"good point, johnson
hey, i found this excellent article on the 5 circles of hell that new Sec Treas paulson will encounter. not about oil, but relevant to makin good progress under King George
....The Fourth Circle of Economic Hell
“I said: “My master, who has set this anguished gust in motion? And he to me: “You shall soon be where your own eye will answer that.”
~ Dante, Divine Comedy: Inferno, Canto XXXIII
It is in the Fourth Circle of Economic Hell that Paulson’s Saga becomes the Ordeal that it truly is. This is the Circle of the Real Economy on which the Third Circle of Fiscal Effects must inevitably rest. With all the glamour lavished on financial manipulation, we sometimes forget that, eventually, real things have to be made. Before money can be sold, subordinated, factored, futured, arbitraged, discounted, traded, and so on, real people have to produce and consume real products. It is here that Paulson and Bush cower in such hopeless despair.
More than 100% of the growth in Gross Domestic Product over the past five years is attributable to the expansion of debt. GDP is up $2.8 trillion since 2001. But government debt alone is up over $3 trillion for the same period. Add in the explosion of home mortgage debt at over $5 trillion, and a cumulative $3.5 trillion in trade deficit, and you get a Real Economy that is literally going backwards. The illusion of affluence is only sustained by selling off the family china. Working Americans know this all too well and the reason is not hard to see: the American consumer simply doesn’t have enough money to pay his bills.
i have thought that our famous growing GDP must be a scam - it's just debt!
Real average hourly earnings are 14% below their 1973 post-War high. Real median household incomes are still 4% below where they were in 1999. The economy has lost almost 3 million manufacturing jobs since 2001—twenty per cent of its total. Delphi Automotive, the largest automobile parts manufacturer in the world is in bankruptcy. It is demanding 60% pay cuts of its work force. Ford and GM are closing 19 plants between them and have just announced severances for 45,000 workers.
Employment in the communications equipment industry is down 43% since 2000. Semiconductor employment is off 30%. Electrical equipment has shed one quarter of its industry’s jobs. Textiles, off 40%. These are the high-wage jobs on which the American middle class—the American standard of living—once rested. Replacing them with jobs for waitresses and bartenders, home health care workers, fast food servers, and greeters at Wal-Mart doesn’t begin to sustain consumer purchasing power.
But that is the overwhelming nature the employment picture under the Bush administration. The economy has needed seven million new jobs just to keep pace with population growth since 2000. It has added just over three million, virtually all of them in low-paid domestic service sectors. This evisceration of labor and labor-based income comes at a time when corporate profits are at their highest level as a percent of national income since 1947 while labor’s share is at its lowest level since 1946. The rich are getting richer and everyone else is getting dramatically poorer.
These reversals are not accidents. They are the intended outcomes of two and a half decades of government policy designed to increase the returns to capital while reducing the bargaining power of labor. The policy began with Reagan’s Supply Side Economics, which cut the marginal tax rate on the highest incomes from 75% to 38%. It is bookended by Bush’s unending tax cuts for the wealthiest, from income taxes, to taxes on interest, dividends, capital gains, and, if he gets his way, the estates of multi-millionaires. All these cuts favor the very wealthiest of Americans at the expense of everybody else.
In this environment, with median incomes falling for decades, the only way to maintain the American family lifestyle is to borrow against the house. And when that is still not enough to keep the economy afloat, the government must step in and borrow against Americans’ future earnings. But rising interest rates are already killing off the tenuous housing-based recovery. And as prices rise with them, consumers are left with even less money to spend. The imperative for more and still more government borrowing becomes overwhelming.
This is Paulson’s inescapable dilemma. If he wants to continue the Republicans’ policy of shifting the nation’s wealth to those who are already the most wealthy, AND sustain the illusion of broad-based prosperity, he has no choice but to increase deficit spending (and therefore borrowing) at a greater and ever-greater rate. To be sure, the higher interest rates that result are an unquestioned boon to Paulson’s coupon-clipping friends. But they are a death sentence for the Real economy.
The Fifth Circle of Economic Hell
"He made me stop and said: 'This is the place where you will have to arm yourself with fortitude.' Oh reader, do not ask me how I grew faint and frozen then—all words fall short of the horror it actually was."
~ Dante, Divine Comedy: Inferno, Canto XXXIV
We have reached, then, the Fifth and Final Circle of Economic Hell. It is this Circle upon which all other Circles—the Real Economy, Fiscal Effects, Monetary Effects, and Ephemera—ultimately rest. It is the Circle of Structural Decline.
As onerous as they are, the deficits described in Circle Three, above, constitute only a small fraction of the total indebtedness of the U.S. economy. The official “national debt” is approaching $9 trillion, as noted, a substantial figure, to be sure. But the government’s “unfunded liabilities”—obligations it has committed to pay but for which there is no known source—are estimated at an incomprehensible $58 trillion. Add in revolving consumer debt, mortgage debt, and corporate debt, and the nation’s total obligations exceed $90 trillion, more than seven times GDP. At the time of the 1929 stock market crash, total debt stood at two times GDP. These obligations will never be paid.
The reason is that the job drain from the U.S., while it looks like a torrent now, is still only a trickle. Though the U.S. won the Cold War, it is rapidly losing the Cold Peace, which began when China ended its communist isolation and joined the world market. The average wage in China is $.57 per hour. China has more than half a billion workers meaning the drain of good jobs from the U.S. to China can go on indefinitely—and will. Alan Blinder, a Princeton economist and former Governor of the Federal Reserve Board, has estimated that as many as 56 million U.S. jobs are susceptible to outsourcing of the sort that has already dealt such damage to U.S. incomes.
But this is exactly what Bush and Paulson and their fellow “conservatives” intend. This is the magic of “globalization” that the Heraldic voices of Thomas Friedman and others eulogize as inevitable. Globalization means liberating capital from all obligations to national well being, freeing it to pursue only the highest returns it can find, no matter where they may lie. That means seeking out the lowest paid labor and shifting all possible jobs there. That is China. Or India.
The U.S. worker and the U.S. economy will be left to their own devices. All social safety net systems must be dismantled for, given the colossal debt, they can no longer be afforded. These include welfare, unemployment and disability insurance, pensions, health care, Medicare, Social Security, job retraining, and eventually, education. ..... "
It was captured from wbur.org by one macunix. If the facts in it are correct, [note that total oil production does not an argument make against aging fields] then severe economic consequences are coming in the next ~2 years.
**I want a good economy for middle class folks.**
I want those rich folks who do to change their ill reaping ways.
The American economic boom and collective fortunes have been squandered by chasing wealth. The choice we had and still have circa 1997 is the lead the switch from oil fuel to alternative fuel. Stanley Meyer came at just the right moment. Please God let us not walk down the path to what we deserve. Let us awaken, repent, and use the gifts we have been given to save ourselves and turn to you.
Let me write Better Godliness Through Love and finish BGodliness Through Chemistry and evil can be trounced in a media publicized and God serving way.
I will begin.
[I want this portion to go unannounced. I do not want to spook investors or economists. I want them to think rationally and change. I am concerned about the economic condition of the coming 5 years. Less than 5 in particular. I believe that there will be a major and likely somewhat sudden but protracted downturn in $, due to American credit ratings failing, energy prices rising, increasing competition for American jobs and an increasing population. I have no idea what this might be caused by. Maybe the people will find out when the DOW breaks. Maybe it will come from oil. Maybe it will be put to them from the media by budgetary analysis. Maybe the FED will announce major changes in their structure and Congress will get on the stick about American economic performance and release badly needed, or badly delayed in development technologies required for growth. Or maybe those technologies will pop out chaotically and unexpectedly in an economic 'rupture'. I hope that does not cause death. Well more death. In fact I hope the two million wells campaign works and a spotlight is shined on 3rd world analysis and alleviation. We should move on this data. State, release the water splitter to the top 3 priorities you can think of, and let's get this pogue thing off the ground for 2007, and let's also get a solution for the coal plant sooner than water splitting as a segway. And let's wipe nuclear off the map. Make it happen.]
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