From James Howard Kunstler:
Bear in mind the original suburbanization of America back in the 20th century — along with its accessory automobiles — must be regarded as the greatest misallocation of resources in the history of the world. So, a rebuild of all this stuff would represent more and possibly even greater malinvestment. We could have applied our post-WW2 treasure to building beautiful walkable towns and cities with some capacity for adaptive re-use, but we blew it in order to enjoy life in a one-time demolition derby. Life is tragic. Societies make poor choices sometimes, and then there are consequences.
We know there’s a car bubble full of seven year subprime loans, a record number of cars coming off lease and an unprecedented glut of new cars available, just as gas prices are about to rise permanently.
Total US debt has doubled under President Obama from around ten trillion to twenty trillion dollars (as it doubled under Bush Two from five to ten trillion dollars). The reason, as stated above, is that we don’t produce enough to cover the cost of our national way of life, so we have to borrow continually at ever-greater volume. Every year, the Treasury has to pay interest on all that debt. It’s a lot of money. This year, with interest rates starting out at historically unprecedented lows (not seen ever in recorded history), the Treasury paid over a quarter-trillion dollars in interest. By the way, the government borrows money to make these interest payments too. An interest rate rise of one percent, would drive the annual US debt higher by $190 billion. As the late, great Senator Everett Dirkson (R-Ill) once pungently remarked: “…a billion here, a billion there, sooner or later you’re talking about real money.”
A sharply rising interest rate on the ten-year Treasury bond will thunder through the system. A lot of other basic interest costs are keyed to the ten-year bond rate, especially home mortgages, apartment rentals (landlords hold mortgages), and car payments. When the ten year bond rate goes up, so do mortgage payments. When mortgage rates go up, house prices go down, because fewer people are in a position to buy a house at higher mortgage rates, and rents go up (more competition among people who can’t buy a house). Zero Interest Rate Policy (ZIRP), in force for ten years, has driven house prices back to stratospheric levels. They are now primed to fall, perhaps severely, leaving many homeowners “underwater,” with houses worth way less on the market than the amount of mortgage left to pay off. The re-financing market is dead. Housing starts were already down by a stunning 19 percent in November. Automobile sales are rolling over. Manufacturing and retail sales numbers are down at year end. What’s up: stocks, stocks, stocks.
Imagine the home and automobile markets crashing at nearly the same time, rendering millions of families upside down on mortgage and car loans. This is why they say debt is so dangerous during deflation. These debt slaves are going to say fuck it at some point and subject themselves to the inhuman consequences of ruined credit.
We already have a ruined working class and a welfare class on subsistence. I don’t care how much hope Trump supporters have, things are not about to get better. Indeed, things are about to get much worse.
Meanwhile, a growing number of people have been suggesting a Universal Basic Income for all citizens of working age, to be paid by the federal government. Sovereign wealth has been used for years to re-inflate the TBTF banks. The same should be done for the citizens.
I’m not gonna get into the tiresome aspects of UBI. It’s kinda like Jesus: you believe it or you don’t. Sovereign wealth has no effective expression other than as debt.
Unfortunately, newly-reappointed House Speaker, Paul Ryan, belongs to the cult of Wall Street-backed Fix the Debt neoliberal assholes who intend to cut the social safety net under the fake pretense that the federal budget must be balanced. Again, we encounter a highly developed false narrative intended to starve the poor.
We have no way to know what the incoming Trump admin means to those on the margins, but we need only look to Raleigh for a good idea what the Libertarian corporatists have in mind. Gerrymandered austerity and religious fascism have transformed the most progressive state in the South into a banana republic. Texas is to take up the senseless HB2 legislation and efforts are in Congress to ratify it.
The last thing these limited government zealots are interested in is spending sovereign wealth on the very people they want dead in the first place. You oughta see how they laugh when I bring up UBI on my Trumptard Twitter echo chamber. The truth is lots of dumb white people have insane amounts of guns, ammo and are just waiting for an excuse to kill brown and black people.
The Left has wandered into the wilderness and the struggle for power is between warmongering Zionist neocons and racist/bigoted Nationalist paleocons. There simply is no place for the poor to be heard. If the compassionate conservative exists in strength, I’ve seen no evidence of it.