Diatribes of Jay: Waiting for the Crash

[For a brief note on a rare “conservative” who can think, click here. For things corporate CEOs can do to help keep the United States from suffering a decline and fall like ancient Rome’s, click here. For a comparison of quality in pols and reasons to recall our recent past, click here. For reasons why Trump’s trade war is headed toward a disastrous defeat, click here. For a brief note on how corporate rule is encroaching on American cities, click here. For our desperate need for voters to focus on good character, click here. For an analysis of facts and Kim’s myth about North Korea, click here. For a second post on training new voters, click here. For links to popular recent posts, click here.]

“Men at some time are masters of their fates.
The fault, dear Brutus, is not in our stars
But in ourselves, that we are underlings.”

Julius Caesar

Two things about Donald Trump are now apparent. First, he’s the greatest con man in the history of a nation that invented the term “con man.” Second, his successful scamming of vast swaths of the American working class is not his own achievement. It’s a continuation of a scam invented by Rush Limbaugh and adopted by Mitch McConnell and the rest of the Republican Party. It’s not a perversion of GOP “policy” for the last decade or more, as many “respectable” Republicans insist in their umbrage, but its culmination.

How quickly we forget. The presidential election of 2008 came just months after the Crash of 2008—the worst financial panic since the one in 1929, which had triggered the Great Depression and ultimately World War II. The Crash and the bailouts of crooked bankers that followed would cause great “carnage” among the American working class, but that pain was just beginning. Still, the public was rapidly tiring of Dubya’s platitudinous stupidity and his unnecessary “forever” wars in Iraq and Afghanistan.

The bailouts had already begun. Goaded by then-Treasury Secretary Hank Paulson’s “chicken little” imitation, Congress and the executive had already spent or committed trillions in bailouts before Barack Obama took office as president. By my own inexpert accounting at the time, the bailouts totaled over $6.6 trillion by the day of Obama’s first inauguration.

What elected Obama was not just a wave of progressive sentiment. It was revulsion at a generation of government ineptitude—from Bill Clinton’s eager signing of the law that set the stage for the Crash, through those two unnecessary wars, to the middle class’ long-stagnating wages. With his superb education and intelligence, his academic bent, his humility and dry humor, plus his absolute moral rectitude, Barack Obama was the perfect leader to address these faults.

So Republicans were facing a progressive revival of biblical proportions. They were staring down the barrel of a decade or two of minority-party impotence.

What did they do? They came up with one of the greatest political scams in American history, perhaps in all of human history. They knew it would take at least a decade to turn the economy and their two unnecessary wars around. In the meantime, hard times would come and keep coming. So they decided to blame them all on the (half) black guy and trust in voters’ unconscious racism and faulty memory.

And that’s exactly what they did. As if to emphasize the depths of human depravity from which this scam came, they didn’t take the idea from the usual suspects. They didn’t get it from those who routinely delude the working class that lowering taxes on the rich, gutting regulation, and weakening the safety net will make them better off. Instead, they got it from Rush. The day after Obama’s first inauguration, Rush declared the GOP goal of making him a one-term president. Mitch McConnell took up the gauntlet a day or two later, followed by the GOP mainstream.

But they needed time to make the blame stick. So they dragged their heels on every legislative initiative intended to make things better. They begrudged the standard Keynesian stimulus needed to get the economy back on track: they let pass only the bare minimum “pump-priming” needed to keep the economy from collapsing. They fought the bailouts of our auto industry. They fought affordable health insurance tooth and nail, inventing the bogeyman of “death panels” to delude voters. When “Obamacare” became law notwithstanding their lies and deceit, they spent half a decade blaming it for everything from higher premiums to the common cold.

As I analogized in an earlier essay, they tried to make kids hate ice cream. And in the regime of the Great Con Man, they almost succeeded. They have battered affordable health care with propaganda, repealed some subsidies, and taken executive action designed to keep information about affordable insurance from the people. They’re on the verge of trying to resurrect exclusions for pre-existing conditions, whose outlawing by Obamacare made health insurance real for the very first time. That’s where we are today.

Then Great Con Man Donald Trump dropped the other shoe. After a decade of the GOP blaming Obama for the hardship that former presidents and bankers had caused, Trump now claims credit for our healthy economy. Never mind that Barack Obama and the Dems had forged that success out of carnage with sensible—and often standard—economic policy. Every economic expert knew that it would take most of a decade for the economy to recover, and it did. So now Trump takes the credit.

But here’s the thing. Nothing the GOP has done under Trump, and nothing it tried to do under Obama, is in the least responsible for the present economic “boom.” Perhaps the resilient American economy would have recovered in a decade anyway. More likely, the driving force for the recovery was the sensible and steady economic policies of the Dems, at least as much as the GOP opposition would allow.

But whatever the cause, healing an economy as large and complex as ours takes time. As Obama himself analogized, our economy is a great ocean liner, not a day-sailer. It takes years to turn our great ship away from a storm, and years to drift back into one.

And drifting back into a storm is precisely where we’re headed. How can we be sure? Because the GOP is in control of all three branches of government. And the current GOP is nothing like your father’s or grandfather’s GOP. It has become the party of the three D’s: distraction, delusion and deception.

Today’s GOP’s greatest success has nothing to do with real policy, the real economy, or any other aspect of reality. It “won” by convincing a large portion of our working class that Obama, who actually helped save us from the Crash of 2008, had destroyed our economy and health insurance, and that the GOP and Trump, which did nothing but resist Obama’s efforts, were the ones who saved us.

The flip side of this Great Con is of course the absence of any real, coherent plan. For two generations, the GOP has sought leadership of government only in order to belittle and downsize it, not to run it well. The GOP has won election after election not only with the three D’s, but by preying on voters’ selfishness, with slogans like “It’s your money!”

But selfishness is not a plan. It’s a vice. And from the moment he entered office, Trump has ignored a simple plan that might have insured skilled workers good jobs for years to come.

Our own American Society of Civil Engineers says we need to invest $ 2 trillion in our infrastructure just to bring it up to standard, let alone to the level of current progress in Europe and Asia. That money would have created millions of good, skilled jobs building infrastructure in our own country (which by its nature doesn’t permit outsourcing). But what did Trump do instead, as his chief legislative priority? He spent three quarters that much—charging $1.5 trillion on our national credit card—to give huge tax breaks to rich people and corporations, which didn’t need them, didn’t ask for them, and didn’t deserve them.

The infusion of cash to the underserving has continued, for a time, the stock-market boom called the “Trump Bump.” If you watch the Dow or the NASDAQ, you might be deceived. But the punchbowl will run out, and the party will end, as the rich and corporations hoard, invest or misuse their windfall, or simply pass it on to shareholders. That process is well under way.

Now Trump has begun a global tariff war, taking us back to the Smoot-Hawley tariffs that helped cause the Great Depression and the greatest war in human history. At the present level of some $34 billion, his tariff “war” is just nuisance to the global economy. Maybe Trump intends to keep it that way: almost everything he has done, except the Tax Scam, has been more show and bluster than substance. But if Trump goes on to the next level—$500 billion of new tariffs against China alone—our great economic ship will begin to take on water and list to the right.

It might be otherwise if Trump had a plan. He might, for example, seek to build American industries and create American jobs under the tariff umbrella, by organizing investors to start or re-start factories. He might even break with Republican orthodoxy and create jobs with government subsidies. But to my knowledge, he hasn’t done so much as organize a conference of investors. He’s just hoping that Xi Jinping, one of the smartest leaders in human history, will cave and maybe give us a plan to resurrect our most important manufacturing and keep our trade secrets to ourselves. Good luck with that!

No, continual scamming has its consequences. There comes a time when the piper must be paid. You cannot run a great nation on distraction, delusion and deception forever. You cannot make blaming and selfishness the cornerstones of economic policy. You cannot leave our decaying infrastructure to rot while paying off the rich men (they are nearly all men!) who fund your distraction, delusion and deception. You cannot do so, that is, without expecting another financial panic and another, probably global, downturn.

Of course no one can tell exactly when or how the crash will come. But ’twill come. It could begin with another stock-market crash arising from the twin effect of aimless tariffs and higher interest rates. It could be an out-of-the-blue crash arising from massive global corruption, gun-running and drug trade made invisible by block-chain cryptocurrencies. It could be yet another unnecessary war. Or it could be simply that our ship of state, drifting aimlessly without any perceptible plan or direction, wanders into another tempest.

Fortunately for our species, a new unnecessary war seems the least likely of these misfortunes. Trump is not just a skilled con man, but a bully. Like most bullies, under his bluster he’s a coward. Anyway, his expert military advisers and underlings will likely stay his hand.

Trump can’t fire nuclear missiles himself. There’s a long chain of command under him, run by well-educated, dedicated and disciplined warriors—words inapplicable to our commander-in-chief. So the chance of war is much smaller than the chance of us wandering into the economic wilderness, led by a man and a party whose only notable talents are distraction, delusion and deception in the cause of blame.

I’ve been out of the markets since February 2. No crash has yet come, but it took nine months for the 2008 Crash to come after I sold out in December 2007. I’ve left some money on the table as the bully corporations—Amazon, Apple, Facebook and Google—increase their power and spread their influence under a government that has forgotten what “antitrust” means.

But I have absolute confidence that a new crash is coming. Just how and when are hard to see. A ship with no course, no plan, no fixed direction and a con man at the helm is never far from danger.

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Diatribes of Jay

25 July 2018

Waiting for the Crash

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