I know I haven’t been posting much about The Correction, but not because I haven’t been thinking about it. One of the reasons I took some time off (apart from the fact that I felt I had to) was that I knew the money I’ve earned or been handed due to no effort on my part is going to be worthless at some point. I am currently guessing 6 to 18 months.
Some American politicians are trying to work on the problem. Without a complete withdrawal from foreign wars, I fail to see how reducing the American debt to the point it can be paid back is possible.
This article, which comes from an American think thank which is focused on the effects of economic policy on working families, but which is centrist by Canadian standards, gives the skinny. By Murrican standards they are scandalously left wing, but Canadians have kind of a different take on that. Let’s just say they ain’t the Fraser Institute. The skinny is that without an immediate deflation of the dollar of 20 to 30%, there cannot possibly be a controlled or ‘soft’ landing of the economy in response to a global shift away from the dollar, and a crisis in which the major nation lenders extend the digitus impudicus to the continuation of American government borrowing.
The US is our biggest trading partner. For 35 out of the 50 states, we’re the biggest single customer. Over 50% of what we produce, manufactured or services or food or energy, goes south. When that market dries up, and believe me, it will, Canadians will be very glad that our infrastructure is in better shape and we can actually feed ourselves, heat and electrify our homes (at hellish cost), and have the banking structure in place to weather the disaster, although the economy will be disabled and crushed by horrific interest rates for a long while. We may actually have a ‘replacement’ currency for foreign money to flee to… if there’s no place for the Euro-seeking investors and speculators to go.
I really feel for my kids; but we have survived pogroms, forced immigration, religious repression, the Russian Revolution, global depression and war, historically, as a family, and we will do it again. It’s not an option to whine. It is what it is, as my old employer used to say.
Right now, it seems like the market collapse is happening someplace else. It isn’t. It’s happening right here, right now. We’re moving goods on credit across the ice of Lake Ladoga, and when the thaw comes, we’ll be pooched. I predicted that the collapse was imminent back in 2004. The US bailout prevented bad things from happening, but the evil day is still coming.
The future is here… it’s just unevenly distributed. (William Gibson).
I notice that the suggestions for solving the problem involve cuts to medicare etc. that will hurt ordinary people, but no suggestion that there should be massive cuts to their military spending and to bailouts to corporations so that they can continue to pay obscene salaries to the drones at the top. Hopefully when their economy tanks it won’t hurt us too much as china is already lining up to purchase a lot of what the americans are currently getting from us at bargain prices. Also they may for a time at least stop invading other countries.