Between Heaven and Hell

Between Heaven and Hell
By David Glenn Cox



Last week economist Paul Krugman made a damn fine analogy, he described our economy as neither in heaven or in hell but in purgatory. I say that it was a fine analogy because Krugman is an economist; he sees the economy much in the same way an astronomer sees the stars or the way a dogcatcher sees dogs. He likes them but his job is to watch for them and to catch them, not to get personal with them.

I’m not trying to be critical of Krugman but only to make a point about perspective. A number cruncher crunches numbers and gives his estimates about profit and loss. A number cruncher watches the movie "Titanic" and thinks, “Boy, the insurance company sure took a beating on that one!” So when Krugman describes our economy as being in purgatory, he is trying to say that it is somewhere in between heaven and hell, expansion or recession.

Yet purgatory is no free ride, it is a land of lost souls seeking to be redeemed only through prayer. This is where Mr. Krugman hit the nail on the head. We are indeed a land of lost souls. A land that judges its economy on the basis of corporate profits rather than the well-being of its citizens. A land that uses mollified, modified, mutated and mutilated statistics to judge the well-being of its people. Hence we are unworthy of heaven and not really unemployed after X number of weeks.

It is we the people who are in a purgatory of discouraged-worker status. The judgment of the economic gods says that we, as workers, have failed to find a job. But government statistics show an average of 400,000 job losses per month and only 8,000 new jobs per month being created. How is it then that we have failed as individuals while our economy has been judged to be turning a corner?

Many of these government statistics totally disregard the government assistance granted to them. Last month retail sales were down .1 % and this was considered better news than had been expected. The government pumped a billion dollars into the economy in its cash for clunkers program. That’s a green shoot? Try to imagine what the retail sales numbers would have been without the cash for clunkers billion and try to forget that even with parents buying for back to school the sales numbers were still down.

Citi Bank announced that they had hired over one thousand new workers to help process the President’s mortgage loan modification program. Citi’s new employees bring their numbers up to those just before the recession began and they can now process 14% of their customers who need a loan modification. I realize that that figure sounds awfully low, but compared to Bank of America at 4% it is stellar. Overall the industry average is just above 10%, so if you are in trouble with your mortgage you have a one in ten chance that your bank will help you. The President's plan gives the banks $1,000 for every loan that they modify.

Now consider that the banks can borrow from the Federal Reserve at a .25% interest rate. So if they borrow one million dollars their cost is $2,500 and the average cost to the bank on a foreclosure is $50,000. All bank losses are deducted from taxable profits but it also gets those bad loans off the books. It is a clear and simple case of number crunching, but in doing so the banks forgo their chance to pick up Obama’s cool one thousand dollars! Banks are in the business of making money and not of making friends, and are also aware that more than half of all loan modifications still go into foreclosure. So it is not that they don’t want to help you, it is that there is just no money in it.

The economic statisticians crow that home prices stabilized and the number of foreclosures was down from the previous month. Those are meaningless statistics meant to drive the good news machine; the water pouring into the Titanic also stabilized at one point. The number of home foreclosures is not an endless supply; there are only a net number of possible foreclosures. It is a saturation point, not a tipping point, and yet this government counts only the brick and mortar and not the blood and tears.

Foreclosures in 2006, 1.5 million; 2007, 2.2 million; 2008, 3 million; 2009, an estimated 3.1 million homes foreclosed. In total since 2006, 9.8 million homes have been taken from their purchasers, and if we estimate that there were four members to a household, the number is 39 million Americans half of whom are children. Purgatory? That is purgatory? For a child I would say that it is hell. For the parents I know it is hell; for the banks it is no big deal. They have new money to lend and guess who underwrites 90% of all those mortgage loans? Why you do, Sunshine!

Mr. Krugman says that the economy probably emerged from recession this summer but that job growth will be anemic. Now just how does that work? Retail sales are 70% of the economy and unemployment is over 10%, and with underemployment, shorter hours and wage cuts, just how the hell does that work? If unemployment is still rising then how can retail sales recover? With record numbers of businesses closing, how can it be getting better?

Ann Taylor closed 117 stores nationwide, Eddie Bauer 27 with two more in the offing. Cache 23 stores, Lane Bryant, Fashion Bug, and Catherine’s will close 150 stores. Talbot’s 22 stores, the Gap 85 stores, Footlocker 140 stores, KB toys closed 356 stores. Macy’s 9 stores, J.C. Penny, Office Depot, Lowe’s and even Home Depot shuttering stores, and behind the façade in the malls are the people that you never see, warehouses that supply them and the truckers that deliver the goods. The list alone would fill pages and where are their replacements?

These jobs didn’t lose themselves; people lost these jobs just as people lost those homes. People have no work to go to and no means of earning a living. Is there a government statistic for the loss of self-esteem? Or a statistic for failed marriages due to economic turmoil or suffering children? No, I didn’t think so. Such things don’t matter much to number crunchers; only percentages and pluses and minuses tell the tale.

But purgatory is for people and people alone, and it is far out of the field of economics. The last thing a nation of lost souls needs is a calculator. It was a calculator that took their jobs and their homes and their futures. What is needed is a government that cares for its people more than its banks, a society rooted in its own well-being rather than a well-balanced account. For through purgatory only a few will ever find salvation, and the best that the rest of us can hope for is more of the same as our options are this or hell.

“But while they prate of economic laws, men and women are starving. We must lay hold of the fact that economic laws are not made by nature. They are made by human beings.” (Franklin Delano Roosevelt)

“The test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little.” (Franklin Delano Roosevelt)

...I do appreciate your conjuring of FDR in these times. Capitalists try to depict him as some sort of communist, but in actuality they should be on their knees before his image, bowing in gratitude for saving their flawed system.

I recently had a facebook discussion with my oldest grandson, who is entering his senior year in high school. We have been estranged until recently due to the ugly divorce process of his parents. His right-wing mother has corrupted his thinking, and the poor lad worships Glenn Beck. I brought up Father Coughlin, who of course was unknown to him. While Beck's erratic ideas are not equivalent to Coughlin's, I said that their bombastic styles and their popularity do beg comparison. Alas, Beck's True Believers can't see anything that isn't filtered through Beck's bizarre world-view. My best hope is that I have made a fissure in the stony wall of his young ideology.

I worry that times will get tougher, and demagogues louder, and the ignorant more desperate. But I thank you once again for another fine piece of writing.

I saw a program on the Travel Channel about Route 66 and this one hour program never mentioned Woody Guthrie and mentioned Will Rogers only in passing. Route 66 was a fun place! One of Americas first national highways! No mention of the great depression or the tens of thousands of "Okies" who trekked the mother road to California. Just fun in the sun and good times!

I appreciated very much your story about your grandson. Don't give up on him. Could you give him some reading material? Please report back to us on any progress with him.

So true. Why doesn't Obama understand that we need jobs, we don't need people to buy more new cars and going deeper in debt. Obama should put people to work maintaining dams, bridges, roads, and the electric grid. Or we could wake up some day in the middle of a huge flood, the dam failed washing out bridges, roads and electric power.