnation. Real hourly earnings were the same in 2005 as they were in 1984, and 10% below the level of 1972.
The trickle down crowd, mostly Republicans, contended that a rising tide lifts all boats. In theory that sounds great. In practice, it has proven to be a lie. During the 1980s and 1990s, all boundaries regarding compensation were obliterated by the “Me Generation”. Executive pay packages began to skyrocket as they were viewed as rock stars and masters of the universe. The ratio of CEO’s pay to the average worker’s pay leaped from 30 to 1 in 1980 to 250 to 1 by 2005. If CEOs had performed phenomenally over this time period, a case could be made for this leap. But, corporate America and certainly Wall Street had brought the US economy to the brink of disaster by 2005. This outrageous pay disparity contributed to the deepening anger in the country simmering below the surface.
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Strauss & Howe aptly described the mood:
“Personal confidence remains high, and few national problems demand immediate action. But the public reflects darkly on growing violence and incivility, widening inequality, pervasive distrust of institutions and leaders, and a debased popular culture. People fear that the national consensus is splitting into competing “values” camps.”
Cynical Alienation
“Now, I have to go back to work on my State of the Union speech. And I worked on it until pretty late last night. But I want to say one thing to the American people. I want you to listen to me. I’m going to say this again: I did not have sexual relations with that woman, Miss Lewinsky. I never told anybody to lie, not a single time; never. These allegations are false. And I need to go back to work for the American people.” – President Bill Clinton, January 26, 1998
“The great story here for anybody willing to find it, write about it and explain it is this vast right-wing conspiracy that has been conspiring against my husband since the day he announced for president.” – First Lady Hillary Clinton, January 27, 1998
The appearance of progress on some issues overshadowed the underlying deterioration of societal institutions and practices. Social Security was “saved” by Alan Greenspan and his commission. Essentially he manipulated the CPI calculation downward, screwing future generations of seniors out of their rightful payouts. Politically difficult decisions regarding Medicare and Medicaid were deferred to sometime in the distant future. With oil prices averaging $20 per barrel through the 1980s and 1990s, a coherent long-term energy strategy seemed unnecessary to the next election cycle politicians who control this country. The deregulation of the Savings & Loan Industry gave them many of the capabilities of banks, without the same regulations as banks. Imprudent real estate lending, fraud and insider transactions by S&L executives, protected by high powered Washington politicians, led to the first financial crisis. The failure of 747 thrifts and losses of $160 billion to the taxpayer can be attributed to lax oversight and fraud.
The Berlin Wall fell as communism collapsed under the weight of central planning, corruption, and fraud. Academics like Francis Fukuyama foolishly declared “The End of History”. According to Fukuyama, Democracy had won over all other forms of government:
“What we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
Only a Harvard academic could spout such claptrap. By 1991, the U.S. was again at war. The 1st Gulf War was considered a moral war as the U.S. came to the rescue of Kuwait and Saudi Arabia. Using traditional military maneuvers, General Schwarzkopf obliterated Sadaam Hussein’s Republican Guard. But, there was no consensus to follow through and eliminate Hussein. Unwittingly, we planted the seeds for the bleak later stages of the Unraveling by leaving military bases in Saudi Arabia. There were not many more feel good national experiences after the 1st Gulf War. A recession in 1991 (remember George Bush Sr. buying 4 pairs of socks at JC Penney to exhort Americans to shop America out of recession) caused by the S&L Crisis allowed an obscure Arkansas Governor to win the Presidency. The election of Bill Clinton ushered in the culture wars of the 1990s. The conservative religious right fought scorched earth battles with the liberal left wing elite who control the media. Pat Buchanan captured the animosity of this conflict:
“There is a religious war going on in our country for the soul of America. It is a cultural war, as critical to the kind of nation we will one day be as was the Cold War itself. Who is in your face here? Who started this? Who is on the offensive? Who is pushing the envelope? The answer is obvious. A radical Left aided by a cultural elite that detests Christianity and finds Christian moral tenets reactionary and repressive is hell-bent on pushing its amoral values and imposing its ideology on our nation. The un-wisdom of what the Hollywood and the Left are about should be transparent to all.”
As ideologues fought wars over morality, religion, and abortion, unbridled corporate fascism and individual greed ran rampant. The unholy alliance between mega banks, mega-corporations, the Federal Reserve and Washington DC led to a widening chasm between the haves and have-nots. The 1990s were rooted in three poisons: anger, greed, and delusion. The Presidency of Bill Clinton was marked by a strong economy, political gridlock, declining moral values and relatively minor military skirmishes. Society glorified individuals, their wealth, power and lifestyles. The TV show Lifestyles of the Rich and Famous, hosted by Robin Leach, ran from 1984 until 1995. The show featured the extravagant lifestyles of wealthy entertainers, athletes and business moguls. Glorification of the rich and their profligate lifestyles, spurred the superficial self-centered Boomer generation to idolize and emulate this lifestyle. There was one big problem with emulating this lifestyle. The Boomers didn’t have the money to live this lifestyle. Wall Street stepped in to supply the fuel for the two decades of decadence. Household debt grew from $2 trillion in 1984 to $14 trillion in the mid 2000s.
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The United States has experienced a three decade long “expenditure cascade”. An expenditure cascade occurs when the rapid income growth of top earners fuels additional spending by the lower earners. The cascade begins among top earners, which encourages the middle class to spend more which, in turn, encourages the lower class to spend more. Ultimately, these expenditure cascades reduce the amount that each family saves, as there is less money available to save due to extra spending. Expenditure cascades are triggered by consumption. The consumption of the wealthy triggers increased spending in the class directly below them and the chain continues down to the bottom. This is a dangerous reaction for those at the bottom who have little disposable income originally and even less after they attempt to keep up with others spending habits. The personal savings rate was 12% in the early 1980s and declined to negative 1% by 2005. The expenditure cascade couldn’t have occurred without easy access to debt. The question that must be asked is, who benefits from debt and who pays?
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The delusion of the American populace cannot be underestimated. Their worshipping at the altar of materialism and adoration of Hollywood created pop culture was crucial to the societal delusion. Without the corporate consumerism marketing machine, an unlimited amount of credit provided by bankers, and ultra-low interest rates supplied by the Federal Reserve, the delusions of grandeur could not have been realized. Credit cards didn’t even exist until 1968. Until the 1990s mortgage lenders followed the 28/36 rule. Your mortgage payment, including taxes and insurance, couldn’t exceed 28% of your monthly gross income. All of your debt payments couldn’t exceed 36% of your monthly gross income. Homebuyers rarely put down less than 10% of the home’s value. Home equity loans were virtually non-existent. The subprime loan market for homes and automobiles was miniscule. In the early 1980s auto loans averaged 45 months and buyers put 12% down on the purchase. By the mid 2000s auto loans averaged 64 months with only 5% down on the purchase. By 1999, 40% of all cars on the highway were leased. The proliferation of easy credit allowed average people to live a life of excessive opulence, occupying 7,000 sq ft McMansions, driving BMWs, and wearing Rolex watches. Americans bought so much stuff on credit they couldn’t fit it all in their oversized abodes. So they needed to rent outside storage for their stuff. In 1984 there were 6,601 facilities with 290 million square feet of rentable self storage in the U.S. In 2009, there were 46,000 self storage facilities with 2.21 billion square feet, a 762% increase.
http://www.marketoracle.co.uk/images/2009/May/uk-housing-size.gif
The delusional middle and lower class Boomers believed they were equal to the top 1% of ultra-wealthy, because they were living like them. As Orwell noted, “all animals are created equal but some animals are more equal than others”. Those that were “more equal” worked on Wall Street. The repeal of the Glass-Steagall act in 1999 with overwhelming majorities in both Houses of Congress and cheered on by Wall Street groomed Secretary of the Treasury Robert Rubin, opened Pandora’s Box. Bank holding companies started dealing in mortgage-backed securities, credit default swaps, and structured investment vehicles. A blizzard of products solely designed to generate fees while ignoring the banks’ fiduciary duty to their clients was unleashed. Subprime mortgages surged from 5% of all mortgages to 30% by 2008, as issuing the mortgage became detached from the risk of the mortgage. The issuer of the loan had no risk, since the mortgages were immediately bundled and sold off to investors (suckers). No doc, Alt-A, and Option ARM mortgages proliferated as fraud ran rampant on Wall Street and throughout the financial services industry. The Federal Reserve, led by Alan Greenspan, aided and abetted the delusional debt bubble through its non-existent regulation of the banks and mortgage brokers, and unnecessarily keeping interest rates extraordinarily low from 2001 through 2005.
As the average American middle class worker fell further behind, without realizing it, the financial sector grew ever more powerful and malevolent. A country that had once produced its way to world domination degenerated into a paper kingdom run by Harvard MBAs, lawyers, tax accountants and central bankers. They “create” pieces of paper with terms that no one understands, packages worthless pieces of debt obligations and sell it to other clueless financial experts, borrow 40 times their capital and gambles it based on models that told them they couldn’t lose, and rewards themselves with obscene pay packages and bonuses.
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http://my.caseyresearch.com/displayTcr.php?id=21#cc1
The “creativity” of Wall Street was complimented by corporate America instituting “free trade” and “globalization” policies (NAFTA) supported by politicians in Washington DC. The terms free trade and globalization were code for corporate CEOs shipping US manufacturing jobs to China, India, and Vietnam, while expanding their corporate earnings per share 3 cents above analyst expectations per quarter. As reward for gutting American industry, the CEOs demanded their Board of Director toadies give them stock options for 1 million shares and $10 million raises. Does it require a Harvard degree and ingenious brilliance to fire 100,000 American workers making $20 per hour and build a plant in China paying peasants $1 per hour and depending on cheap oil to inexpensively ship the goods back to America? Only one problem, people without jobs have trouble buying stuff. Without middle class jobs, corporate CEOs turned to their Harvard buddies on Wall Street to create $1.2 quadrillion of financial derivatives to convince the middle class they really had wealth to spend on cheap Chinese goods. This corporate/banking collusion was fully supported by their paid for representatives in Washington DC. This unholy alliance between big business and big government enriched the ruling elite, while impoverishing the middle class.
Once In A Lifetime
“Indeed, recent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward.” – Alan Greenspan, February 2004
“Even though some down payments are borrowed, it would take a large, and historically most unusual, fall in home prices to wipe out a significant part of home equity. Many of those who purchased their residence more than a year ago have equity buffers in their homes adequate to withstand any price decline other than a very deep one.” – Alan Greenspan, October 2004
“Improvements in lending practices driven by information technology have enabled lenders to reach out to households with previously unrecognized borrowing capacities.” – Alan Greenspan, October 2004
“The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions …. Derivatives have permitted the unbundling of financial risks.” – Alan Greenspan, May 2005
You may find yourself living in a shotgun shack
You may find yourself in another part of the world
You may find yourself behind the wheel of a large automobile
You may find yourself in a beautiful house, with a beautiful wife
You may ask yourself: well… how did I get here?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
You may ask yourself
How do I work this?
You may ask yourself
Where is that large automobile?
You may tell yourself
This is not my beautiful house!
You may tell yourself
This is not my beautiful wife!
You may ask yourself
What is that beautiful house?
You may ask yourself
Where does that highway lead to?
You may ask yourself
Am I right?… Am I wrong?
You may say to yourself
My God!… what have I done?
The Talking Heads – Once in a Lifetime
David Byrne’s lyrics are reflective of how Americans have operated in a largely unconscious state for the last twenty years, operating on debt-oriented auto-pilot, and waking up from their materialistic stupor asking, “How did I get here?” We have taken the acquisition of material belongings so seriously that it became what we worked for. Material possessions defined who we are. When we lose these possessions we no longer have the identity that we have blindly created by collecting “things”. My God, what have we done? Charles Mackay in his book Extraordinary Popular Delusions and the Madness of Crowds , written in 1841, captures the essence of what has happened in the US:
“Money, again, has often been a cause of the delusion of the multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper.”
The nation had an opportunity to come to our senses with the election of George Bush in 2000. The gravity of the coming Saecular Winter could have been moderated through prudent actions taken on the fiscal, political, and defense fronts. The autumnal Unraveling is a time of foreboding and a brooding pessimism. As a howling wind begins to blow, leaves turn brown and wither, determined squirrels scurry around collecting acorns in preparation for the bitter snowy Winter ahead. The opportunity to judiciously prepare was wasted after the September 11, 2001 terrorist attack on America. The colossal overreaction to an attack by a terrorist organization consisting of a few thousand members, ensured that the coming Winter will be harsh, deadly, and more bitter than any ever experienced in U.S. history. Prudence, caution, intelligence, and sound judgment were required. Recklessness, haste, stupidity, and hubris were employed. The result was that the Crisis that arrived in 2005-2008 will be more painful and possibly fatal for the United States. The multiple wars of choice, immense housing bubble, stunning government deficits and unaddressed unfunded liabilities have created a nation weakened and unprepared for the harsh reality ahead. The Empire of Debt has reached epic proportions.
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The recklessness of our lack of preparation is reflected in the following facts:
- Total US credit market debt increased from 275% of GDP in 2000 to 365% of GDP in 2009.
- The National Debt increased from $5.7 trillion in 2000 to $13 trillion today. It is projected to reach $20 trillion by 2015.
- Consumer debt has increased from $1.5 trillion in 2000 to $2.4 trillion today.
- The U.S. has spent $1 trillion since 2003 on wars of choice in Iraq and Afghanistan.
- Annual defense spending has risen from $359 billion in 2000 to $896 billion in 2010.
- Unfunded liabilities for Social Security, Medicare, and Medicaid total $106 trillion.
- There are 7 million less Americans employed today than there were in 2007.
- In 2008, Wall Street lost $42.6 billion and required middle class taxpayers to bail them out. Total compensation on Wall Street in 2009 totaled $55 billion, three times the previous high.
Michael Lewis was befuddled that his tale of greed, hubris and recklessness, written in 1987, did not deter college graduates from heading to Wall Street. It took two more decades, but the Wall Street money culture is in the process of being discredited. Americans are slowly coming to the realization that unbridled greed is not the same as capitalism. Excessively low interest rates punish savers and senior citizens, while benefitting borrowers, risk takers and Wall Street. Savings leads to investment, while borrowing leads to impoverishment. The actions taken thus far by politicians, government bureaucrats, and the Federal Reserve are the exact opposite of what was required. The next leg down in this Greater Depression will thoroughly discredit those who have promoted a money culture over those virtues that will benefit society in the long run. The current Crisis will require personal sacrifice, renewed community spirit, public consensus, and truth. Failure could prove fatal for our nation. The best of human nature must win out over greed, ignorance, and love of power. Our future hangs in the balance.
“It has always seemed strange to me… the things we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the concomitants of failure in our system. And those traits we detest, sharpness, greed, acquisitiveness, meanness, egotism and self-interest, are the traits of success. And while men admire the quality of the first they love the produce of the second.” – John Steinbeck
Smokey says:
A fine recap on how unbridled greed has combined with and encouraged deregulation throughout the past twenty years to bankrupt this nation’s future.
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13th June 2010 at 8:18 pm
bluestem says:
Very sobering article Jim. A fine recap of the tip of the iceberg that got us where we are today. John
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13th June 2010 at 10:04 pm
bob nett says:
Nice job.Any data supplied by the Fed,bank or other,should be considered as an unreliable source.According to CAFR1.com taxes only account for one third of government revenue.How do they generate the remaining revenue?See the Web of Debt article this week about some of California’s surplus billions from shadow taxing.Or Oregons ability to find 3.3 billion this week.All assets are listed in the respective CAFR’s(Certified Annual Financial Report) Dear Administrator,with all facts being relevent to your article,how do avoid mentioning 110 TRILLION dollars(federal reserve notes)of assets in these 185,000 individual funds(accounts)? Disclaimer;comments not supplied by a certified financial planner or central banker. But it does seem like enough to cover all debt and future liabilities.We could even throw in Fanni and Freddi and still have cash for a party. Dear Administator,are you compensated to avoid this information?
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13th June 2010 at 10:05 pm
Tony Ieradi says:
Another great analysis Jim. Always on target with facts. Facts and data tell the story!
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13th June 2010 at 10:10 pm
Administrator says:
bob nett
I am compensated extravagantly by the Fed Reserve to avoid disclosure of their secret. A guy has to make a living.
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13th June 2010 at 10:12 pm
Yojimbo says:
Dear Jim,
I thank you on behalf of myself and my 10 year old son for this essay.
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13th June 2010 at 11:20 pm
Yojimbo says:
Dear Jim,
I thank you for this essay on behalf of myself and my 10 year old son.
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13th June 2010 at 11:23 pm
Sancho says:
You have it wrong. Look at what the people at Harvard is saying, like Dani Rodrik
“What makes this perverse is that Germany runs a huge current-account surplus. Projected to amount to 5.5% of GDP in 2010, this surplus is not far behind China’s 6.2%. So Germany has to thank deficit countries like the US, or Spain and Greece in Europe, for propping up its industries and preventing its unemployment rate from rising further. For a wealthy economy that is supposed to contribute to global economic stability, Germany is not only failing to do its fair share, but is free-riding on other countries’ economies.”
The full link
http://www.project-syndicate.org/commentary/rodrik44/English
I read it today published in a conservative (yes, old fashioned right wing conservative) newspaper in Argentina, and could not believe the logic behind it.
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13th June 2010 at 11:26 pm
bob nett says:
Admin,the reference is not related to any Federal Reserve Bank Inc. assets.The subject is the assets of your incorporated townships,school districts,county,state and federal governments of the United States.Do you see any use for these assets at this time for the benefit of the citizens of this country?Do you deny their existence?It is relevent since their value is 2X your total credit market debt chart.Put a bar on the chart twice as high as the 52 Trillion and you can get a visual on the available funds.
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13th June 2010 at 12:10 am
Apollo says:
JimQ – Another fine solid report. Alas, the cake is baked. There is no going back and the price must be paid in the next 2 decades. In the form of riding the 4th Turning to its conclusion. There will be tragedies; there will be blood. But there will be lessons – for the young generations. See, it was the young generations in the 1930′s, too young to be responsible for the crash of 1929, that paid the biggest price during the Depression and WW2. But with scars burnt deep and spirits tough as nail, they upheld the value of basics. And won WW2. Thus ending that 4th Turning on a high note. But, like this coming one, a most severe price must be paid.
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13th June 2010 at 1:30 am
Anonymous says:
Without questioning motive, is there any indication what the actual figures are for unfunded obligations of the federal government and real deficit and debt figures?
Barry Goldwater stated that federal pensions and interest on the national debt would freeze the budget sometime in the early 21st century, although I couldn’t find an actual quote. Given the exponential nature of deficit spending, how soon is a default likely to occur?
Overall, a thoughtful and insightful article, thanks!
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13th June 2010 at 6:13 am
ssgconway says:
This fine read reminded me of something Julia Roberts said to Richard Gere in ‘Pretty Woman,” concerning his being a corporate raider. It was something to the effect that he was like someone who hot-wired cars and then sold them to chop shops to be cut up for parts. (Having a hooker sit in judgment on a lawyer who makes money off of dismembering businesses is almost Biblical in its’ insight.)
Tom Wolfe’s ‘A Man In Full” deserves a mention here, too. The story of the Atlanta real estate player’s downfall, juxtaposed with that of an employee in one of his meat-packing plants, informs the reader, just as “Bonfire”did, of the disconnect between life at the top and the reality most of us know.
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13th June 2010 at 9:06 am
ssgconway says:
BTW, the Goldwater prediction referenced by a previous poster is from “The Coming Breakpoint,” which he published in 1976. (I remember reading it in high school.) This is the Amazon.com page for it: http://www.amazon.com/Breakpoint-Americas-Conservative-Goldwater-crossroads/dp/B000J0SAQC
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13th June 2010 at 9:14 am
Administrator says:
ssgconway
I read Man in Full. You are right. That might be another article idea.
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13th June 2010 at 9:14 am
Carpet Pisser says:
Jim,
This is an excellent essay, as usual.
And I see they are posting it over at zerohedge.
Kudos – and keep up the great work!!!
CP
“that rug really tied the room together”
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13th June 2010 at 10:15 am
Guest Post : Two Decades Of Greed – The Unraveling | W DE WEB says:
[...] Submitted byJim Quinn of The Burning Platform [...]
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13th June 2010 at 10:36 am
Guest Post : Two Decades Of Greed – The Unraveling | oolaah says:
[...] Submitted byJim Quinn of The Burning Platform [...]
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13th June 2010 at 10:44 am
bloodworm says:
..and now, the group most responsible for this heads into retirement, broke and expecting all the benefits that the World War 2 generation received and will expect the next generation to pay for it and to also somehow deal with the national debt.
The boomers had a huge party and did not have to pay for it – the check was covered by Reagan, Clinton, Bush, Obama, Greenspan and Bernanke. The check was paid for with debt and money printing.
Where we stand now is that the govt and fed are doing everything possible to reinflate the bubbles that got us into this mess. Gasoline on fire comes to mind.
Hot debate. What do you think?
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13th June 2010 at 10:46 am
Guest Post : Two Decades Of Greed – The Unraveling « The New Economy says:
[...] Submitted byJim Quinn of The Burning Platform [...]
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13th June 2010 at 11:00 am
Kenny G says:
An ancient Quote from the Bible rings thru loud and clear decade after decade……..”The love of money is the root of all evil”.
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13th June 2010 at 11:18 am
J. C. says:
I’ve been hearing about government debt and unfunded liabilities since I was a kid (over 35 years ago) and it never seems to matter. As “true” as all of the facts in this article the financial markets don’t seem to care. Peope are still buying US government bonds, the dollar is King, interest rates are low, the stock market is up, the US economy is recovering, the global economy is thriving, the new ipod is even better than last year’s and may sell out at only $500, cell phone use is growing world-wide, corporate profits are up, oil prices are down and BP can still pay a dividend despite it all, government entitlements are up, government job growth is up, there’s talk of a VAT (Value Added Tax) and maybe taxing companies on energy usage and carbon generation, all other taxes are going up next year, illegals are soon to get better detention facilities – and then amnesty, war in the Middle East is in full swing, the FED has the back of the IMF which has the back of the ECB and the BIS is cool as a cat. Et cetera.
Go figure.
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13th June 2010 at 11:21 am
Kenny G says:
Mankind is helpless to counter this attribute of greed ……..given another opportunity to change an correct these destructive habits will evenually lead us down the same road……..look at history for proof.
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13th June 2010 at 11:23 am
Buckshot says:
Gread Read Jim. I always check in and look forward to your next article.
I am a Boomer and I watched from the sideline as my generation did all of this. I never took part or drank the from the cup. I watched the greed , the hubris and gloat take hold and was always looked upon by my peers as “Not Included” in the happening generation. I did not do the financed homes and the “too many kids” and the excessive credit card debt . I drove old cars and bought fixerup homes for cash. Some commentors here don’t understand that the Boomer generation has built the inevitable crash that is coming. We borrowed our way to a delusional lifestyle that we did not earn. We traded family, community and morals for “Buy it Now” addictions with the readily available tool of easy credit. It is true that the charade has continued long after it should have crashed and I too get anxious for the cleansing period to begin. But it will happen and happen big when it does. As Denninger puts it, “The Math never Lies” and the Laws of Physics state that for every action, there is a reaction. Belive me, there has been action and it has been all in the wrong direction. The reaction will be Catastrophic and coming soon to a town near all of you.
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13th June 2010 at 1:17 pm
stan says:
I am amazed that TPTB have lowered interest rates so low that frugal and prudent savers now make less than 1% on their hard earned savings. It is one of the most shameful acts in American history.
Do you people realize what is happening? Do you? The entire rotten system is falling apart. And we allow it. We can’t do a thing about Allan Greenspan or Ben Bernake. We are helpless to do a thing. And our president is a worthless human being.
We deserve to be destroyed as surely we will be.
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13th June 2010 at 2:30 pm
Pat Smith says:
This doesn’t take into account the effects of last year’s stimulus, which is now part of base line budgeting, and health care reform which will blow a never to be closed hole in the federsal budget.
Not to fear, Congress will fix it. Why just this year they are responding to this exploding growth in spending by NOT submitting a budget. They are putting the transfer pump on auto pilot and will cram down some continuing spending resolutions after the election.
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13th June 2010 at 2:36 pm
ragman says:
“Bonfire” is one of my all-time favorites. And, “Social X-Ray” is an apt description of the Wall Street wives. Skinny, titless, bags-of-bones that masquerade as women. I know I’m a male chauvinist pig, but so what? Seriously, Walls St and our govt are totally outta’ control. Check out Drudge for a video of a “CONgressman” assaulting a college student for asking him a simple question. This is the USofA in 2010, a pretty sad state of affairs. I have given up on the big picture and am concentrating on how best to evacuate so Fla when the oil catastrophe the entire state.
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13th June 2010 at 3:06 pm
ragman says:
Forgot “hits” between cat… and the. Sorry.
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13th June 2010 at 3:07 pm
Jerry P says:
“The repeal of the Glass-Steagall act in 1999 with overwhelming majorities in both Houses of Congress and cheered on by Wall Street groomed Secretary of the Treasury Robert Rubin, opened Pandora’s Box.”
You failed to mention that this repeal was sighed by your boy wonder, Bill Clinton who has a large part of the responsibility for what is going on today and this is in addition to the $50 billion bailout to Mexico that was really a bailout the Wall Street again, and oh, the 1971 Gold window being closed by the traitor Nixon could have something to do with it, ya think, duh….. Until we get rid of these traitorist dinasoars, all of them, Dems & Rep, you can not expect anything less from these people.
The FEDERAL RESERVE is responsible for all of this, with the help of the Politicians, period…….
PS: I will take Ronald Reagan/Andrew Jackson, over all the rest combined….
Hot debate. What do you think?
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13th June 2010 at 3:32 pm
Norsky says:
Great analysis Jim! Unfortunately it shows WFD (we’re freaking doomed) following our current path.
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13th June 2010 at 4:10 pm
SonicPig says:
Excellent article.
To quote Julius Caesar as he crossed the river Rubicon, “The die has been cast.”
For the US, the die is indeed cast.
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13th June 2010 at 4:24 pm
Buzz Fuzzel says:
I marvel at the vacant mind set of those like smokey who believe everything can be fixed with just one more “regulation”. It is our mindless pursuit of man made solutions which got us here. We live in a self regulating universe. The arrogance of men who believe they can improve on the creators regulatory regime has a long history of failure. Although the looming failure may not be the last it has all the indicators of a failure on a Biblical scale. Hopefully we will all come out OK on the other side.
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13th June 2010 at 5:30 pm
Rug Making says:
Had the Fed done precisely what Bernanke now thinks they should have, the Great Depression would have been much worse. Rug Making
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13th June 2010 at 6:03 pm
newsjunkie says:
Awesome.
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13th June 2010 at 6:58 pm
FREDDY says:
Amazing article- send it to everyone u know !!
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13th June 2010 at 7:49 pm
pacer says:
Great piece. So what happens next? Punitive taxes on the ultra wealthy, including inheritance taxes and closure of the loophole that lets estates off the hook if the person renounces their citizenship and lives a few more years after? Much of this lost money is still held by American elites. Even so, we’ll never get back the money we have sent to China, Brazil, India, etc. to create industrial giants in those places. And now our workers have to compete against folks who work just as hard for a fraction of the pay and benefits.
From the coming depression, will we as a nation rediscover the values and virtues that got us to 1970? Somehow I doubt it. There will be pockets of right minded people, but all order degrades and eventually a reckless generation will spoil the legacy they inherit. Just the nature of humans.
Tough a life as they present, I’m thinking farming or fishing rather than working to pay off the debt incurred without my consent and which benefitted others. At least my chances of avoiding starvation, insanity or looters will improve…
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13th June 2010 at 8:17 pm
Because reading blogs and multitasking can destroy your brain … « Blog on the Run: Reloaded says:
[...] } … here’s a little brain exercise: an article by Jim Quinn titled “Two Decades of Greed: The Unraveling.” Print it out, [...]
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13th June 2010 at 8:33 pm
CompassionateFascist says:
This is as good a summary of how we got to the edge of the present precipice as anything I’ve read on the net. A little heavy on the Reagan-bashing, though; my impression is that, for all the good Reagan did in his first term, Bush Sr. and his hyper-corporate crowd had pretty well shoved an increasingly mentally-befogged RR aside by 1986 at the latest. This is who, where, and when we got legalization-of-illegals (sweatshopping the working class), “free trade” (wipeout of middle-class by job-outsourcing), and Iran-Contra (lawless, Zionized foreign policy) from. As to the future, it is all good. The coming Time of Troubles – and I don’t mean merely an economic “depression”, I mean something like the T’aiping Uprising in 19th century China – will sweep away all sorts of trash-institutions, trash-values, and trashy people. Prepare, but do not worry. These things have to happen now and then.
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13th June 2010 at 9:04 pm
disco-bar says:
[...] 15 de Junho de 2010 “It has always seemed strange to me… the things we admire in men, kindness and generosit… Publicado por Pedro Francisco ás 01:25 Categorias: en, interessante, [...]
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13th June 2010 at 9:26 pm
Apollo says:
@Jerry P:
“You failed to mention that this repeal was sighed by your boy wonder, Bill Clinton who has a large part of the responsibility for what is going on today…”
Indeed Bill Clinton signed the repeal. He recently apologized for that error, said he got bad advise and took it. But let me bring some balance into this. The repeal of Glass-Steagall legislated separation of commercial banking, investment banking and insurance by itself does not necessarily and automatically create a financial mess. Many Eurozone countries, Canada and Mexico, Japan, certain S Asian countries and China – all permit integration of these businesses to varying degrees. None experienced financial blowups as a result. Canada offers the best example – its banks are fully able to offer all three services, including insurance. But each service is regulated separately, using difference agencies, and there is not the slightest hint of incompetence or corruption.
The difference in America is 1) who prompted the repeal, 2) did regulatory regime adjust for the repeal. In the US, it was a few big investment banks who ‘forced’ the government to repeal, then ‘forced’ the elimination of regulatory changes (including the now-famous leverage rule). It was successful big biz corruption of government. Freed from the shackles, able to write the rules, these big Wall Street investment banks proceeded to create their wild west casinos. Their rule – head I win and tail you lose. Let me say again – it not the repeal of Glass-Steagall per se, it was the politically sanctioned corruption of private sector financial institutions under the Bush administration.
“..and this is in addition to the $50 billion bailout to Mexico that was really a bailout the Wall Street again”
Yes, Mexico screwed up its sovereign finances when the Asia Economic Crisis of 1998 hit. Their currency tanked, and cannot service Wall Street loans denominated in dollar. Mexico problem was not triggered by Wall Street, but by events in Asia. Default was all but certain – meaning peso will hit the gutter and millions of unemployed will hit the US border. US exports to Mexico will be wiped out. US has to bailout a neighbor, a NAFTA partner, in deep trouble for both Wall Street and national security reasons.
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13th June 2010 at 10:43 pm
John Steinsvold says:
An Alternative to Capitalism (which we need here in the USA)
The following link takes you to an essay titled: “Home of the Brave?” which was published by the
Athenaeum Library of Philosophy:
http://evans-experientialism.freewebspace.com/steinsvold.htm
John Steinsvold
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13th June 2010 at 10:53 pm
LLPOH says:
John Steinsvold – I quickly read through the article you pointed to. You are obviously out of your fucking mind.
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13th June 2010 at 11:10 pm
TIM says:
Reminds me of Custards Last Stand. USA is in the middle and the rest of the Global markets will circle around to collect on debt due. Then we just default and run to the hills!!!
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13th June 2010 at 11:21 pm
Richard Robinson says:
Nice article but still just a footnote to the culture-wars debate. No real analysis of capitalism as an economic system, so not likely to get to the real nub of the matter. Just as your car is ultimately driven by its underlying engineering and your driving style only affects what it is capable of in relatively small ways, so the basic rules of a capitalist system are clear and simple and all this anger about corporate greed and reckless Boomers is secondary. So are complaints about CEOs offshoring America’s jobs: if you don’t get the basic fact that globalisation is the natural expression of capitalism and completely indifferent to American interests then you are just going to be reduced to another branch of the Tea Party any day now.
A capitalist economy pursues the maximum possible ROI – and that is necessarily greater than any sustainable return from the real economy. So this structural requirement for ever-increasing profit will soon cease to be met by any conceivable real economy, especially in peace-time, and the unreal economy, where imaginary values can be made to look real just long enough to cash the cheques, will start to take over. But even the financial sector is only the pure form of capitalism: _all_ sectors of a capitalist economy – including the real economy – will eventually be forced to resort to the same tricks – short-termism, unsustainable debt, insane risks, creative accounting, illusory economics, perpetual motion machines, ridiculous leverage, subsidies to the biggest and richest companies, the constant destruction of (and forced demand for more) goods and services to fight imaginary security threats, and finally just plain dishonesty.
Where else are the profits in a mature, free and open economy going to come from? Well, you could try being less mature, free and open, but I don’t think that’s a policy direction any of the subscribers to this site would like much – being cheap labour and having a security-obsessed state isn’t much of a future.
None of which has anything to do with Boomers or greed or other cultural or psychological explanations. They are the symptoms – along with environmental devastation, the looting of developing countries, the appalling levels of poverty within America itself, the absurd dishonesty of so much of the media and government, and much else. But they are not the disease.
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13th June 2010 at 7:38 am
Novista says:
I’ve always found it strange that Reagan fostered the independent Grace Commission and then ignored all their recommendations.
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13th June 2010 at 8:00 am
Administrator says:
TIM
I think Custard and his men were all slaughtered.
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13th June 2010 at 8:42 am
gg says:
I do not see anything as sinister. Governments are incompetent regardless of who is in charge and they waste a lot of money. We send paper and promises all about the world and in return people we do not know send as petroleum, goods and services. Who will run out first?
America kept the lamp of freedom burning between 1920 and 1990 at a time when Socialism had conquered most of the world (its only remaining thrall’s in American Universities). An ideologue may argue that it could have been better but it coule have been worse. So in a sense now that most of the world has gotten smart, our phony bonds are really a freedom tax, things could be worse.
Reagan was a gas bag and a senile socialist who read nice sounding scripts to the teleprompters. His Presidency was just like his govenorship, massive spending and tax increases. Freedom took a beating with his unnecessary military buildup, his deficits and his regulatory classification of everything but the time of day.
The baby boomers sobered up, took their beads off, bell bottoms, got haircuts, and finally went to work. This was a double surge for the economy more workers, and parents with much more disposable income.
Now the Boomers are saddled with their children, disposable income plummets, recession rears its ugly head but it will eventually end and another double hit will occur causing the economy to surge.
With a little luck we will all be able to sell our ridiculous McMansions to our children and get out with a little cash for retirement.
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13th June 2010 at 8:47 am
Administrator says:
gg
I don’t think you’ve got your facts straight. Too many McMansions to sell to too few kids. Too little oil to sustain the “American” way of life. And too much debt to ever be repaid.
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13th June 2010 at 9:00 am
Anonymous says:
It is not greed in the last two decades that is the cause of the unraveling. The unraveling is occurring due to two decades of envy fueled by political rhetoric that the uneducated, indoctrinated masses blindly follow. In a free society, economics is not a zero sum game. Just because a CEO makes $10 million and I only make $1 doesn’t mean that there was only $10,000,001 available to be made, unless, of course, one believes the talking head intellectual posers so prevalent today.
We are taught that CEO’s are bad and that government is good. We are taught that CEO’s rob us blind and the government is there to provide for us. We are taught that we must believe in a god of some sort. Governments and religious zealots, not CEO’s, have carried out the atrocities of death and suffering throughout history.
This age of envy we live in and the belief that economics is a zero sum game and the belief that government is the only solution and the belief that mysticism is good has brought our country into an age of tribal warfare with each tribe fighting for their piece of the pie of wealth. With capitalism, the problem is that the pie has no size . There is no limit to the wealth that can be created.
Greed is defined as : a selfish and excessive desire for more of something (as money) than is needed. Who is to determine how much one needs? Is it the government or should it be a religious leader or maybe the neighbor in the house down the street. I think I would rather decide for me what I need and want
Envy is defined as : painful or resentful awareness of an advantage enjoyed by another joined with a desire to possess the same advantage. This is what we see all around us today.
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13th June 2010 at 9:05 am
robertsgt40 says:
Events in history happen either by accident or by design. The demise of this once great nation was no accident. We are in the final stages of history that have been on a course for destruction since before Christ. The world is in a spritual war that is coming to a head soon. BTW, 911 was an inside job. A nation cannot survive treason at the highest levels.
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13th June 2010 at 11:15 am
Pirate Jo says:
Eh, there are some gems of truth to this article, but it’s hard to sift them out through all the overwrought, emotional rhetoric. Clearly someone is desperate to demonize the Boomer generation. I don’t buy it. Our problems go back to that much-praised “Greatest Generation.” And frankly, those old bluehairs really made things nice for themselves. They make me sick.
The old people have given us a government whose primary focus is to hand the money earned by relatively poor, young, working people over to relatively wealthy, old, non-working people. This pyramid scheme was started long before the Boomers – in fact, the Boomers are going to be hurt by it, too. Between Social Security – where your grandchildren get robbed blind so that you can spend the last 25 years of your life uselessly loafing, and Medicare – where your grandchildren get robbed blind so you can get a $2 million heart transplant at the age of 75 and eke out a few more useless years, to the looming pension deficits and the bailouts they will cause – where your grandchildren get robbed blind because you bought into foolish, false promises (and see above about loafing the rest of your life) – everyone is getting soaked just so we can throw a bunch of money at useless old people who never produce anything or contribute anything. Hey, keep driving around burning gas in your motor home and bringing home more in Social Security than I even make in a month. No sweat.
Everyone thinks they are entitled to a second childhood that lasts 25 years and begins at the age of 62. Where they don’t have to get up and go to work every day and they can just float around in their nice big houses and do what they like. Everyone thinks that if the medical technology exists to keep them alive for three more months, they are entitled to it, even if it costs more than they have ever made in their lifetimes.
You can’t just pin this on the Boomers, though. And I say this as a Generation X’er who can’t stand those smug, bureaucratic, corporate McMansion buyers either.
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13th June 2010 at 12:38 pm
Ken Lonewolf says:
Sadly, we in the middle class, the foundation of any free society, were duped into believing that NAFTA and CAFTA would benefit all Americans, when in reality, it has only benefit the one percent on the top of the heap in America. As more and more Americans lose their jobs to NAFTA and CAFTA, we all are moving toward the next bloody American Revolution. We are now treading the same path that led to the unholy French Revolution that lasted for ten very bloody years. The French “government” was whatever mob was in charge for the day. The streets literally ran red with blood!
This revolution was caused by the one percent at the top of the French heap, whose lavish spending ran the tresury of France compleltely dry! Then they taxed the middle class out of existence in an attempt to build the treasury back up. Things then “hit the fan” when there was no more middle class in France, and ninety-nine percent were poor, and one percent were very wealthy!
It can happen here in America!
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13th June 2010 at 1:24 pm
Pirate Jo says:
Sorry, Ken, but I think that “1%” is really all of us.
We all think we are entitled to
* two or three decades of retirement
* unlimited medical care
* having all the kids we want, and that those kids are entitled to a first-class education
* a house
And so on, and so on …
The problem is that we think we are entitled to these things without any regard for our own ability to pay for them. Well sure, *I* may not be able to save up enough money to spend the last 25 years of my life doing nothing but take cruises, but there will be someone else who can spare the extra dough. Problem is, my neighbors don’t make any more money than I do. Who that “someone else” is, is never quite clear. We imagine someone living in a mansion who owns a yacht, and yes there is a tiny number of such people in the world. Some of them earned their wealth in honorable ways and others did not – the point is, there aren’t enough of them to provide all of us with gold-plated lives.
Nobody has done anything to fix these schemes, mostly because they haven’t been paying attention to what is going on, and nothing WILL be done until the schemes crash into a wall. It’s going to be very hard for some people when they realize they have been paying into these programs their entire lives, will still have to work until they drop dead, and will have no choice but to die because they cannot afford to take daily pills that cost $750 apiece and the government can no longer help them. We will see, without the artificial bubble of government spending to prop them up, lower life expectancies.
We are really victims of our own self-delusions, and yes the government and some Wall Street crooks took full advantage of our gullibility and stupidity, but we didn’t have to buy their snake oil.
Raise your hand if you always thought your 401K was a magic box that would automatically grow if you just handed 10% of your earnings over to the person selling the 401K plan. My hand is raised. I admit it – I was stupid. People who accepted pension plans were also stupid. All of us were.
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13th June 2010 at 1:40 pm
frances snoot says:
Hollywood images are just that: marketing tools brought to bear upon a public that resemble the desire-laden agenda of those behind the funding. The essay draws upon distinctions created by cinematic agency. The distinctions never had any corresponding reality outside the imagination of the men who manipulated them. The press/cinema calls reality but cannot produce it. It is a siren call. And now change? New funding, new images, same corruption–how many believe that a multilateral exchange system run by the UN will bypass greed and mandate truth?
Raise your hands.
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13th June 2010 at 2:52 pm
LLPOH says:
Ken Lonewolf – unfortunately the middle class is not the current foundation but is rather much of the problem. The middle class is simply living beyond its means, and is too stupid to realize it. It is addicted to free shit, and has developed the mentality that there is a right to be affluent, and does not understand that affluence must be earned.
Yes, there are those that are taking advantage, and that are reaping huge and undeserved financial reward, and many more that are taking advantage by doing absolutely nothing but living off of the welfare state. The world doesn’t owe us a damn thing, and the idea that it does is a new phenomenon. Even the idea of retirement is a new idea, and didn’t really exist even fifty or sixty years ago. Now it has become an absolute “right”.
Until the middle class recognizes it is at the heart of the problem ,and takes responsibility for itself, and demands that all segments of society do the same, the rapid slide toward destruction will continue.
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13th June 2010 at 10:52 pm
Bruce C. says:
I’ve come to the conclusion that the number one flaw in this experiment in human ego-consciousness is that events take too long to develop and play out. People aren’t able to make the connections and learn from their experiences.
Humans create their realities but the time delay between deciding upon a set of belief experiences and their manifgestation takes so long that people forget what they were thinking and thus fail to make the connections. In other words, most people don’t learn from their experiences because they don’t “see” that their own beliefs, intents, desires, etc. are what formed them. Consequently, we’re all still bobbing about in a sea of confusion.
People ask, “How could this (financial crisis) happen?” Never mind all of this history, look no further “back” than the bailout proposals (TARP, etc.), Obama’s election, and the ramrodding of the Health Care Reform boondoggle. That’s how it happened. The same beliefs (including pragmatism) that were behind all of the other crap from earlier decades laid another egg for us. When I saw how many people were blind to the consequences of these recent policies, I knew it was over.
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13th June 2010 at 10:35 am
Pirate Jo says:
“The middle class is simply living beyond its means, and is too stupid to realize it.”
In 1994, a co-worker was complaining about having a car payment. But, she said, with her “lousy pay,” she couldn’t afford a $24,000 car. I said, “So don’t buy a $24,000 car. Buy a $4,000 car.” She replied, “But that’s not the American way!”
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13th June 2010 at 11:16 am
Anonymous says:
There is no middle class or any class. There are no generations. These terms are used by politicians to confuse the masses and create tribal conflict. Wake up people before it’s too late.
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13th June 2010 at 12:24 pm
Gaffer says:
Another delightful read. I love all the pop culture examination and comparisons. Pop culture tells us more about ourselves than any survey or MSM article ever will. Movies, TV shows and music would not become popular in the first place if they did not reflect “us”. Plus, there’s this weird dynamic where the people ultimately control the direction of pop culture (by voting with their dollars) but are in turn controlled and directed by the messages, themes and images the cultural elites feed to us on music and movies.
The reference to “Life Styles of the Rich and Famous” was absolutely DEAD ON – it’s references like this that keep me coming to this site. I was repulsed by both the show AND the people who watched it religiously. “Wheel of Fortune” was a huge craze at the same time as “Rich and Famous”, and part of the show’s schtick was having all kinds of Rodeo Drive luxury goods for the average-joe players to buy with their winnings (nobody went home with plain-old cash – also, compare to the much older “Price is Right” where people were winning weed wackers and mattress sets). These shows contributed mightily to our cultural rot. They were forerunners to many similarly themed shows and to today’s filth like “The Hills”, “The Housewives of [insert name]” and “Sex and the City.” Nobody should underestimate how much influence show like these have on impressionable people. (Just because you’re smart doesn’t mean you’re not impressionable.)
Also, I can’t figure out if Oliver Stone is a genius or an idiot. Did he really think some schlep sitting in a cheap apartment and watching “Wall Street” on a 13 inch TV would think “Gee, the chance of debauchery in a luxury Manhattan high-rise with Darryl Hannah just doesn’t justify the risk of running afoul of the SEC, I think I’ll stay put right here in good old Peoria …” Hell, even with 20-20 hindsight I still might have taken a shot at it.
I am, apparently, much smarter than Michael Lewis in that I concluded that the Liar’s Poker economy was all a big scam and steered well clear of it from the beginning. This spared me the hassle of accumulating big piles of easy money and the trouble having access to scads of gorgeous female sex partners. Thank God for that. The fact that my incompetent college buddy who’s worked for about every corrupt company on the planet (except for BP – which he’s going to be pissed about slipping by him) routinely gets severance packages that are larger than my entire life’s earnings comforts me as I hand-wash my ziplok baggies for re-use.
Well-loved. Like or Dislike:
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13th June 2010 at 12:38 pm
Kevin R. Kosar says:
A question about your piece:
How can “real hourly earnings” over time be down but “average real after tax income” be up for all levels of wage earners?
Seems contradictory to me.
Cheers,
KRK
http://www.kevinrkosar.com
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13th June 2010 at 9:06 pm
Administrator says:
Kevin
Tax rates have gone down. One measure is before taxes and the other is after taxes.
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13th June 2010 at 10:37 am
Charles says:
Capitalism fails as a system since the rigged game benefits a smaller and smaller number of players by destroying collective wealth and with the acid of greed eroding the bonds of trust that bind men and nations together I submit that the psychopathology of this system works itself out consequentially one generation at a time. Justice occurs, and it is impartial and blind and harsh.
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13th June 2010 at 2:29 pm
jackson says:
I’m slowly giving up on Raging Debate while reading The Burning Platform regularly.
Jim Quinn, your main articles are too long by a factor of two or three. They’re so long I haven’t had the time or inclination to read through the last several ones. Can’t you make your points more succinctly? Your daily comments are short, the right length, and delightfully pungent. The comment attachments are generally too long. Add excerpts, not the whole article.
I know, you’ll do what you want and f— me. Well, f—you too and that’s my opinion. However I do enjoy your comments and selections as most of them are right on.
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13th June 2010 at 12:54 am
Rocketman says:
Well, we learn from history that we don’t. And we learn why. Nothing will change without a change in human nature. If only we valued education (esp. K-12) and could convince our politicians to truly value it, perhaps then we could begin to climb out of the maw of mediocrity and anarchy which is sure to come.
Oh boy, let’s vote for the “golden tongue”. We are fools though, aren’t we?
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13th June 2010 at 7:35 pm
Administrator says:
Politicians don’t want an educated public. They want zombies who can’t think.
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13th June 2010 at 8:11 pm
Walter Antoniotti says:
As a preface, I would have like a quote from either of Neil’s books that best describe
1) What has happened
2) What will happem
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13th June 2010 at 2:45 pm