America: A Dual Nation?

Writing a blog like Another Opinion attracts the attention of a lot of people. Not surprisingly, I receive a lot of articles from different organizations and individuals. Some are basically doom and gloom types looking for any opportunity to tell us that we should all be bending over and kissing our collectives butts goodbye. Others are humorous (whether intentional or not is open to debate), and still others are simply compelling. The attached article by Rick Pedraza of Newsmax.com is somewhere between the first and last choices. Read it for yourself and see what you think at http://www.newsmax.com/newsfront/corsi_dual_country/2009/03/11/190793.html?s=sp&promo_code=7C05-1.

Nevertheless, the article got me to thinking (yeah, I know; that’s almost always dangerous). The name and thrust of the article is whether we are becoming a dual nation. I sat back and pondered Mr. Pedraza’s question. My first reaction was “how”? After all, this is America. We taken the worse the world could dish out and we’re still standing right? America has seen tough times before and we’ve always come out better and stronger. So, I thought, why should this be any different? But the more I thought about the question, the more I began to find flaws in my assumptions.

Let’s take a basic look at the economy. Americans having been living on borrowed time (and money) for decades. Our economic philosophy changed somewhere around the 1970’s from a production economy to a service economy. In order to maximize the bottom line (and reduce the clout of unions), employers began outsourcing jobs overseas.. We became a “McJobs” nation. Companies began raiding retirement funds, cutting benefits while focusing “creating” paper wealth.

Capitalism thrives on consumption. That’s why products are always being touted as “new and improved”, fashion changes every year, and products are manufactured with built in obsolescence. When we moved from producing hard wealth to paper wealth, financial instructions started encouraging people to buy on credit; that is; on money they didn’t have yet. But it was this unchecked buying that fed the beast. Our next purchase was only as good as our credit rating. The problem was that the beast was never full, and the more it consumed, the more it wanted. That’s why businesses demanded open markets in Russia, China, and Southeast Asia. It had nothing to do with global cooperation or improving the standard of living. It was all about feeding the beast. As an aside, the fear of Communism was never about its different sociological philosophy, but its rejection of capitalism. That was main reason it had to be defeated at all costs. Sorry if you thought it was more idealistic than that.

Linked to this was speculation on real estate (based on the assumption that real estate values never fall). Sure, the stock market occasionally drops, but it always trends up. As the fictional character Gordon Gecko from the movie “Wallstreet” famously said, “Greed is good”. Well, now we’re finding that our economy was really based on more than speculation and false sense of optimism. It was based on an illusion. Wealth has to be, at its heart, based on hard assets; not paper. The question now is whether Mr. Obama’s economic package works. If so, he could go down as the greatest president ever. If he fails, it will be disastrous for us and the world. There are no third options.

The American middle class, along with the small business person, has historically been the economic engine of this country. There’s not much of it left. The wealthy have always been fairly insulated thanks to their trust funds and foundations, and the poor have come to relay on government services, paid for mainly by the middle class. Obama’s plan thus far has been thus far to throw billions at the same banks and financial institutions who have mismanaged billions for decades. Most economists believe more of the money should have either been directed to the people or to the creation of “brick and mortar” jobs. Should government be in business of bailing out mismanaged companies, especially those where corporate executives are earning hefty six figures incomes while denying overtime, cutting benefits, and laying off people? At the same time, little has done to overhaul our credit driven economy itself. Indeed, many of these same banks chaff at the very thought.

Hopefully Obama will prove to be successful. At the very least, however, he will forfeit the future of our children and their children. The problem isn’t in actually being solved. It’s being pushed into the future, where the beast will again at some point rear its head and demand more sacrifice, but at what cost? Look at how much it’s costing us now, and we don’t know if that’s going to be enough. We have gone from a nation of independent entrepreneurs to economic serfs; from self sufficient citizens to forced consumers.

We have in fact become a dual nation. We are now a defacto country of haves and have nots, where the have nots are quickly becoming a majority. Of course, we haven’t even addressed issues such as illegal immigration, which is draining our very limited resources directed at social services, or the pending retirement of the baby boomers (the largest mass retirement in our nation’s history). The strain on Social Security and elder care could surpass the breaking point. What about our crumbing infrastructure—our bridges, sewers, highways? What about failing education system? Where are the resources for them? Of course, there are other issues such as global terrorism and the nut cases trying to get their hands on nukes, narco-states and violence, our broken borders, and lastly, a government unwilling or perhaps unable to act. We were promised “no more pork” and we’re getting nothing but pork from Congress. To think that our government wasn’t able to do something as simple as that in this economic crisis is sickening.

A lot of Americans have simply stopped watching or listening to the news. We can’t take it any more. We don’t care about Tom Cruise, Brittney Spears, or what some so-called “celebrity” said, wore, went, or ate. We don’t care who did what on “Survivor” or any other reality show. We have our own realities, and in many cases, they’re a lot more chilling than anything we’d see on television. Americans want the truth, and yes, I believe we can handle it. We’re beyond tired of political party’s bickering; shut up and fix it or get out of the way. Americans like fair play, but we’re tired greedy arrogant crooks sitting in front of Congress with their hand out; or on Wallstreet; or in Washington. The time may be coming, sooner rather than later, when Americans take another look at our Constitution and realize that we don’t have to sit back and it any more.


Taxpayer Revolt?

Here’s another interesting article I received. This came from Isaac MacMillians over at NetRight Nation. The name of the article is A Taxpayer Revolution. The article examines what may become an interesting trend in this country as people say “enough is enough” over increased rate hikes (see my article February 28, 2009). Our fellow citizens in the great state of New Hampshire have stepped up and did job that their elected “leaders” failed to do. What do you think folks—think it’s time we give it go? Read it here: http://netrightnation.com/index.php?option=com_content&view=article&id=482767:a-taxpayer-revolution&catid=1:nrn-blog&Itemid=7

Poll Results

The economy has been on everyone’s mind lately. It’s being talked about everywhere you go. My question to you was when you thought the economy would turn around. The possible answers I gave you were based on responses from several economists. 7% of you thought things were going to improve late this year. 15% of you thought things would be looking rosier by early 2010 while 1% said it would be late 2010. Now this is where things get interesting. 30% of you said it would be 2011 or later and a whooping 38% of you said “never”!

I am an optimist at heart, but I think like a realist. If the stimulus is going to work, it’s going to take time. It’s like taking medicine; it has to get into your system before you see any results. I don’t see any major improvements in early 2009, though by late 2009 we may see a leveling out. 2010 will see improvements and by late 2010 or early 2011, I think we’ll be on the road to recovery. There will be a lot of casualties along the way though. A lot of familiar name brands will be gone. Our choice of products will be greatly diminished, and the quality of what we are able to buy may be poorer. Many Americas no longer be having the standard of living they did before the depression…err…recession. Economically, may be only a second tier country. If Obama fails, we may find ourselves an economic third tier country torn by strikes and riots.

Corporate Welfare

I’m sure just about everyone has noticed that a bipartisan Congress gave some $4 billion dollars worth of subsides and tax credits to the oil companies, and yet oil company executives belly ache about how much money they’re not making. We notice their “plight” every time we buy gas, oil, or anything else made with petroleum (like plastic). We notice Exxon made $7 billion dollars in profit the first three months of this year, but that’s just a fraction of the story.

Last year, according to the Spark newsletter, Exxon made after-tax profits of $26 billion dollars, an increase of 52% over 2003. Chevron-Texaco made $13 billion, an 86% increase from the previous year. Shell Oil was up 48% over 2003, with $19 billion dollars in profits. Poor babies. I suppose the increase in pump prices is to compensate oil companies for hiring more accountants to count all the money they’re raking in.

Continuing increases in oil prices will in the long run severely damage the economy. People will stop spending as much in order to compensate for the increase in gas and oil prices. The decrease in purchases will lead to a decrease in sales, which in turn will lead to layoffs. Service businesses, ranging from anyone in the transportation industry down to the pizza delivery person, will see a decrease in business in direct relationship to the increase in costs of their services as a result of the cost of oil and gas. Manufactures of high end vehicles such as trucks and SUVs will see a decrease in purchases as customers move to more cost effective cars. Businesses which use petroleum based products, which includes everything made of plastics, will see the costs increase. While some of the increase can be offset internally, it will eventually be passed on to the consumer in the form of higher prices for such things as milk (plastic containers) and computers. For fun, take a minute and look around. Count the number of items made of plastic. That will give you an idea of where the increases will come from.

In short, consumers will have less disposable income, and will make adjustments to compensate for the increase. Manufactures will be forced to increase costs to adjust for the increase of supply costs on their end. With less money to go around, companies will be forced to reduce costs in the form of “sales” which may offer a short term boost in the economy, but will make the economy more instable, forcing marginal companies to either layoff or close. Housing and “big ticket” sales will suffer as folks have less money to spend, and are increasing worried about the economy, which feeds into an increasing unstable economy. The Fed may have to step in to reduce interest rates in order to artificially stimulate the economy. This may, again, have short term benefits, but doesn’t address the cause. The long term result could be a recession.

In 1976, during the “Oil Crisis”, then President Jimmy Carter promised Americans that the US Government would do whatever was necessary to harness alternative energy sources. Well folks, we’re more dependent on foreign oil than ever before, and geo-political nature of world is far more dangerous and volatile than ever. The hated “oil rich Sheiks” of the 1970s turned out to be the same US oil companies that boasted such impressive profits cited above. Oil companies stifled any real efforts to develop alternative energy while it was still in its infancy. President Bush recently remarked that he couldn’t understand the public’s concern over the increase in pump prices, and cited that the increases had “been gradually coming over time.” What he meant to say was that the oil company’s dominance over energy has been gradually coming over time. My solution would be simple. First, invest heavily in alternate fuel sources. Set “non-breakable” time tables, and require oil companies to contribute to its financing. After all, since they spent millions trying to stop it, seems only fair they should now have to fund it. Second, demand auto manufactures develop energy efficient cars and trucks (as an aside, the auto industry has been very successful in dodging this one. In fact, cars are less efficient now than just 10 years ago). Set specific “drop dead” dates with stiff financial penalties, and accept no more whiney ass excuses. Third, nationalize oil and gas companies, along with all other energy and water producing facilities. Industries that have such an effect on national security and the public’s well being should not be in the hands of folks motivated solely by profit. Fourth, and perhaps the most important, put the presidents, CEOs, and boards of directors on trial for war profiteering, for clearly that’s what it is.