I think we’re sorry for what we’ve done to you. I say “think” because I don’t believe that most Americans have any idea what’s going on right now.
We’re sorry that we’re sandbagging you with massive amounts of debt that will likely reduce your standard of living. Someone called it “indentured slavery”. They might not be far off.
What the hell am I talking about?
Most of us have heard about the current sub-prime crisis, housing values dropping, the gov’t having to take on debts incurred by the private sector. But other than getting that this is likely a bad thing, it can be hard to grasp what this all really, practically means.
In real terms, we might have just increased our total national debt by 50% by guaranteeing Fannie and Freddie. Why does this matter? Because our debt per working person in this country works itself out to be somewhere around $60,000 a person.
No, I didn’t mistype that.
I’m horrified by just how many people think everything is OK with our economy. How many think everything is OK because we spend a lot of money (ie., # of cars on the road, housing sizes, total consumer consumption.). The problem is that this is all symptomatic of the disease which we’re in danger of dying from. We’ve borrowed massively from the rest of the world (and from what we would consider the poorer nations of the world, to boot) to finance our decades of prosperity. Then, in a bizarre turn of logic, we point to that borrowed prosperity as a sign that everything is OK. It’s as if we we were parents, and our teenager worked at McDonalds, but thanks to her credit card, she drove a new Lexus, wore all designer clothing, and took fabulous vacations. When we’d try and explain that this just doesn’t work, and that problems are ahead, she’d say that we, “just don’t get it” and point to how well she was doing.
As Bill Gross pointed out in the letter he wrote to Obama a few weeks ago, the reckoning is coming. Our president in ’09 is going to have to choose to right the ship (incredibly painfully) or to continue as is, and ignore the problem. Either way, it sure looks pain is coming. Good luck, children of America.
P.S. This is essentially the overview material for the chapter in Forsaken, on fiscal crises.