The U.S. Economy Near Meltdown: It's Coming Sooner Than You Think

CounterPunch
April 8, 2005

Coming Sooner Than You Think
The Economic Tsunami
By MIKE WHITNEY


It seems that there are a growing number of people who believe as I do, that the economic tsunami planned by the Bush administration is probably only months away. In just 5 short years the national debt has increased by nearly 3 trillion dollars while the dollar has continued its predictable decline. The dollar has fallen a whopping 38% since Bush took office, due largely to the massive $450 billion per year tax cuts. At the same time, numerous laws have been passed (Patriot Act, Intelligence Reform Bill, Homeland Security Bill, National ID, Passport requirements etc) anticipating the need for greater repression when the economy takes its inevitable nosedive. Regrettably, that nosedive looks to be coming sooner rather than later.

The Bush administration is mainly comprised of internationalists. That doesn't mean that they "hate America"; simply that they are committed to bringing America into line with the "new world order" and an economic regime that has been approved by corporate and financial elites alike. Their patriotism extends no further than the garish tri-colored flag on their lapel. The catastrophe that middle class Americans face is what these elites breezily refer to as "shock therapy"; a sudden jolt, followed by fundamental changes to the system. In the near future we can expect tax reform, fiscal discipline, deregulation, free capital flows, lowered tariffs, reduced public services, and privatization. In other words, a society entirely designed to service the needs of corporations.

There are a number of signs that the economy is close to meltdown-stage. Even with cheap energy, low interest rates and $450 billion in borrowed revenue pumped into the system each year, the economy is still barely treading water. This has a lot to due with the colossal shifting of wealth brought on by the tax cuts. Supply-side, trickle-down theories have been widely discredited and Bush's tax cuts have done nothing to stimulate the economy as promised. Now, with oil tilting towards $60 per barrel, the economic landscape is changing quickly, and shock-waves are already being felt throughout the country.

The neoliberal chickens have come home to roost. America has become the latest staging ground for the eccentric economic policies of the Washington Consensus. The towering national debt coupled with the staggering trade deficits have put the nation on a precipice and a seismic shift in the fortunes of middle-class Americans is looking more likely all the time.

http://www.counterpunch.org/whitney04082005.html

but think that (collectively speaking) we're going to do anything about it until it happens?

I wouldn't bet on it. :nuke:

Tax breaks for the rich, exuberant borrowing, huge "defense" budget, a war to pay for, foisting off costs to the states, privatization, fuel prices at record levels, and a compliant congress giving a green light to it all.

Not to mention our "patriotic" corporations outsourcing away jobs for cheap labor.

The vultures are coming home to roost for the middle class, up to their asses in debt and still spending their dough on SUV's and every bit of shiney new gizmos and designer labeled trash available.

"Nobody ever went broke overestimating the stupidity of the American people." - H.L. Mencken

"Go ahead and sell those dollars. See if I care. It will hurt you more than it will hurt us. When America sneezes, the rest of the world catches cold."

If you play chicken long enough, however, you're going to crash.

or if it's just doomsday or conspiracy theory talk. What exactly happened when Argentinas economy collapsed? Are we talking about massive amounts of homeless people or ?????

This isn't the usual doomsday predictions. Many leading economists and capitalists are very worried if not outright alarmed by economic developments. This is real and it's very serious.

what else should people do? I'm at a loss as to how to reallocate my 401K because there is so much conflicting information out there, especially on the bond market. My nest egg is pretty small, but it's all I've got and I'd like to hang on to as much of it as possible when the caca hits the fan. What are other DUers doing to prepare for the crash?

Fixed interest, if that's available. Cash. Even if you only get 1-2%, that's better than taking a loss. Plus, we're just coming into the period of the year (May-Oct) when markets historically decline anyway.

Me, I just hope I can stay employed for another two years to get vested for medical benefits on retirement.

That's what I've been trying to figure out for myself. Should I invest in U.S. treasury securities, international bonds or something else. I don't care about the rate of return, just the safety of my investments. Would something else be safer?

I believe that during the 30's crash the government payed all monies due on treasury notes. It was the safest investment one could make and I wonder if that will still be true in the event of another meltdown.

This is a horribly gloomy view.

Wonder how the events in Mexico fit in with this?

The latest on Obrador's loss of immunity:

http://news.ft.com/cms/s/56e2c7d0-a850-11d9-87a9-00000e2511c8.html