Running Into A Brick Wall, Audaciously (Revised)

Many have predicted that Obama’s fiscal recklessness squandered finite, borrowed time and money. Sprinkled across hollow facades. Under this appraisal, Obama deficits, woefully inadequate stimulus, etc. -collectively they shot one of — if not the last — chits of the U.S. financial ‘supremacy’ meme living off inertia. Regardless, the financial world is all too clear about American pointless profligacy. Exploding debt service is a looming fact. *And* finally China, Japan, Germany and the rest of our creditors are saying no more. You (Obama/U.S.) are cut off. The Chinese have been surprisingly blunt lately. Their traditional indirect warnings disappeared in a cloud of Rahm’s vulgarities and the Summers et al. black hole of multi decade incompetence. All that accumulated debt and almost no actual investment in generating wealth creating, hard currency exports.

Doomsayers hit an agitated creative peak last Fall. We still have pollyannas. Green jobs will save entire states like Michgan. We are told that we will see new job growth. In the real world, green tech is already beyond our grasp. Americans at best will assemble products designed and created overseas. That pay might be a dollar or so above minimum wage. Politically it will be marketed as a triumph of American ingenuity. How small the American dream has become. We’ve yet to see a serious non-ideological depiction – from anywhere- of a sustainable U.S. economic policy beyond short term, tactical ‘fixes’.

The ‘Things aren’t so bad’ crowd have one systemic reality in their favor. Financial decision-makers in Frankfurt, Riyadh, Beijing, Tokyo, etc. are conservative and loathe to rock the boat. Even now. Better many think to discipline an irresponsible and clueless U.S. one knows than for Beijing and Tokyo etc. have the onus for building a new architecture while not shooting their own dollar holdings in the process. The problem, however, is that the U.S. economy is moribund, the dollar finished as a reserve currency. (We just don’t see it, yet). So the ‘pretend we can cajole’ game has a lingering but ultimately short life span.

In private councils the question before the world’s central bankers is “How to let the U.S. sink without blowing our own dollar holdings?” One can appreciate the predicament. It’s like the Chinese finger traps with two fingers. They tighten more if one seeks extrication.

The Transition Will Be Shorter Than Expected

Our creditors debate how but their public stance is unmistakeable. Any silver linings in American domestic politics? Fiscal realities a death knell for Neocon enthusiasms re Iran? Perhaps, but some creditors might leverage American debt addiction. Riyadh, for example, worried about the Persians (and keeping Mayo going and American call girls at the ready). In any event, America is no longer steering her own destiny.

This transition period we argue will be shorter than many hope for. We haven’t seen a convincing case for an integrated economic strategy. Pessimists/realists/Pollyannas — for all their self-adorned iconoclasm — largely envision tomorrow as today, only more so around the edges. (If you’ve seen a rigorous plan, please pass along). For example, imagine the IMF dictating austerity measures to the U.S. like it did as our agent of indirect imperial rule in so many cases. Fantastical? What about the obverse? The U.S. uses this transition period to fashion a coordinated economic plan that integrates trade, fiscal, financial, labor polices to promote American domestic development. Which is more far fetched?

Here’s another thought experiment. The Stiftung Library has mint original manufactured currency imposed on Japan by SCAP (Supreme Command Allied Powers (our Shogun, Douglas MacArthur)). The cases are not closely analogous. Military obliteration, Robert Strange McNamara and Curtis LeMay planning the mass murder for wooden Tokyo in low level incendiary bombing raids. The devastation – like Bomber Harris’ war crime against Dresden – was orders of magnitude beyond the 2 atomic weapons. Still, while SCAP’s tenure evolved in a complicated dynamic of Japanese realities, SCAP’s initial ignorance and American domestic politics, we did get the Japanese to print that money.

The Japanese proved cannier in the end. They all but outfoxed and co-opted the initially serenely unaware Americans. Korea in 1950 changed everything anyway. We offer this not as analogy but to shake people out of tomorrow being like today but a little more so rut. From this prostration the Japanese invented the merchantilist model of economic development copied around the world. What will it take for Americans to stop shooting ‘Free Trade’ smack into their veins? We continue to defeat ourselves pissing away trillions on Bedazzlers, Snuggies and McMansions, chasing empty, transitory consumption. The real beneficiaries are the financial engineering Class and the merchantilists.

What would a comprehensive American economic re-development plan look like? That examines the American economy holistically, from an input-output matrix point of view. That can learn the best parts of the Asian spectacular success and create something for our circumstances. Can our political system even debate it? Implement it? The draconian possibilities above may never come to pass. Why not try and think now during this transition period to minimize future surprise? The unexpected shapes history, of course, every day.

It is so fantastical to ask ‘What if?’ At a minimum, surely we can begin designing logos and suitable color graphics for our signature before the solvent at transition’s end. Perhaps in Palin’s peppy motif?

Comments

  1. Dr Leo Strauss says

    @gail
    Agree with you reading it in retrospect again. Self-indulgent incoherence. One in a long, time honored tradition here. Will try to do better.

  2. Dr Leo Strauss says

    @tile
    Revised the text slightly upon re-read on 12.02.10. The text you quoted was pared down. We rarely tinker with items outside the initial 24 post window but this particular post was especially sloppy intellectually and even with spell checking.

    You may be right about the American people making strides since 2001. One hopes so. Events of 2009 suggest a backslide if true. Perhaps God still loves drunks, fools and the U.S. We certainly have pushed our luck, haven’t we?

  3. Dr Leo Strauss says

    Yeah, read the VB piece lifetimes ago at the request of one of his intellectual heirs (and certified genius in his own right) regarding science and policy at that level. We considered at one point collaborating on a book updating VB for the digital age but the project collapsed for a variety of reasons. You’re right that it’s a text out of time. In so many ways. How to say it in 140 characters with LOLZ mixed in?

  4. Comment says

    Liberals are too easily pleased — all over the lib blogs we see links to some sort of George Will V Liiz Cheney smackdown. Yawn. We won’t watch – we are sort of puzzled why Liz get on air at all since she is not an attractive personality and has no real POV other than whatever s*** her Dad is shoveling.

  5. tile says

    The Margolis column is excellent. I’d never heard of him. Such candor from an apparently mainstream presence is surprising. Paul Kennedy had an op-ed in Financial Times a few weeks ago saying much the same thing about the Obama/Afghan outlook.

  6. tile says

    “None that we have seen (if you, please pass along) imagine what it would look and feel say for the IMF to take control of the U.S. political economy[…]”
    James Howard Kunstler’s blog: While I have problems with elements of his thesis(es) and his expression, (which not confident at the moment could do justice to with necessary qualifiers), I do read him. He has the factual walk-through element covered certainly. Quite some bit of droll splatter too, orders of magnitude funnier and more intelligent than G.Beck. Orlov’s had some good stuff too.
    A consistent theme on his(JHK) blog is infrastructure of mundane economic existence, with focus on post-collapse or post-peak-oil. A proponent of prioritizing the rebuilding of the rail infrastructure, both for freight and passengers. I would add to that a project to develop a parallel road network for only non-motorized vehicles (bicycles). Major and intelligent infrastructure investments. There are many possibilities. Industrial and agricultural project proposals, re-structuring and re-engineering diverse components of the society’s mechanisms at all levels… All of which is to point out that the trouble of course isn’t lack of options, the trouble is the absolute dominance of stupidity and stupid people over the collective cognition and decision-making processes. Also subject to improvements. I really think the ‘American people’ have made great strides in maturity and all-around perspicacity since 2001. Much if not all of this has to do with the influence of the internets. Likely not enough to avert catastrophe, but maybe.

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