The Global Pawn-Shop Economy
by Rick Ackerman
Posted originally Feb 4, 2010
FOR READERS WHO HAVE TIRED of Rick’s Picks’ (http://www.rickackerman.com) sugar-coated predictions for the economy, here’s a despairing jeremiad from that irrepressible bear’s bear, Erich Simon. Is there any escaping the grim future that he foresees? Only on the planet Mars, perhaps (but even there, the dust can kill you). Here’s Erich, with a take on the endgame that some readers may find all too plausible:
When you look at the political leadership in the U.S., it is in complete disharmony. In-fighting, finger pointing, fragmentation, bickering, squabbling, separation, individualism, heterogeneity, split, divided, dog-eat-dog, every-man-for-himself — all the hallmarks of a people in breakdown caught inside the walls of a collapsing and imploding economic environment, fueled by resource depletion and gross mismanagement. That’s mismanagement to the point of indictment: of the nature of Man, and of the determinism of Nature.
We are witness to demographic saturation, without unification or leadership, on a global scale. The world economy is adjusting (or not) to a blow-off top marked by an age of corruption and squandering. It is the final hurrah, catalyzed by Western capitalist blow-off finance, spearheaded by the U.S. Fed, on an epic and terminal scale. Society itself is disintegrating as the pool of participants that make up the active, economically productive base continues to shrink below sustainable levels until the time of breakdown. Unable to absorb any more conflict, negative-impact events of all kinds are only hastening the demise.
“Too Poor to Live”
“Squandering” here means misallocating and misappropriating money into the pockets of the few and away from meaningful investment in the common good. For example, there is the building of McMansions in place of more modest shelter when basic necessities such as health care go unaddressed. The state of health care in the United States, the supposed richest nation, describes a country literally too poor to live.
In leading-edge states like California — irretrievably bankrupt — we spend far more on prisons than on schools, more on locking people up than on teaching them. This statistic is daunting, if not to say incredible, and points in only one direction: not toward unity, but toward disintegration. The path to national (and globally intertwined) ruin is now undeniable. The present administration — the Wall Street/Obama amalgam — with its two-faced attempt at sugar-coating a yellow-brick overlay, is an affront to our remaining vestige of national pride and decency.
The Great Pawn
We are living in the endgame, the time of The Great Pawn. The Fed bankers understand this only too well. They know that it is not a matter of ‘if’ but of ‘when’ before chaos breaks apart whatever fleeting social cohesion is yet endures. The banking authority continues to stall and stop-gap until the day when there is simply nothing left to sell, nothing left to pawn. Competition for ‘money’ will destroy all things money — equities, bonds, gold. The global throngs will sell whatever they own to whomever they can to be able to achieve what was yesterday’s ambition and tomorrow’s subsistence.
This is the story of Planet Chindia. This is no Cinderella story, welcoming the Third World into the ranks of materialism and luxury that demands no toil. The auto market collapse over the last decade brought not just the implosion of an industry, but the curtailment of travel itself. Mobility, a fundamental inalienable right, has been removed for the larger contingent, curtailed for most everybody else — a new dawn where horizons shrink, borders are carved, and citizens boxed.
As prices for things that enhance the global lifestyle continue to rise, investors will at first feel the need to chase ever-higher returns. Eventually, however, the day will come when liquidity will give way to liquidation. That is where we are today: caught in a chaotic flux of asset rotations that has rendered the concept of ‘buy and hold’ a quaint relic of the past. The severe drawdown of household nest eggs, tied to the ongoing collapse of real estate, is a harbinger of the coming sale of everything both tangible and, especially, intangible.
Greenspan blew out the money supply, triggering a global Pac-Man game by mergers-and-acquisitions wizards. When the bottom dropped out, crushing the so-called Greenspan put, equities collapsed in 2008-09. Helicopter Ben to the rescue? Not hardly. His attempt at a bank bailout has filled the banks with reserves that no one wishes to borrow. And the more he enriches the connected few, the faster he bankrupts the greater good. Hanging onto the reins of a stagecoach bound for a cliff, Bernanke is looking for his moment to jump.