The Coming Depression

It will be interesting as all hell to see how Americans act in a new depression. For the past two years, all we’ve heard is how no one could have seen this coming and it’s at the bottom and things will turn around next week/month/quarter. Bologna. We’re in for a full on, Joad family in pick-ups, breadlines and soup kitchen depression. This one will grind on for a decade just like the last one.

It’s all inevitable and obvious if you’ve been paying attention, but nothing is obvious to the uninformed, and man, there’s nobody uninformed like the American Joe Sixpack is uninformed.

I’m dumb enough to tell anyone who’ll listen about the coming depression, and the number one response I get is, “I thought they fixed it so that can’t happen again, right?” Well, they did and they didn’t. The deregulation of markets that’s been going on since Reagan left an unsupervised bunch of boy geniuses on Wall Street making millions for coming up with wackier and wackier financial products that no one completely understood.

It was a game of musical chairs, with many players and very few chairs and nobody can quite believe that the music stopped. The silence has been thundering.

The mechanics of how everything falls apart are interesting fodder for another day, but the fascinating part is trying to figure out the social ramifications of spoiled and entitled debt junkies losing everything they thought they deserved, and living in a world where you can only afford something if you saved up the cash money to buy it. No Hummers on lease, no liar loans, no house as ATM. In hindsight, what kind of moron would “consolidate debt” by paying off credit cards and car loans with a new 30 year loan on the house? How would you feel making a mortgage payment today that’s paying for the 1979 Pinto you totaled in 1983 and the huge 19 inch color TV you bought in 1980 that crapped out in 1988? It was and remains ridiculous, and yet it had become standard operating procedure for a vast flock of sheep, er, consumers.

So where do they go if they lose the McMansion and the Hummer and access to credit? The banks and finance companies don’t just forget you when you lose it all. They bill you for the difference of what you owed and what they get for it at giveaway prices. Now your wages are garnished to pay for things you no longer have, but will be paying for for a long, long time. How do you react?

I’m frankly amazed that one of these accidents waiting to happen hasn’t done the math, decided it was the mortgage broker who did it, and gone downtown with a Mac-10 and an AR-15 and popped a cap or three on some mid level functionaries. Next at the realtors. Next at the payday loan/check-cashing store. Pop, pop, pop.

So aside from the homicidal maniac reaction, how will Americans respond? Here in Maine, people are pretty resourceful. I’ve already had discussion like the one with a friend who said she’s moving in with her boyfriend, renting out the house that she owns, and they’re both felling, cutting and splitting trees on their woodlot for heat this winter and getting out at the start of deer season to fill the freezer. What the hell does the ex-McMansion dweller in New Jersey do? Hunt pigeons? Take down the trees at the mall?

I suspect there will be a swing in politics to the left, but you can never forget the attraction of fascism in hard times. Maybe the last seven and a half years have just been a warm up. Maybe the next leadership act will make Mr. Cheney look like Mr. Rogers.

It’s impossible to know for sure, but I’m hoping Americans can come together to take care of each other. The current meanness and social Darwinism just doesn’t feel right, and I hope we’ll all become much better aware of how incredibly fortunate we are, and downright lucky to have had the wisdom and foresight to be born into 20th century America, unlike those who had the misfortune and lack of foresight to be born into, let’s say sixth century Somalia.

Bill Gates born in Somalia in AD 550 would have been lucky to make it to adolescence, and with that bad eyesight would have been a rotten shepherd. So here’s hoping that the collapse of the financial system as we know it and resulting hard times lead us to more peace, love and understanding and not to a Fourth Reich.