Fears of Regime Change in New York

Normally, I don’t report on anecdotes from my immediate circle, but a set of conversations in less than a 24 hour period suggests that even those comparatively unaffected by the crisis are bracing themselves for the possibility of sudden, large-scale, adverse changes. And that sort of gnawing worry seems to be growing in New York despite being buoyed by TARP funds and covert bank subsidies.

When out on my rounds the day before yesterday, I ran into an old McKinsey colleague, who had subsequently had impressively titled jobs in Big Firms You Heard Of before semi-retiring to manage family money. He and his very accomplished wife were big Bush donors and had been invited to both inaugurations.

He made short order of niceties and got to the point: “We need more fiscal stimulus. Obama did too little and too much of what he spent on was liberal pork. We could and need to spend a lot on infrastructure. This is looking a lot like 1936. I’m afraid it could get really ugly. And I’m particularly worried that the Republicans will win big this fall. They’ll cut even deeper, that’s the last thing we need right now.”

No I am not making this up, and yes, this is one of the last people I would have expected to express this line of thinking.

Next day, I had lunch with a two long standing, keen observers and participants in the New York scene, as in very involved in some of the city’s important institutions. Both have witnessed the shift in values over the last thirty years and the rising stratification, particularly at the top end (New York has always been plutocratic, but it formerly had a large upper middle class and a much smaller and much less isolated upper crust).

They started by commenting on my Bill Gross post, which had mentioned the appalling Steve Schwarzman contention that taxing private equity overlords more on their carried interest was like HItler invading Poland. Schwarzman is not only not retreating from his remark, he is convinced that the reason the economy is so lousy is that rich men like him are not getting their way (this is if anything an understatement of their account. Both men expect his head to be the first on a pike).

The conversation turned to whether the US was going towards revolution or fascism. One argued for the a continuation of trends underway: that the continuing weakness of the Obama Administration (and the discrediting of other members of the elite) meant there was a power vacuum. The obvious group to exploit it is the most strident, uncompromising opportunists, an area where the extreme right has a monopoly. The other, who has ben reading up on the French Revolutions. took issue with the conventional idea that a revolution is impossible in America: “In France, the trigger was that people were hungry. We are close to that point than most think.” He stressed the desensitization to violence (video games, more and more violence) plus widespread gun ownership. And he pointed to rising and underreported crime in the city, for instance, assaults of cab drivers.

He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.

This was an engaging and lively conversation, but it you stepped back, the content was grim. Another thread was the decay in values, that there has been two generations of parents not setting boundaries for their children. One lives next to one of the elite private schools and likes children, but called those in his ‘hood as “monsters,” describing how a boy was beating up on his nanny and he had to intercede.

These data points don’t converge neatly, but they suggest a deep-rooted anxiety that economic and social structures are near a breaking point, and whatever comes next is not likely to be pretty.

Print Friendly, PDF & Email


  1. Jim in SC

    I think your assessment is too grim. Americans are an essentially conservative lot as far as change is concerned. Also, I have confidence that the job picture may improve soon. This view was encouraged by your recent piece about call center costs in India and the US converging. If the emerging economies continue to develop, eventually the US export machine will ignite, and some of these manufacturing jobs will return.

    I am less sanguine about the likelihood that real estate will recover any time soon. Our system of funding municipal government through property taxes has been shown to be a risky sham. It will take a few years for most people to challenge their valuations, but the result will be lower revenues to cities and towns, and probably more federal bailouts. What we need eventually is a re-assessment of what a municipality should do, and how they spend their money, particularly on schools. Our local school district is more like a private college at the high school level. We need to lop two years off high school, as the president of Bard College has recommended. We cram eight years of study into twelve years, and prolong childhood in order to keep young adults out of the work force.

    1. Yves Smith Post author

      Hey, I’m just reporting! What was striking was this line of commentary came from individuals who are savvy and not alarmists by temperament.

      1. psychohistorian

        And I want to thank you for that.

        The rents in the social fabric are getting bigger but IMO the tipping point for revolution (I would be happy with a little evolution)or regime change continues to seems just out of reach. The decline of America’s empire will be “interesting” to live through. If we can now think of various sociopath’s heads on pikes, think about how people in other countries feel about us.

        1. lambert strether

          The Big O had the chance to head all that off, of course, by sending some of the banksters to jail for accounting control fraud. CEOs in orange jumpsuits doing to perp walk would have been a terrific morale booster. Of course, Obama was groomed exactly to avoid that, and so he didn’t.

          Meanwhile, it’s hilarious to watch the elite discovering that they really need an FDR, after having, over the last 30 years, systematically decapitated all the institutions capable of producing one.

          I’ve been relatively sanguine about maintaining my own quite low personal baseline, assuming that the Ds would pump enough blood into the zombies to maintain until after 2012, and that the elites don’t panic and turn on each other. It may be that I was too pessimistic on both counts.

          1. Ishmael

            Lambert — Agree with you. We should have had some quick trials of a few hundred (or thousand) bankster and put them away for life and taken their assets. That would have put the fear of god in the bankster class and helped take the country back.

        2. A_MacLaren

          What’s needed is NOT a revolution, but a RESTORATION to the principles that guided and shaped this country and economic system.

          Enforcement of the rule of law.

          Private, not public, accountability, and consequences or benefits for actions.

          A level playing field and markets that do not favor the leaders that would stifle competition, but instead encourage it.

        3. Chris

          The day that people go hungry and go starving is the day revolution will probably happen. Look at Paris, look at Russia circa 1917.

          1. Michael

            The French and so called “Russian” revolutions were not spontaneous uprisings of poor and hungry people but quite well prepared and organised covert operations, just like the Rumanian and Serb revolutions some years ago. This can’t happen in the US. That is the reason why your oligarchs are so reckless. Their power is not and will not be challenged.

      2. Richard Kline

        I’m not surprised to hear the tenor of remarks from your former associate at McKinsey. The right-wing media spin of the last 20 years would have it that ‘he could never defect from his class,’ but that’s just their swill. If this person is intelligent, informed on current policies, and had been previously voting his net worth rather than his prejudicies, his present perspective is where I’d expect him to arrive. The Republican Party currently had zero to offer the economy and their country, and the Tea Potters are of course an oligarch-funded freak show. The Demos are slack and bought, but there’s nothing else to look for. And most who expect a solution to be effected rather than eventuated understand that active policy intervention is necessary, even if the details on that are hotly disputed. He’s showing he has a clue and knows where to fit it in the puzzle.

        To me, one of the under-represented issues of this ongoing financial crisis is the extent to which the policy conquest of the oligarchs is very inimical to the standing of the upper middle class, and even some amongst the truly wealthy. The oligarchs have sucked all the oxygen out of the pond. Consider the impact on medium sized banks of the TARP-and-government lie program we have in place; smaller, well-run places who never got in trouble are taking a big hit with credit rationing, higher regulatory fees, and loss of business to the government-guaranteed Too Big to Kill enterprises. The big boys are getting to unload their rotten ABSs to government buying while the merely rich who bought property at the top are stuck with 40% losses just like the middle class—but were even more leveraged in many cases, witness the remarks that many are just hanging on, keeping up appearances. Yes, the middle class has been a B-I-G loser in the policy outcomes of the last three years, but many of middling wealth feel those walls of ‘creative destruction’ being geared in on them, too, by the oligarchs.

        Now being a radical personally, I’d be happier if a quasi-revolutionary outcome would result. I don’t see it. The middle class is politically neutered, voluntarily so, while the poor are politically conquered and heavily policed. There’s precious little resistance brewing down there. As long as those 37% of American young adults presently unemployed can, many of them, move back in off their much maligned Baby Boom (and younger) parents, there’s not revolutionary compression from _that_ lot. An alternative course to a revolutionary outcome, though, is Reform, with a capital R. Reform is the program of the bourgeosie, typically the true middle class more than the haute bourgeois, but still. And in fact, in the 1890-1910 period, the US got not revolution but Reform, in just this way. The trusts ran roughshod over the interests of the nation, and enough of the middle class together with portions of the upper middle class (such as university educated professionals) defected from traditional political alliances to coalesce a reform program. It is worth nothing that that program ran cross party and outside of existing centers of power. The Progressives in the Republican Party ran on good government platforms with litle backing from the oligarchs of the time running the Republican Party of the day, while social justice Democrats pushed reforms with only fragmented backing from the ethnic machine organizations of the urban dominance. Progressive and Democrat programs were not the same, but the reforms that resulted came due to the erosion of existing factions.

        This, to me, is the most likely outcome over the next 5-15 years: Reform pushed by the upper middle class and some of the wealthy not in the Ring. Not simply for reasons of historical recurrence, though that is in play in a complex fashion I won’t detail. But more because this is the one group with both the resources and the motivation to actually strive for power in policy decisions. I don’t doubt for a second that this consituency would sell out the rest if offered what they want from the oligarchs but the oligarchs, like the trusts of four generations ago, are simply too toxic and too greedy for the rest to get and endure a handshake.

        1. Ryan


          You make some interesting comments about the effect of corporatism on the upper-middle class and wealthy. I think much of the pessimism that I see in the entrepreneurial class and “wealthy” (but not super rich), stems from: (1) they were hurt by the asset price bust just like most Americans and were similarly overextended, (2) they have not been recipients of bailouts, and (3) they are being targeted by the current administration as the “solution” to the problems via higher taxes and more regulations.

          The latter point is, in my opinion, important. A high-end professional making $250-300k per year or a small business owner is feeling the brunt of the recession on a personal level, has less job security, and is concurrently being hurt by legislation/government action that raises their taxes, complicates their business environment, and demonizes them to boot. These people are not your hedge fund managers or CEOs taking home 8-digit annual comp; these are hard working people who are generally the lifeblood of the economy.

          There needs to be more differentiation between the super-rich and the “lower-upper” class, and between small business and corporatism. Thus far, all of Obama’s legislative agenda is to be paid for by raising taxes on the so-called wealthy but it is unfairly punishing a upper-income segment that is also struggling. Likewise, the “reform packages” have added layers of complexity to the operating environment while also serving the interests of large interests over those of smaller ones.

      3. Theo

        The message is simple: People in the know expect collapse, and are saying so privately. The situation is extremely grim, and your sources are spot-on.

    2. Psychoanalystus

      “We need to lop two years off high school, as the president of Bard College has recommended. We cram eight years of study into twelve years, and prolong childhood in order to keep young adults out of the work force.”

      Neuroscience has shown that the human brain is not fully developed until around age 25. As such, this is not an issue of “prolonging childhood”.

      Besides, how does such a proposal address the fact that there really aren’t any jobs out there?


      1. gatopeich

        To that’s saying the brain starts its decay at about 25.
        90% of jobs don’t rely on brains.

        Science is too influenced by the stablished university complex, which is just another corrupt institution all around the world: anything for the money, not a glimpse of ethics.

        Less education and more experience is what I’d give the young. And screw the old, they are sooo spoiled.

        1. Psychoanalystus

          Does not mean the brain starts decaying at 25. It means it completes development at around 25. Neurons are built to normally last upwards of 100+ years.


  2. rd

    We are missing a huge opportunity to invest for the future in our infrastructure that would also be real stimulus.

    The problem is that infrastructure is hard and the laws are making it harder. Infrastructure takes planning, thought, and committment over several years. Our politicians cannot conceive of this today. Instead, they focus on “shovel ready” projects, so you see some basic beautification efforts like putting a new layer of asphalt down or a paint job on something.

    Real infrastructure takes 1 to 5 years of investigation, planning, and design (all work based in North America). It then requires a couple of years or more for the bidding and construction (most equipment, materials, and labor is based in North America, much is local within 25 miles). However, this would require a realization that we are in a decade-length (or more) slump where that type of stimulus is necessary. The current political and financial sector mantra is that prosperity is just around the corner so that it is unnecessary.

    We also have the issue that it now takes years of EIS’s and plan approvals to accomplish something, so the concept that we can suddenly go out and build a bridge has vanished. We could not emulate Roosevelt’s New Deal construction projects if we tried. Our system is still too calcified to allow anything of significance to occur in less than a decade – the WTC site in NYC is a current classic example of that where it has taken almost a decade to build a basement and most of the energy now is locked up in a battle over having a religous institution on private property a couple of blocks away.

    At least we are not alone; the NYT had an article about how India has a shortage of civil engineers because the profession doesn’t pay enough and so their infrastructure is suffering. At least we have been able to export some of our stupid policies as well as our jobs and cash. http://www.nytimes.com/2010/08/26/business/global/26engineer.html?_r=1&sq=india%20civil%20engineer&st=cse&adxnnl=1&scp=1&adxnnlx=1282820599-lqngxrb/hS01JG+JEcqzNQ

    Our infrastructure is decaying at a horeendous rate but people only are noticing when bridges fall into the water. Over the coming decades we will see more problems arising with services assumed to be basic, such as water, sewage, energy, and transportation. Now is the time to start doing something about this. The beauty of it is that there will be a double stimulus because we will have a better infrastructure for future growth as well as re-investing our money in labor, equipment, and materials that is North America based instead of buying TVs and cellphones made in Asia. However, it will require our politicians to think more than 6 months ahead.

    1. Doug

      Thanks RD for this important point. It makes one wonder how many other potential solutions are nullified by systemic, structural obstacles that could only be overcome through a kind of leadership not likely to arise.

    2. John L


      I agree 100% that the funding on infrastructure has been too little and too tied down with red tape and attached strings to do much good. Here in NC we’re spending as much of the stimulus money that goes to infrastructure, but as usual, the money is being spent on “quick fix” projects rather than the needed bridge replacement or pavement rehab projects.

      I disagree with your comment about needing an EIS any time infrastructure needs replacement. There are three categories of environmental documents; CE (categorical exclusion), EA (environmental assessment) and EIS. The EIS is used only on projects that have major environmental impacts, such as new location construction. EA’s are typically used to determine if a project requires an EIS, and are used for widening projects most of the time. CE’s are used when the impacts are minor, such as on a bridge replacement project.

      The problem is, even a CE can take 9 months to a year to complete, and if right of way needs to be purchased, nothing can begin until that document is finished. With the administration insisting on projects using stimulus money being ready within 3 months, that eliminated every project not already begun. States should be given the money without the timeline strings and let them fund projects already in the pipeline.

      1. Stelios Theoharidis

        I am quite tired of this infrastructure “meme”. Yes we need to fix highway infrastructure that is a danger to the public.

        But, it is well documented that we have reached diminishing returns to investment with most highway expenditure. Most expansions of highways only reduce drive times by minutes and within a few years related sprawl and increased use of highway infrastructure removes that benefit. It does not add efficiency to our economy or time savings for individuals utilizing it. Furthermore they increase our reliance on automobile dependent transport, foreign sources of fuel, and raises our trade deficit.

        We need to talk about the merits of types of infrastructure spending and forget thinking about it as a unequivocal good. I would support all types of water and energy efficiency funding mechanisms, smart grid technologies, public transport systems, but further highway spending just feeds our already problematic addiction.

        Highway spending also may not significantly reduce our unemployment levels (fueled by collapse in home construction), there is not a rapid movement from home construction to highway construction, these industries are fragmented and there are specific highway infrastructure development engineering companies that have direct access to state and local governments.

        1. Doug Terpstra

          Agreed. We need NEW infrastructure, not more of the same. Current “leadership” clearly lacks the imagination to visioneer a new paradigm. All it can do is dig deeper holes, subsidize obsolete slum-divisions and bridges to nowhere, and pave over status-quo stink holes. Regime change can’t come soon enough. A merciful death is preferable to prolonged torture.

          The US transportation system, including the world’s largest public works project ever, the interstate network, is the greatest planet-wide misallocation of resources in the history of mankind. It is a Cold War artifact of nuclear-target population dispersion that gobbled vast swaths of land with massive sprawl and created a homogenized, placeless culture of alienation, utterly dependent on profligate consumption of “cheap” oil—rackets like BP and middle east conquest and occupation.

          1. Ishmael

            Agree totally! Historical infrastructure is a waste of money. Look at all the space in airports which is currently not being used. LAX has much less traffic, SEA-
            TAC seems empty, Nashville has big sections not being used, OKC built a big new addition to its airport and it is empty.

            High speed trains are a waste. Let’s first just get train service working between places like LA and San Fran that have functioning bathrooms and a good dining car.

          2. John L

            Let’s see; trains are a waste, the interstate system (one of the great wonders of the modern world, btw) is considered a disaster, and airports are underused.

            I guess you and the others prefer the US to go back to horse and buggy transportation, since you just eliminated all the other modes. If you denigrate all of these, what’s your suggestion? Forcing everyone into mega cities and mass transit isn’t an answer, btw.

          3. Ishmael

            Really the interstate commerce system was built to move the military after Eisenhower had seen how effective the autobahn was used by the nazi’s.

            First we must start with the understanding that 70% of the nation’s crude oil. Unless the US can start exporting enough to pay for the crude, the sellors of crude will become disillusioned with taking toilet paper for their oil. As Stein law says, if something can not go on forever it will not.

            To move large quantity of goods, the rail system is far more energy efficient. In addition, a lot of this consumer junk will be determined to be useless and will not need to be translated. When incomes decrease and traveling costs increase drastically I could see travel also dropping off drastically (also technology has made a lot of business travel unnecessary).

            People in many areas justify the present with what was justified in the past. Things change!

          4. Doug Terpstra

            John L,

            Acutally, IMO, rail is a highly efficient transportation and freight system, a huge opportunity for wealth-creating investment. Europe and Asia are way ahead of US there, with an economic advantage that will be enormous if/when peak oil hits. We can’t start soon enough, IMO, with serious investment in modern rail, transit, and alternate transport modes.

            And yes the interstate system is real marvel, one we are wedded to for the foreseeable future that may be an asset for readaptive reuse or retrofit, perhaps including rail or intermodal systems. My point was that it was a product of old-school thinking that spawned and metastasized many tumorous side-effects, which we should not allow to keep us rutted in obsolete, cancerous development patterns.

        2. Eric

          To your point on public transportation, I don’t know why there is so little interest in supporting these programs. Sure, infrastructure work might be shovel ready and showy, but for the large number of transit authorities facing budget deficits and needing to cut back, you have “paycheck ready” jobs there. The buses or trains exist and are paid for (by gov’t accounting standards), and are just going to be used less after any budget cuts. Plus it could help a low income or financially devastated worker get to any job that might exist – think a guy in an underwater mortgage, down to one or no cars getting a job in the city or nearby community. And consider that materials and machinery are the major costs in a construction project, plus they are inherently temporary jobs. I don’t ignore that there are other costs in transit jobs – but the cost of operation is $60-100/hr (including drivers and support staff – http://www.publicpurpose.com/ut-2002bus.pdf) with a good portion of that going to salaries. Seems like a solid win to me.

          1. Western Civil Engineer

            You’re missing one very crucial point. Infrastructure the right kind will produce millions of skilled high paying and value added jobs that cannot be outsourced to third world sweatshops and will also send the never produced one nickle of wealth wall street financiers into a hissy fit. Instead of the $1.7-trillion bailout of wall street why not channel that money in to one massive project that should have been built years ago but will come in handy now considering our 25% real unemployment rate namely the NAWAPA project (North American Water & Power Alliance). In a nut shell this project funnels snowmelt run-off in Alaska, The Canadian Yukon and Northwest territories that would otherwise go in to the pacific and Artic oceans and channels it through dams and reservours through the rockey mountain basin and into the Olagalla aquafers with some water even going into lake Superior and all the way down to Mexico. The project would immediately solve all of North america’s water problems for at least two to three centuries, provide 400,000 MW of surplus cheap hydroelectric power negating the need for dirty coal and nuclear power plants(not that I’m against nuclear power but lets build the nuclear reactors on the eastern seaboard and midwest so as not to risk an accident due to a siesmic event which is much more likely to happen in the west), make millions of now arid lands a bread basket for food production, and create new nature habitat and outdoor recreation/appreciation opportunities. Oh and by the way 85-90% of this project has already been designed since it was first concieved by the Ralph M. Parsons Construction Co. back in 1964 so much of the work is “shovel ready”.

      2. rd

        Thhanks for the response. We are at the point where there is a fair amount of replacement needed for existing infrastructure that does not usually need long, complex EIS’s etc.

        However, much of what we need is not replacement, but rethinking which will require complex public processes. Something like real expansion of rail (much more effiicent than cars and trucks) would likely require EIS’s and eminent domain actions. Expansion of bicycle paths and and pedestrian routes could require the same.

        Changing types of structures, such as replacement of a bridge by a tunnel could also require a complex process.

  3. leroguetradeur

    “the most strident, uncompromising opportunists, an area where the extreme right has a monopoly…”

    Not really. You perhaps need to have lived in Europe to have seen that neither extreme left nor extreme right have any monopoly on this, and that neither are significantly morally different when they get to power.

    I agree with you on an intuitive level about one thing, its basically a feeling that the other shoe is about to drop, and many of us do share it.

    You make a very curious opposition: “The conversation turned to whether the US was going towards revolution or fascism….” Why are these either alternatives, or the alternatives? It is a two by two matrix (like most things), we could either have revolutionary or moderate incremental change, and it could be right wing or left wing.

    If its right or left wing revolution, it will not much matter which, it will end as always in programs of mass murder in the name of some ideal or other. But it does not seem very likely, and certainly, some kind of mass uprising seems very remote.

    Remember that revolutions are not the consequence of mass uprisings, whatever the left wing myth. They happen because of disaffection within the ruling elite, where the reforming faction wins the argument, and starts on a process of radical (by the standards of the day) reform. If this process coincides with great popular misery, then the crazies may take the opportunity to mobilize that and seize power, as they did in the French and Russian revolutions.

    It is however radical reform by the ruling establishment as a consequence of a loss of a feeling that their institutions are effective and legitimate that starts the process. This is the sign to watch for. I don’t think you are seeing that at the moment. And Republican gains in the coming elections will not lead to it.

    Still, its interesting that these kinds of people are having these kinds of conversations. They do mean something, even if they do not mean imminent revolution.

    1. Yves Smith Post author


      I didn’t make this opposition, my two lunch companions chose to debate it, and then asked for my view. I though we are more likely to see a lot more random violence, I have my doubts re organized uprisings.

      1. East Coast Cynic

        Speaking of more random violence, I recall listening to a talk radio show close to a year ago where a Detroit Public Defender called in and said that the economic downturn had resulted in a dramatic increase domestic violence and DUI charges. Yep, I think the White Panthers, as well as the 1.0 Black ones, are a thing of the past.

      2. leroguetradeur

        Another possibility is that the Federal Government might be driven to the conclusion that it was necessary to take on the finance sector. That the risk of doing this was less than the risk of continuing to placate them. Governments have done things like this in the West in the 20c. One thinks of Thatcher and the UK unions. Sectional interests do not realize how much of a minority they are in, until it happens. Think of the legislation of the thirties in the wake of the Great Crash for a US precedent. Yes, its not happening yet, but we could get there.

      3. Psychoanalystus


        Somehow I suspect that the majority of readers of this blog live in fairly low-crime areas. As such, they are likely removed from the large sections of their cities torn up by gang warfare, where most underprivileged members of society have had to live for decades now.


    2. papicek

      As a member of the left (the angry left, mind you), let me say that most of us fully realize what it takes to conduct a revolution. In somewhat modern terms those are: money, organizational ability, a flair for leadership, and most importantly, a FAT ROLODEX (maybe a long mailing list these days). That’s why even the left isn’t talking about black unemployment, that 1 in 9 black men see the inside of prisons – far, far higher than any other group, or the plight of the poor these days. We’re talking about the middle class who are about to join the ranks of the poor. Anyone with any background in history (yours, truly) realizes fully well that the middle class is “the great revolutionary class” (h/t John Fowles), whether they were Renaissance merchants, French lecteurs, or the colonial American merchant and professional classes. As a purely historical observation, social instability most often arises out the middle (whether as revolutionaries or warmongers like the German professional and managerial classes at the dawn of the 20th century). If Yves’ lunch companions are nervous, then they should really take a very hard look at the condition of the American middle class, and consider the role unions played in its creation. They might want to start with what Elizabeth Warren has to say on this. We often speak of the middle class as an inevitable American institution, the product of our “classless” society growing inexorably from the country’s inception. We like to think of the middle class as “secure”. Nothing could be further from the truth. That notion of security is only about 40 years old. Prior to this, professional, white collar workers would come home everyday and work with their families at some menial task like collecting paper scraps that they would sell for the few extra pennies they needed to survive. Prior to this, Chautauqua (out of which American Progressivism was born) was as much a self-help and entrepreneurial movement as a religious one. We traded that away, and now we wait for “convergance”. Maybe her companions should feel nervous, but as a class, they’ve nobody to blame but themselves.

      1. Psychoanalystus

        “that 1 in 9 black men see the inside of prisons – far, far higher than any other group”

        Yeah, sure, sure, there are 3+ million Americans behind bars, many on trivial charges. But now just think about how hugely profitable stock in the new and growing “private prison” business (CRN, CXW, GEO) has been to fine Wall Street investment banks everywhere…


    3. Constant

      Xenophobia All Over the Place? by Immanuel Wallerstein
      We see it in the United States, where the so-called Tea Party wants to “take back the country” and “restore America and…her honor.” At the rally in Washington on Aug. 28, the organizer, Glenn Beck, said: “As I look at the problems in our country, quite honestly, I think the hot breath of destruction is breathing on our necks and to fix it politically is a figure that I don’t see anywhere.”

      In Japan, a new organization, the Zaitokukai, last December surrounded a Korean elementary school in Kyoto, demanding to “expel the barbarians.” Its leader says he has modeled his organization after the Tea Party, sharing the sense that Japan now suffers from a loss of respect on the world scene and has gone in the wrong direction.

      Europe, as we know, has seen in almost every country the rise of parties which seek to evict foreigners from the country and return the country to the exclusive hands of the so-called true citizens, although how many generations of continuous lineage it takes to define a true citizen seems to be an elusive question.

      Nor is this phenomenon absent from the countries of the South – from Latin America, Africa, and Asia. There is no point in spelling out the multiple and repeated instances of when and where xenophobia has reared its ugly head.
      Commentary No. 288, Sept. 1, 2010

      2 times a month I look forward to see what the next commentary is about.


  4. Anal_yst

    Not sure I’d call either of these anecdotes “data points,” but interesting nonetheless. While there may be un(der)reported crime in NYC, its hardly the wild west. I don’t think I’ve ever seen anything about violent crime show up in my Facebook feed which is heavily-skewed with NYC-based friends. Surely, things are far worse than the MSM is reporting (do you hear me NYT, CNBC?!!?!), but I don’t think we’re close to revolution, although if there is anything even remotely close to it, I fear it will be for mostly the wrong reasons, as The Public is largely ignorant of reality, alas…

    1. Yves Smith Post author

      Violent beatings of taxi drivers are apparently way up, which is an economically motivated crime. And both were confident that Bloomberg is under-reporting crime in the outer boroughs.

      1. cougar_w

        As crime increases and becomes more depraved in nature, our internal “fence” for what is important and reportable also goes up. This has been going on for 100 years of course, as societal norms have veered toward acceptance of violence (ref: sports and entertainment). My general observation today is that unless there are guns involved, it goes unreported. In fact, unless guns are involved the police might not even show up.

  5. lalaland

    The rich have always been notable for their paranoia, their fear, and their delusions of grandeur. I’m firmly planted in the lower end of the middle class (by NYC standards) and there is certainly no talk of revolution in my circles; I’d even wager the lower rungs of the economic strata are more attached to our form of government than the rich are.

    “And he pointed to rising and underreported crime in the city” – where did he get any evidence crime is suddenly being underreported? Crimestats says murder is up 15%, and that should surprise since we just got through one of the hottest summers on record (not to mention the previous years were record lows so it’s unsurprising it would go up a bit eventually).


    1. Conrad

      “The rich have always been notable for their paranoia, their fear, and their delusions of grandeur.”

      add “entitlement”.

  6. Edmund in South Gloucestershire

    The fundamental problem with the Ponzi-Debt, fossil-fueled, endless growth economy model is that everyone except fantasists knows that it must eventually hit the buffers.

    We cannot see the future, so every time the scheme hits an obstruction we hope and pray that it’s just blockage we can break through. Then we can keep the scheme going long enough to enjoy the benefits to the max and die a natural death before industrial civilisation reaches the end of the cul-de-sac it’s been heading down since Spindletop, Texas, 1901.

    As Yves’ correspondents are closer to the real knowledge centres than most of us (i.e. they’re talking to people who see into the immediate future through a relatively transparent gauze), it’s indeed worrying to hear that they appear to believe that the thing against which their fingernails are scraping is not a short-lived rough patch but the bottom of the oil-growth-debt barrel itself.

      1. cougar_w

        If you want a second opinion: absolutely.

        The G7 countries are poster children for unsustainable fantasy, and have been for 30 years on the inside, maybe 80 years all said. The last 10 years have been pure speculative fluff, a complete fiction.

  7. Ignim Brites

    Re: “…whether the US was going towards revolution or fascism”. This meme has its roots in the Marxist superstition of a materialist dialectic. Fascism also was a revolutionary ideology. It was light years more intelligent than Marxism (or Nazism) and, in fact, remains the only quasi serious contender in the ancient cult of revolution. But the new name for revolution is secession. And this is the far more likely course of regime dissolution in the West in the conventional sense of political action. But what is really emerging on the horizon is narco-anarchism as the challenge to the Federal government in Mexico illustrates. Whether this can make serious headway in the US remains to be seen. We will get something of an answer if California decides to compete for the cartels’ business by legalizing pot.

    1. Conrad

      “Fascism also was a revolutionary ideology. It was light years more intelligent than Marxism (or Nazism) and, in fact, remains the only quasi serious contender in the ancient cult of revolution.”

      Sure, if you consider feudlism revolution.

      The aim of Marxism is to increase the franchise, the true legacy of the enlightenment and the history of all progressivism in the US from the freeing of the slaves to votes for women to the New Deal to the civil rights movement. Not that all these expansions of the franchise were either explicitly or implicitly Marxist but their modern basis was in the enlightenment.

      1. Progressive Ed

        Wasn’t Marx’s vision to eliminate private property, money, and all markets?
        And historically, isn’t Progressive the American term for Fascist(i.e. the individual exists as only an extension of the will of the State)?

  8. kievite

    I am pretty pessimistic about the current situation. There are some tectonic forces at work and politicians can do only so much to try to prevent an earthquake.

    One aspect of the problem is that the society became way too complex.

    Tainter in his book suggested that as societies become more complex, the costs of meeting new challenges increase, until there comes a point where extra resources devoted to meeting new challenges produce diminishing and then negative returns.

    The USA has an interesting twist in this regard which make some form of drastic change more plausible: Republican Party. The current Republican Party (aka wrecking crew) is a textbook demonstration of the forces that prevent any meaningful reform.

    The amount of resources diverted to military industrial complex and financial companies probably serve as another severe limitation on what can be done to prevent new crisis.

    And with 40% of population believing that Saddam was instrumental in 9/11 the chances of political change are slim. Looks like country is pretty evenly divided and multi-year brainwashing can’t be reverted until the current generation pass away.

    Rampant unemployment and absence of meaningful jobs creation are two features that make the current situation unsustainable.

    Simple solutions like some form of fascism is definitely become more attractive in this atmosphere. So we can be sure that attempts to explore this opportunity will be made. Clerical fascism is one possibility.

    High unemployment is a powerful catalyst of mass support of any radical ideology.

    Actually the beginning of this century looks in many ways similar to the beginning of the previous century. And we know how things developed in previous century.

    We just do not know the form “change we can believe in” will take.

    1. pros

      excellent points
      obviously you hit only the highlights
      we have evolved a long way towards a defacto military dictatorship—Obama is a “captive” of the Pentagon, the paramiltaries and their corporate allies. No president in this country under present circumstances has real power over these guys.
      So look for the corporate/military to further consolidate control as the situation worsens. The outcome? Who knows…
      probably a series of ever more severe “crises” that justify further consolidation of control…Eisenhower laid it all out in his famous farewell address. Democracy is not consistent with the existence of a huge standing army.

      1. Leviathan

        Interesting comments.

        In a nutshell, I would say that we are far from any organized movement on the ground. We have a lot of inchoate rage and a great deal of anxiety (bordering on paranoia), but they are layered over a substantial base (let’s say about half the country) that has not been directly impacted by this crisis and are hoping it all blows over before it reaches them.

        Contrary to the class-based analytics some have offered here, I see the “contented half” as spread pretty evenly across the country and across class lines. Simply put, if you have a job and your old salary and neither need nor desire to sell your house then it is easy to sit back and hope for the best. Unfortunately, this “contented half” is also the source of many attacks on the new “welfare queens” (e.g. the long term unemployed, foreclosees and bankrupts). They pity but do not identify with friends and family members who have fallen into the discontented half. Tsk tsk, but they bought too much house/got too greedy/didn’t time the market right, etc. They do not understand that this is a musical chairs depression–it is not skill but luck and timing that determine who loses out.

        On a philosophical level what is happening is that the more thoughtful members of the citizenry are reconsidering their consent for the ruling establishment. This can be a positive change with a good outcome. I have been very active in local government these past few years and saw up close how badly run it can be, how much taxpayer money is squandered because few bothered to question spending priorities Bell, CA was a wake up call. Some will learn from it. The question is whether they will turn the ship round in time.

        Citizens are now waking up. There is a brief window in which the governing classes can appease them. Not necessarily by throwing money at them, but by demonstrating that there is a recognition of the problem and a PLAN to fix it.

        The danger is that neither Obama and CO. nor the Republicrats seem to understand the need to do this quickly. Is it because they personally are doing fine? Yes. DC is a prosperous island in a sea of pain. Versailles, anyone?

        Finally, the two most interesting suggestions made above (IMHO) are that we could be on the brink of secessionist movements (with which I definitely concur) and that there is a distinct danger of fascism rearing its head, to which I would just add, beware the growing power of top secret government. This is a state within a state and it controls a segment of the economy that is robust and rapacious, despite the crisis that has undermined most everything else. Fear the power of the banksters and oligopolists, yes. But fear these invisible power brokers at least as much. They are the unknown unknown that lurks in the bowels of DC. Even the pro-government Washington Post fears this beast. It is the most dangerous force in the world right now (and I feel quite certain that I have added to some watch list merely by writing these words). What a sinking feeling.

        1. PQS

          Agreed. It is easy for many to “sit back and hope for the best.” I’ve seen this first hand, and up close. I’ve been unemployed for six months, yet when I sit with parents at kid parties, this goes right over their heads. They are employed, still making payments, and yes, there may have been a downturn, but it hasn’t hit them yet, so it just isn’t real. Even when it is sitting right across from them.

          You make a lot of good points. This is one of those threads that is bracing to read, but still scares the pants off me.

        2. Psychoanalystus

          “fear these invisible power brokers … (and I feel quite certain that I have added to some watch list merely by writing these words). What a sinking feeling.”

          Well, I don’t know about that. They’re probably too busy worrying their jobs.


    2. Jim Haygood

      You started out with the ‘complexity’ bit — how can a country of 300 million be governed democratically, with meaningful citizen input? Obviously, it can’t — it devolves to elitist, corporatist rule, as we’ve seen.

      But to blame it on one faction of an entrenched, corrupt duopoly? How tiresome, how anachronistic.

      Ten countries of 30 million would be more governable than one of 300 million. And when it’s popularly understood that the US fedgov is INSOLVENT, there will be huge incentive for states and regions to repudiate federal debt, and start with a clean slate (including a clean slate of political parties — no Demonrats or Repukes with compromising ties to the failed ancien regime).

      Who would have thought that ‘Bernie Madoff accounting’ would take down the ‘world’s only superpower’? We coulda been a contendah ….

      1. Sufferin' Succotash

        Somehow the notion of a disciplined and centralized political movement taking over the US doesn’t seem very convincing. The country’s too big and undisciplined for that. A revolutionary situation is more likely to develop by means of secession movements which are by no means limited to the South or to the political Right(see Alaska, Minnesota, NYC).
        Nor would secessions necessarily be violent. One could visualize states and localities (especially those which send more tax dollars to Washington than they get back) “requisitioning” Federal revenues for their own purposes. A dithering and irresolute response from Inside the Beltway could easily lead to en masse secessions resembling the USSR in late 1991. As long as the seceders didn’t do something stupid like, say, opening fire on a Federal military installation the USA could be in pieces before you could say James Buchanan.
        Speaking of Buchanan and his more illustrious successor, consider a headline in the New York Times just after Lincoln took office and just before the attack on Ft. Sumter: “Wanted–A Policy.” Abe & Co. were widely perceived as weak and indecisive until the Confederates resolved matters by shooting first.

          1. papicek

            I don’t see it so much as an hypothesis as a dynamic. Sit down at a poker table sometime (or a chess board for that matter) and you’ll see it all the time. Someone’s nerve will break. Whether we’ve reached the point where breaking nerve is enough of a factor, due to one kind of desperation or another is another question. Are there signs? Well, perhaps. I’ve lived in the metro Boston area all my life, and I’ve never seen people begging before this downturn. Now I see it daily. White people, black people, both men and women. Late 20’s to what looks like around 50 years old. Obviously people who have always worked, and want to again. They’re holding signs: “2 CHILDREN. WILL WORK FOR FOOD.” (I first saw that one a few years back, and I’ll never forget the chill it gave me. It could easily have been me – I’ve been laid off before.) My first reaction to Yves’ piece is to think, “yeah, it happens. You’ll survive.” Then I remember just what an ugly experience that can be. Then I remember that sometimes, it doesn’t matter how much game you’ve got, if people aren’t buying what you have to sell.

        1. doom

          And for secession see Vermont too. It’s not just for the right, although the right hops on the bandwagon wherever it comes up. The South can now make a case under customary international law that they have recourse to rebellion because the state has deprived Gulf peoples of their marine livelihood and well-being. There’s an incremental option there, UK-style devolution. It doesn’t strike at military/industrial parasitism but it might permit regions to better control banks and other oligopolies.

          1. Maude

            The ‘State’ has deprived them? You seem confused, the entity that deprived the Gulf of their Marine life is a Private ‘foreign’ Corporation.

          2. doom

            A private foreign corporation in lockstep collusion with the state (e.g. NOAA, USCG, EPA, DOI, and legislators at the state and federal levels.) This is not a blanket antigovernment rant, this pertains to a state that risks failure from pervasive corruption and trading in influence.

        2. cougar_w

          Ring of truth, right there.

          That comment (well this whole thread) is going to become part of my Book of Shadows.

      2. purple

        Except there is nothing to show that a country of 30 million won’t create its own divisions. And then you break it down to 3 million,etc etc

        Events are moving in the opposite direction.

        The world is more cohesive and integrated than at anytime in human history. I can communicate for free, by video and audio, right now with anyone in the world.

        1. pros

          “right now” are important qualifiers

          google and verizon have made proposals to end net neutrality

          once all communication is web-dependent and controlled my monopoly, centralised control of access and censorship become quite easy matters.

        2. cougar_w


          You are speaking to my industry, which I know top to bottom. And what you perceive is illusory at least. The entire structure could be collapsed (or worse, subverted) with one well-placed Presidential order. Or more easily, a somewhat broader interpretation of a few lines in the (you have to wonder about who names these things and the extent of their criminal genius) Patriot Act.

      3. Ishmael

        Jim — Very good thoughts. Originally, as the 13 states were set up we had a large number of seperate experiments going on regarding how to govern. If one state was doing better than another then good ideas could be taken from that state. The people would have demanded it.

        Since 1865 we have had a movements towards more and more centralization forcing bad ideas down upon the population from the top even though the people were against it.

        1. liberal

          If one state was doing better than another then good ideas could be taken from that state. The people would have demanded it.

          Is there any evidence that it worked that way? It certainly doesn’t now.

    3. Ishmael

      Kievite says — sayd “Clerical fascism is one possibility.”

      That is an interesting choice of words. I have sometimes wondered if the future instead of being like the French Revolution instead being more like the English Civil War, when the protestant conservatives became disgusted with the English monarchy. Of course it only took a generation of the Lord Protector’s puritan rule for the English to get their fill of that.

  9. Kevin Smith

    The grossest error in the stimulus package was to waste money on clunkers and homes, when the US and its allies allies in desperate need of resources to maintain its basic infrastructure.

    I realize there are lead time issues [and in the US, the certainty that projects will be bogged down in litigation].

    It would be criminal [“hostis generis humanis”] if the various wars were being used as “stimulus”.

  10. pros

    Schwartzman has become a drunkard and needs to go to rehab.

    his position is dangerously close to

    “If you say anything bad about a banker you’re a Nazi”

    1. kievite

      That’s a useful political trick. It puts government officials on the defensive and forces them to keep proving that they are friendly to business.

  11. Genghis

    There is no doubt in my mind that all your interlocutors make excellent points. While it’s debatable that stimulus funds are too few they certainly seem to have been misdirected. Witness, for example, the non-stop traffic jams and deteriorating air quality in the LA basin and tell me that investment in a proper commuter rail system doesn’t make sense from the employment and positive long run externality angle.

    The main problem seems to be an increasingly decadent national mentality demanding instant self-gratification without concern for long term challenges and collateral damage. This urge seems to have gone parabolic over the past generation and can explain lots of phenomena from the increase in income inequality to terrorist toddlers. Suppose this is par for the course for an empire in (relative) decline. The time to fear revolution is when the new age lumpen proletariat cubicle dwellers, worked to the bone to fatten corporate profit margins but facing deteriorating standards of living themselves, figure out that their futures have been mortgaged by the politicians and the corporations who control them.

  12. Jim Haygood

    This chart shows an index compiled by the Consumer Metrics Institute, which is drawn directly from online consumer durables purchases and therefore leads GDP reports by several months. The rate of change in the smoothed index has plunged back to its crisis level of autumn 2008:


    Article link:


    So I tend to believe Roubini’s claim that 3Q GDP prints sub 1%. And for my own part, I suspect that 4Q goes negative, as we end a third year of recession in December 2010 and enter the fourth. As an aside, Depression I (1929-1933) lasted 43 months.

    Yep, it’s pretty ugly out there. On Monday, somebody stole a log splitter from my rural farm in broad daylight — our first problem with theft in a long time. Lots of desperate folks out there, urban and rural.

  13. MikeNY

    I agree, Yves. We will see more QE, probably in Q3, and, ultimately (absence another Internet miracle), we will be forced into a huge jobs bill. We cannot have 15 million people falling off unemployment benefits and hungry.

    But since the first stimulus was largely wasted giveaways to the states and to the Dem voter base, the bar for the next bill has been set higher — which means we will need to endure more pain (i.e., cover) for DC to act. A big Republican victory in November just raises that bar more. The end game for everyone is political stability.

  14. Kevin de Bruxelles

    Very interesting post. I’ve been thinking a lot about this lately. Inspired by both Barrington Moore’s Social Origins of Dictatorship and Democracy and a recent post Attempter had up about among other things Marxism. I have been trying to break down American society into classes and to understand the power relations between the classes. From what I can see there is no revolution on the horizon, but who knows maybe things will change?

    In feudal times the class structure was easy. You had the peasants who produced the wealth and the aristocratic/priestly class who were parasitical and extracted as much wealth as possible from the peasants. In return the aristocrats provided military protection and occasional tickets to the afterlife. The key to stability was convincing hte peasants that their overlords rendered essential services.

    In modern America you basically have four classes; two parasitical and two productive. The highest is the parasitical Rentier class which basically hovers over productive society seeking opportunities to extract rent in all its various forms. At the bottom you have the parasitical Lumpenproletariat (gang bangers, meth heads, crack ho’s and the like) who suck the life blood out of society through criminal activity and/or lives on welfare or in the penitentiary. The two productive classes are the Peasants; who are uneducated to somewhat educated people who basically follow the law and most of the time have jobs. On top of these you have the Bourgeoisie who are white-collar workers with educations and with more cultural refinement than the Peasants.

    Politically both parties are under the thumb of the Rentier class. Democrats tend to be more culturally and occasionally economically aligned with the Bourgeoisie and they tend to be quite protective of the Lumpenproletariat. Republicans are economically tied to the Rentier and occasionally to the Bourgeoisie class but make strong emotional appeals to the Peasants and are quite hostile to the Lumpenproletariat and some elements of the Bourgeoisie.

    The key to a strong and stable society is to diminish the two parasitical classes to the minimum. The only way a just welfare state is possible is if producers and the parasites tend to be the same people, with their status depending on their age or particular circumstances. The key to avoiding conflict is if the line between parasite and producer passes through the same person. A worker who is a parasite when young and old and occasionally when unemployed will support a welfare state while he is a producer as well. But when a Peasant sees a corrupt and greedy Rentier class combined with a huge and rapacious Lumpenproletariat sucking the life blood out of his society, he will not support for the continuation of the looting welfare state.

    For there to be a productive revolution in America the Peasants and the Bourgeoisie would need to combine against the two parasitical classes. But the culture wars being driven by the media elites ensure that these two groups will stay at each other’s throats for the foreseeable future. IN some ways the Peasants would love to go after the Lumpens and many elements of the Bourgeoisie would go after the Rentiers but the key is that this will only work if both productive classes combine. A revolution led by the Bourgeoisie alone would be pretty hopeless. If the Peasants really started to rise alone (and not the current Rentier-class led Tea Party movement) their anger would be directed towards the Lumpenproletariat and away from the Rentiers and lead to a hopeless and bloody stalemate.

    So it seems the current trends look good for the Rentier class. Profits and labor are more and more being outsourced. The ever-growing Lumpenproletariat not only provides live training for America’s security forces to train for future overseas duties, it also ensures that tensions between parasites and producers means that what remains of the US welfare state will continue to be dismantled. The Bourgeoisie will take a hit but they have no real options besides expatriation since they refuse to combine with the Peasants against both parasitical classes.

    And of course I have not explained (nor thought as much about) what it means to actually attack a social class. My first thoughts would be that to attack the Lumpenproletariat would not only mean making sure jobs were available for those who actually did want to pass to the Peasant class, it would also mean to attack the very dysfunctional culture at its root and that means with the raising of children.. Most Lumpen adults are hopeless after a childhood of Lumpen deprivation. Attacking the Rentier class would be more straightforward, the question is acquiring the power to actually carry out attacks.

    1. attempter

      Thanks for the link, Kevin.

      Going with this terminology, if we eradicated the rentier parasites, then the lumpenproles and the bourgeoisie would soon cease to exist, and we’d have only producers.

      Since all unemployment is the result of artificial scarcity of one or another input, engineered in order to create extraction opportunities for elite parasites, then once rent-seeking was abolished there’d no longer be unemployment, since everyone would have the opportunity to work. To give one obvious example, post-oil localized food production will be a growth industry, and there’s no lack of land for such proprietors, except where land is hoarded by banksters. Eradicate the rentier land monopoly (which in fact never emerged from feudalism at all; to render it “capitalist” in a truly Lockean sense would constitute a modernization which never occured previously), and you generate sufficient economic capacity for full employment.

      Meanwhile the bourgeosie, the “white collar worker”, a hanger-on of the rentier class, would be forced by circumstance to stop leeching and commence working for a living. So it too would fade out.

      We’d be left only with a sustainable, steady-state, full-employment economy, which would also for the first time in history maximize human fulfillment.

      That’s one option for the post-oil world. The other is total refeudalization, but in a far more vicious way than prior medieval feudalism. That’ll be because we’ll lack the organic sense of family, town, countryside, religion, culture, while the overlords will also lack the restraints of the chivalry ideology (honored more in the breach historically, but they did exist). Instead they’ll operate according to the precepts of instrumental reason, “libertarianism”, greed fundamentalism, and totalitarianism. The result will be infinitely worse than the original feudalism.

      So there’s our choice – freedom and a new vision of prosperity, or total enslavement and death.

      1. purple

        Even more simply, without private property there would be no homelessness.

        Privatizing everything creates scarcity and rent-seekers,, and of course ‘self-interest’.

        1. Progressive Ed

          Great point. Let’s check out the Marxist cultures around the world (both now and historically) and model the USA on the one that delivers the most equality and least exploitation of the workers. My nomination is Cambodia of the 1970’s, though perhaps N. Korea or Cuba is more realistic. Viva La Raza!

        2. Ishmael

          Even more simply, without private property there would be no homelessness.
          Purple, I believe you have a typo. I think you meant, “without private property there would be no homes.”

          There, fixed it.

          1. Skippy

            Private or Common property see: earth ship developments.

            Land is bought by the community (no individuals), then lots are picked out of a hat. All must work together in the construction of the commons and maintain it.

            Skippy…American housing design, construction, zoning and long term sustainability is atrocious. A profit driven exercise for the benefit of the rentier class.

      2. Kevin de Bruxelles


        I find your idealized agrarian society very appealing; I am a bit of a foodie and my dream is to someday own some land and grow my own food (I may change my mind when I actually start doing that of course). And I’m sure many of the answers to today’s problems lie in moving in that direction. What I don’t see addressed is the human, no biological, propensity towards cheating. After all the human parasitical classes are no different than brood parasites like the cuckoo bird, which leaves its eggs in the nests of other species. Usually the cuckoo chick hatches first, grows quickly, and eventually evicts the true offspring of its “parent”. Other birds must then develop defences against this parasitical behaviour while not going so far as to destroy themselves in paranoia.

        So in an idealized agrarian society there will be bandits roaming the land. I’m thinking of Kurosawa’s “Seven Samurai” where a village must defend itself against the imminent attack by a well-organized band of thieves who will attack at harvest time. Of course the resultant creation of a soldierly class eventually leads to both private property and in order to enforce these property rights, a strong centralized government. And this government very quickly becomes the executive committee of the ruling class. And then the ruling class eventually gets dominated by the parasitical Rentier class. And then we are right back to where we started!

        I’d be interesting in your ideas of how to deal with Hobbes’ three problems of man’s selfishness, diffidence (demand for security), and need for glory. Obviously alongside these instincts are man’s ability toward cooperation and altruism. Any successful society must diminish the former (without resorting to totalitarianism) while encouraging the latter.

        1. attempter

          Well, I’m no hippie pacifist. My idealization would include a militia of able-bodied adults, like the Minutemen. So bandits, at least, would be no problem.

          As for greed and stratification trying to arise again within, I’m not sure. I think in terms of a far better educational system including the right humanistic anti-sociopath moral curriculum, along with something like the ancient Athenian custom of ostracism for incorrigible Randian scumbags. That’s just a sketch; I haven’t thought it all out yet. Unfortunately, it looks like we have time….

        2. EmilianoZ

          How’s the food in Bruxelles? Plenty of sprouts I presume. I don’t envy you.

          Why are the peasants so obsessed with the lumpen? I’m pretty sure the amount of resources they take up parasitically is negligible compared to those stolen by the rentiers. It must be like a rounding error in the vast sums diverted by the rentiers. The rentiers just do it more stealthily. That’s why it’s more urgent to deal with the rentiers.

          I don’t have any special sympathy for the lumpen but I know they can’t bankrupt us. The rentiers can, already have maybe. It’s so obvious. Why can’t the peasants understand that?

          1. Kevin de Bruxelles

            The food in Brussels is excellent. For the home cook it is quite easy to get your hands on high quality, in other words not industrial, products. Brussels sprouts can be good if cooked properly, braised for ten minutes and then pop some butter or walnut oil on them. My seven year old daughter actually asked me yesterday when we were having them again! (They are more for winter to be eaten with gibier (game) so she will have to wait a couple months).

            As for the cost of the Lumpen class vs. the Rentiers it may very well be that the Rentiers cost more. But there is indeed a huge cost to society associated with the Lumpens, not only for police, courts, prisons, security systems, etc, but also the lost productivity of having so many people who could be adding to society instead subtracting.

            As for why the Peasants react against the Lumpens it is because they live closer and feel more viscerally the effects of their parasitical behaviour. While they see on TV that Goldman Sachs is sucking the lifeblood out of their wallets via the TARP, it remains distant ant theoretical. But when a young meth head car-jacks a Peasant with their kids in the back it hits much closer to home, despite the fact that obviously the dollar amount of the Lumpen crime is much lower than getting robbed by a bankster. In general the Bourgeoisie have the wealth to insulate themselves from the Lumpenproletariat and so are able to analyse them in a much less emotional and more theoretical manner.

          2. EmilianoZ

            Good to see you’re enjoying life in Bruxelles. I’m extremely surprised your toddler daughter likes sprouts. With age I’ve managed to acquire a taste for some vegetables but I still can’t eat sprouts. So bitter! Is “gibier” deer meat?

            It also crossed my mind that proximity might be the cause of the peasants’ hatred of the lumpen. But it seems to me that they live in different areas. When I think of peasants I think of small towns in rural areas and lumpen make me think of inner city ghettos. I’ve made many road trips in the West driving through small towns in states like Wyoming or Idaho. The people there are extremely nice and helpful. I once had a car problem on a road in the middle of nowhere. I was amazed by the number of people who spontaneously stopped to check on me. I owe them big time. I don’t know what I would have done without their help. There’s absolutely no cell phone coverage in such areas. Anyway, what I’ve noticed is that those rural areas are mostly white and middle-aged. The young seem to have gone and I can’t remember any minorities. Are there white lumpen in such places?

      3. Psychoanalystus

        “We’d be left only with a sustainable, steady-state, full-employment economy, which would also for the first time in history maximize human fulfillment.”

        That reminds me of one of the original Star Trek episodes, where highly intellectual and scientific societies chose to live in what appeared to be simple peasant societies, with no machinery or technology in sight. The only thing though, is that those “people” had a few million years of evolution over us.


        1. attempter

          It doesn’t seem like it would take a million years of evolution. On the contrary, for the vast majority of man’s history we lived in a way closer to what I wrote than to the Hobbesian gangland free-fire zone in which we’re dying today.

          Even 150 years ago things weren’t like this. The deterioration of all aspects of humanity and civilization happened very fast, assisted by the immense energy pumped into the system (physically and figuratively) by fossil fuels.

          But as we enter the post-fossil fuel age, we’ll again have the main trend of most of human history, plus our bitterly won knowledge from the modern kleptocratic nightmare, which we can hopefully transform to wisdom and political will.

          We’ll have all that to put up vs. the desperate evil of a handful of criminals struggling to cling to what the whole world knows is nothing but stolen power and wealth.

          1. Kevin de Bruxelles

            Again, I do believe we are eventually headed in the direction you described but we have to be realistic about what that means. As far as we know humans only mastered the domestication of plants and animals roughly 5000 – 10,000 years ago. With agriculture came civilization and class structures. Before that, for around 98% of our evolution, we lived as more-or-less classless hunter gatherers. Therefore our hindbrains are deeply hunter gatherer, although of course human culture can evolve much more quickly than humans can biologically. Azar Gat, in his book “War in Human Civilization” argues quite convincingly that hunter gatherer societies match pretty closely to Hobbes’ state of nature in contrast to the idea that they were noble savages. He argues this based on early reports of civilized contacts with hunter gathers in among other places Australia and the Pacific Northwest but of course there is always some room for doubt.

            Gat claims that the death rate among hunter gatherer males was between 20% and 30% and that scarcity was almost always a fact of life. He describes their lives as a continual state of low intensity warfare. There were two main types of combat; symbolic set piece battles where deaths and injury were rare (his descriptions reminded me of American football which I see was mentioned further down the thread). These symbolic battles were meant to relieve tension. The real killing took place in ambushes where the attackers would (somewhat logically I must admit) try to maximize their chance of killing the enemy while at the same time minimizing their own risk of getting killed. This type of warfare is sometimes looked down upon by civilized armies as cowardly although recent technological advances have meant that modern armed forces are quite similar in that nowadays we have “soldiers” 10,000 miles away from the battlefield killing with the enemy with drones.

      1. Kevin de Bruxelles

        Thanks for the link, the articles look very interesting. In fact I have a copy of “The Power Elite” sitting on my desk but I haven’t read it yet, but I will soon.

        And I will keep in mind the “your only hope is the Dems” warning!

        1. doom

          On the other hand, I can relate to their idea that the key to reform is to crosscut partisan opposition with an non-exclusive ideological test – they suggest human rights. That was the secret of the civil-rights movement, after all: it tore both parties apart.

    2. rene

      I appreciate your helicopter view on the classes of America, Kevin. One point of criticism, if they guys and gals from the Lumpenproletariat would cease to exist. There would be an awful lot of institutions such as the police/penitentiairy system, the DEA and FBI facing dramatic job losses. We MUST maintain the status-quo. We can’t afford to lose another couple of million middle-class jobs. Therefore, we have to find ways of providing the crack whores and gangsters with cheap heroine, cocaine and crack from Afghanistan, Colombia and of course Mexico.

      1. Kevin de Bruxelles

        Thanks, and yeah, I bet the new stimulus will in fact just be turning 10% more of the population into Lumpenproles by shipping even more Peasant jobs overseas so that we can create even more of those security-type positions.

    3. Chicagolawyer

      You left out the government worker class, which likely belongs on the parasitic side. Already there is a tension over private sector workers having to contribute taxes toward the generous pensions of government workers and forgo saving for their own retirement. Though it professes to be committed to empowerment of the little people/change, the government worker class benefits most from the status quo (control over the means of taxation/appropriation).

      1. Kevin de Bruxelles

        Good points. If government is but a tool of the Rentier class, deployed to extract wealth from the productive Peasants and Bourgeoisie, then its workers could certainly be considered parasitical. On the other hand, if a government works in the interest of the productive classes, then its workers should be counted as productive.

        What is interesting about the government vs. private sector worker compensation debate is that the private sector worker is put in the ambiguous position of being somewhat on the management side of the issue when considering public sector compensation since if we look at it as zero-sum (and some may argue it is not) then the government worker’s high pensions and salaries come at the expense of the private sector worker in the form of higher taxes. In a healthy society the private sector worker has to be convinced the government worker is providing society a useful service in return for his salary.

    4. skippy

      Um 4 categories…now where have I read that before ummm.

      Slave, Freeman, Citizen, Nobleman.

      Ohhh I would love some journo to give Obama a HAIL CEASER after a answered a question.

      Skippy…Togas and gladius for all, really I mean it, it sure would clear up the visual aspect of this illusion.

    5. jedimom

      I would suggest to you that the Bourgeoisie and Peasants are already uniting. I am a lifetime Dem and Tea Party Patriot. We are college educated middle class and are Tea Party Patriots. The Tea Party encompasses the ‘Peasants’ and the ‘Bourgeoisie’. Obama and FIRE and TBTF being rescued off our backs has united us. We will VOTE out the incumbents in DROVES. When the GOP fails to learn their lesson and after 2 yrs of gridlock Romney us elected in ’12 and they try trickle down with no help from the bottom up again, they will lose their new base and the Indies and DNC Dems such as myself and hubby, will all switch back to Dem and vote Hillary in ’16.

      Hillary would not have let FIRE and TBTF run the show. She would have done HOLC. That is why FIRE and TBTF made sure she didnt get the nod. It will be their undoing. We will get her anyway, in ’16, by then FIRE will be lucky if they werent all run out of town on a rail.

      I support free market capitalism, but a well regulated, NON CAPTURED, free market. I want my DLC Dems back, we all grew income in the 90s. Hillary can get us there again, If not it beats me where we go next.

  15. Adam

    Many people early on wanted to compare Obama to FDR. That comparison could never work out because FDR came to power after the country had veered off the cliff and already crashed and burned. People were ready for major change including many of the elite. While things are rough now, the country hasn’t come apart at the seams, yet. I’m pretty pessimistic and expect it to sooner or later. The interesting part will be who ends up with the controls at that point, the new FDR, Churchill, Hitler, or Mao?

    1. Jim Haygood

      Frank Roosevelt had a clean federal balance sheet, thanks to Coolidge’s fiscal surpluses in the 1920s. He had enormous unused borrowing capacity, and a budget devoid of ‘entitlements’ tapeworms.

      O’Bomba wasted what little borrowing capacity he had on corrupt TARP II bailouts, and expanding the Af/Pak quagmire. Stoopid! One Term Obama richly deserves his approaching obscurity.

      1. rental_paradise

        ‘One Term Obama richly deserves his approaching obscurity.’
        You really think the first African-American elected to the presidency will fade into obscurity? Really?

        1. EmilianoZ

          “It doesn’t matter if the cat is black or white as long as it catches the mice.”

          The same is true if the cat doesn’t catch the mice.

  16. Paul Tioxon

    The most relevant recent analysis on social revolution, would the African-American Civil Rights Movement in the 20th century. The problem with the people here is that they are so socially isolated they have no idea what goes on, what is fabricated astro turf media manipulation and what kind of powder keg could ignite. The damage to the well educated middle class, the middle managers and the higher up corporate HQ types will be the death knell of our placid social order. It is a well maintained thesis, that rising expectations among African American, who had achieved a measure of success, money, education, responsibility and confidence from their WWII experiences in Europe and after at home, decided to push to a conclusive victory over Jim Crow, 2nd class citizenship in the North and overall acceptance into all of the venues of the mainstream of America. Of course they had many courageous allies outside of their community. But the key point here is the rising expectations and the domestic Berlin Wall they were smashed up against while coming home to America. Che was a doctor, Arafat a civil engineer. You get my point. Right now there is a lady in Philadelphia selling cupcakes from a truck. She use to be a lawyer. Her truck was confiscated by the local business licensing inspectors of the city. It did not make people love government more. As we have seen with the character assassination against the strategic defaulters, usually, the wiser, better educated, less sentimental parts of the middle class that do not have the social ties that bind as much as the corporate mindset that made them successful, they are not being spared the welfare queen treatment to stoke the passions of resentment. Those that remain employed, housed, toting their children off to college undisturbed, need to feel that their neighbor is the slacking enemy, not the oligarchs of Wall St. If too many more well educated, healthy minded, confident middle class types find themselves involuntarily ruined, their anger will not all be inner directed. They will not feel guilty or ashamed and their anger may well be directed outward towards the real culprits. The people who spent a lifetime pursuing success in a discipline manner while deferring gratification know all too well that revenge is a dish served cold. Economic recovery delayed is economic recovery denied. And desperate people do desperate things, especially after they have nothing left to lose. Let’s hope and pray that Obama sees the crisis for what it is, not nearly over and crushes the economy with liquidity to get people back to work and not have time on their hands to listen to demagogues that will tear apart what tolerance and patience we still have left.

    1. pros

      Crunch time will probably come when we cannot afford to both: 1.pay the military and 2. bail out the banks.

    2. readerOfTeaLeaves

      And desperate people do desperate things, especially after they have nothing left to lose. Let’s hope and pray that Obama sees the crisis for what it is, not nearly over and crushes the economy with liquidity to get people back to work and not have time on their hands to listen to demagogues that will tear apart what tolerance and patience we still have left.


    3. JTFaraday

      “If too many more well educated, healthy minded, confident middle class types find themselves involuntarily ruined, their anger will not all be inner directed. They will not feel guilty or ashamed and their anger may well be directed outward towards the real culprits.”

      I agree they won’t blame themselves.

      They’ll direct their anger at the teabagging rabble, which is why The Tea Party was astroturfed into existence in the first place.

      Then the baggers were given top billing in the NY Times.

      That the cultural “liberal” blogosphere can’t (ever!) resist being led down this path by the elite media is sufficient evidence that the bailout kings have found adequate scapegoats for the duration:

      “Selfish young people?! What about retirees who demand unlimited medical benefits? They don’t want government interference in “their” medicare, and no one but them gets subsidized medical care. This includes especially the Tea Partiers, who wanted limited government spending on everyone else.”

      So, we’ll cut their social security–that’ll teach ’em!

  17. Eric

    To say things like the extreme right has a “monopoly” on strident, uncompromising opportunists fundamentally discredits this contribution. It simply isn’t true, either currently or historically. If thinking about what is written is unimportant, then the reader has every reason to wonder what other parts of this post and other posts on this site are simply typing for typing’s sake on the part of the author. You treat what you write more seriously, I’ll read what you write with a great deal more interest.

    1. peterb

      In the meantime, it’s immediately apparent your flaccid plea for equivalence renders your comment entirely useless.

      1. IdahoSpud

        A batshit-crazy leftie movement that hogged th evening news wouldbe a nice counterpoint to Yves’ assessment. Since there is none, her point stands, unflaccid.

    2. cougar_w

      To say things like the extreme right has a “monopoly” on strident, uncompromising opportunists is to simply state the obvious.

      Perhaps you are wondering how such a lop-sided situation could arise in a country where everyone has free access to media.

      It is a myth that everyone has free access to media. In gaining access to media it helps if one is a strident, uncompromising opportunist as this sort of behavior suits the agenda of the media moguls, who as a class are strident, uncompromising opportunist.

      See? It all makes sense.

  18. Bruce P.

    About 15 years ago, a colleague and friend told me, “Pretty soon, there will be three groups of people in America: the super-rich, everybody else and the armed guards that keep them apart.” Now, this observation came from a battle-hardened, ex-Marine who had been up near the DMZ in Viet Nam, someone who later had become a Quaker. So, he saw both sides of the war/peace calculation, and he came to choose peace.

    I somewhat agreed with my friend’s prediction but thought it would take years for this to evolve. Wrong! I believe it’s happening more quickly. Witness the barriers and police presence that keep the G-20 types and the Davos crew cocooned away from the protesters.

    As your link to the New Yorker article on the covert operations of the Koch tycoons illustrates, the super-rich effectively exploit wedge issues to drive divisions among the population so that any organized resistance to the elite agenda is neutralized.

    The Brits successfully used the divide and conquer strategy in its occupation of Kenya. They were afraid that the three main tribal groups would join together to oppose their rule. Some Kenyan authors assert that British authorities eventually favored the Kikuyus to split them off from the other major tribal groups. It created a legacy of internal rivalry and division that was tragically reflected in the horrendous aftermath of the 2007 election, when ethic rivalry resulted in more than a thousand dead.

    Hopefully, the recent constitutional vote in Kenya will reflect a new era of ethnic harmony; hopefully, too, the bulk of the American people will awake from their “lotos-eaters” daze and recognize that our emperors have no clothes. Then, maybe we, too, can move toward a period of mutual and peaceful collaboration.

  19. marketfollower

    Selfish young people?! What about retirees who demand unlimited medical benefits? They don’t want government interference in “their” medicare, and no one but them gets subsidized medical care. This includes especially the Tea Partiers, who wanted limited government spending on everyone else.

    1. jedimom

      I don’t think you understand. The Tea Party wants govt to stop spending on what we perceive as social engineering gone mad. All I want, as a middle class Dem, was to keep what I have, my home and middle class existence and see my children have the same chances I did.

      I do not want Schwarzmans life or his daughter’s ‘Manny’ lol. And while we were left in peace it was fine whatever FIRE did. But now it has threatened our existence in the middle class.

      We have an Innate sense of when w are endangered and the spending Obama has done CLEARLY HAS to lead to tax hikes, which we also innately understand will endanger growth and thus our existence.

      That is why we have been gathering since April 15 09, The insanity of the HCR bill when we were teetering on economic collapse, was CLEAR to us. But Congress would not listen.

      Then of course there is the alienation being created by the MSM. Labelling any and all racist! islamophobe! Tea Bagger! is not going to make the scared middle class feel part of the big picture, safe. It just further validates our fears.

      We see a group of elites-MSM, Betway types, pundits, who think they know ‘better’ than we poor pee-ons. Well we think we are the backbone of this country. We think this country was created for us and by us and we do not like to be told to sit down and shut up, especially when we feel we are fighting for our way of life.

      It is somewhat surprising that the pundits who go on ad nauseum about how insurgent movements win b/c they are fighting for their way of life are sooo blind to the fact that the Tea Party IS the upper and lower middle class fighting for its life. That is what it is. We will be voting in heretofore unheard of numbers.

      All we want is to be able to earn a middle class living and keepo our American dream which is our family and our job and our ball games and a future for our kids.

      This new MSM move to push RENTALS as the NEW American Dream is not going to work. How is cutting us off from property ownership going to make us feel safer and less endangered?

      Advice to FIRE, TPTB, TBTF do the MS 1 pg refi for underwater homeowners backed by GSEs NOW. Stop the bleeding in housing.

      Housing led us uinto the recession, uit is leading us into the double dip, we all know HAMP was extend and pretend, everyone got BAILOUT BUT the middle class, poor? here is ta list of 300 programs for you. Rich? here is TARP PPIP the fed ZIRP. In the middle? you are on your own .

      now that may have worked if they werent spending so much on those other 2 groups that TAXES HAVE to go up. Now they plan to cut SS.

      as a Gen Xer I knew this day would come, but to spend like mad, give the middle jack, then pension off Boomers while loading up Gen X and millenials with ever more debt is not going to work, not without major dislocation of the economy, the motivations of the middle class (see walk aways spreading)and political upheavals yr after yr, which is not good for FIRE either.

      So just give us our refis, and expect a huge turnover in Congress and then the WH in 12 and then again in 16. Obama blew his wad on TBTF FIRE and labor giveaways. Incredibly shortsighted and narrow of scope was Mr Hope and Change.

      when a lifetime treehugger like myself has been in the Tea Party since April 09, you have already lost the ideological battle and need to move to save the next line of govt-IOW, the FIRE pays for their COngressCritterrs right? well they bet on the wrong horse, Obama was no doubt signed, sealed, delivered to gut SS, but they blew it by ignoring the middle to their peril.


  20. Amos Newcombe

    This reminds me of the monkey trap, where the hole is big enough for the monkey’s open hand to go in, but too small to allow him to remove his fist clenched around the goodies inside. Are they really monkeys? Will they realize in time that the way to escape is to unclench that fist and stop looting the rest of the country? Maybe this time will be different.

  21. BondsOfSteel

    The elites haven’t quite got a grasp on the anger out in the streets.

    Sure, the Tea Party/Right is angry. So is the left.

    Obama said that he didn’t run for President so he could bailout a bunch of fat cat bankers. But that’s what he did. People voted for him because they wanted change. That change did not happen. The health care bill is seen from the left as a giveaway to the insurance industry. The financial reform bill is seen as wallpapering over the problem… another win for predatory banks.

    No one believes the government that all the gulf seafood they say is safe is really safe to eat.

    1. readerOfTeaLeaves

      With all due respect, if you read Yves’ book EConned, you may develop a better sense of how complex the mess actually was that Obama stepped into.

      I do not say this to excuse Obama, nor anyone in D.C. As Lambert Strether pointed out @8:29 am, the failure to send some banksters to jail for accounting control fraud, the lack of perp walks has disastrous implications.

      But the accounting fraud and the bad policy decisions are all based on set of how the economy works that are currently about as relevant as the sailing ship, the carriage coach, and using leeches as the main means of medical intervention.

      The social disintegration alluded to in this post reflect a world in which economic notions of ‘free market capitalism’ have enabled people to act in ways that, while ‘good for the bottom line’ are socially destructive.

      Some of that destructiveness took the shape of extraordinarily complex ‘derivatives’, whose purpose was arguably to be so convoluted as to be extremely difficult to decipher or unravel. But as long as those derivatives could be leveraged to ‘return on investment’, then our current economic models viewed them as very successful. Until they weren’t.

      Blaming Obama doesn’t address the underlying problems.

      ‘Free market’ economic beliefs enable amoral conduct, in the sense that looking out primarily for one’s limited interest — at the expense of shared resources, or social stability — has been lauded as economically virtuous. This worked in a world of cheap resources; that’s probably no longer a wise assumption going forward. Consequently, the old economic models are less and less able to keep things together and the unraveling appears to gain velocity.

      Blame Obama all you want; he badly needs new economic advisors IMVHO.
      But what he needs even more — like other global leaders — are new economic models that are far better suited to our current era (rather than harkening back to 1776, or 1928, or even 1952). The old model of ‘free market capitalism’ assumes that ‘all individuals acting selfishly will produce the greatest good for the greatest number’. It turns out that sometimes, it translates to criminal conduct (including beating up cabbies).

      Society could descend into fascism, or revolution; both are risks.
      Or, it could see some kind of ‘economic Reformation’ in which fundamental beliefs about economic activities realign in ways that produce social stability and richer social ties.

      Locked into ‘free market’ fundamentalist beliefs, there’s probably going to be more social unrest.
      We’re in urgent need of new economic models, IMVHO.
      That’s probably our best way of avoiding utter chaos.

      1. BondsOfSteel

        Let’s be clear here… I’m an Obama supporter. I don’t blame him for the cause of the crisis at all.

        I do have some issues with policy decisions he (or by proxy his Administration) made.

        1) The size of the stimulus. At the time he proposed it, it was criticized by many as way too small. (Krugman for example pushed hard for a larger stimulus.)

        2) TARP. While Bush/Paulson were responsiable for the creation of TARP, AIG, AIG, AIG, and the Citibank backstop, Obama/Geithner backstopped BAC and allowed the TARP banks to buy back warrents before any deep investigation into the cause and with minimal impact to the banks. Moral hazard was not addressed.

        OTOH, Obama’s use of TARP to provide DIP financing for GM/Chrysler will probably go down as his biggest success.

        3) Financial reform was not nearly strong enough to avoid a similar collapse in the future. CDS look like they will not require collateral. The prop trading rules look like a sham. Fundamental safeguards around securitization were not put in place to allow that market to recover.

        4) HAMP. They spent 50-60 billion and only [temporally?] saved 500,000 homeowners? We as taxpayers spent $100,000 on each ‘saved’ case. (When people figure this out… watch out!)

        My point was that Obama was elected with an overwelming mandate of ‘change’. What we’ve seen is mostly a tweaking of the existing systems which have already failed.

        The failure to act more swiftly is either a faulure of Obama… or Simon Johnson was right in his article ‘The Quiet Coup’: http://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/7364/1/


      2. SteveK

        This is a fascinating and disturbing discussion. As someone who lives and works in Silicon Valley rather than NYC, I’d like to offer another thought. I believe—and there are many here who would agree—that the fundamental driving force behind the extreme concentration of wealth and income that we now have is TECHNOLOGY. (And globalization, but in many instances that has been enabled by technology).

        There is no doubt that the elite are benefiting from that trend, and that beginning with Reagan, they effectively destroyed the things that might have acted as a countervailing/mitigating force: unions, progressive taxation, etc.

        The point, however, is that even as the elite manipulate the system, they do NOT fully understand the implications of what is happening. Those of us who are deeply involved in technology sense that things are moving faster than ever before. Unemployment may well increase dramatically. Income inequality is very likely to accelerate to unthinkable levels: there is simply nothing to stop it, other than perhaps the type of revolution or uprising that has been discussed here. There is a point at which the system will simply no longer function, and I don’t think anyone realizes how fast we may be approaching that point.

        I realize this may sound far-fetched, but I encourage everyone to think about it. Here’s a book (available as a free PDF) that gives the most effective presentation of this issue that I’ve seen:

        The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (http://www.thelightsinthetunnel.com).

        I also think that we need new economic models, perhaps a completely new paradigm, and this book does actually propose a very interesting one—although it is, of course, politically unthinkable. I don’t think mainstream economists are capable of producing a solution: they are essentially brainwashed with the mathematical models they learn in graduate school, but those models are outdated and built upon silly assumptions.

        Also check out the author’s blog http://econfuture.wordpress.com and this post in particular “Did Advancing Technology Contribute to the Financial Crisis” (http://econfuture.wordpress.com/2010/04/06/did-advancing-technology-contribute-to-the-financial-crisis/)

        This discussion here has really made me think. So far, I guess we are fairly isolated. I have not seen much evidence of the increasing crime or parents with children carrying “will work for food” signs for example. I did read that Ventura (near LA) recently changed its city ordinance to allow people to sleep in their cars (in some cases in BMWs) because so many formerly middle class and even upper middle class people now have no other alternative. It is frightening. And I think it will get worse.

        1. Leviathan

          Interesting points. I will check out the PDF when time allows.

          Technology is clearly a major factor in ever higher efficiency and job scarcity. That which makes us stronger is also undermining society. But historically this is nothing new, right? It’s just an order of magnitude bigger and faster.

          At the same time as technology is giving one guy and a server the same productive capacity as hundreds (or thousands) of workers fifty years ago, the burdens of work are absolutely punishing on those left employed in ways our grandparents never dreamt of.

          This was the rationale behind the “high-touch” service economy which picked up the job slack for the last ten years but has been crushed in the last 2-3. The problem was that this nascent sector was still very mom and pop, inefficient, and vulnerable to downturns. Five years ago everyone had a personal trainer, now…?

          There is still a lot of potential for job growth in this sector, but unless it is rationalized and (perhaps) consolidated somewhat it will not give workers living wages or a stable future.

          A lot of these are the “girlie” jobs that pay poorly and have no future, but this does not need to be the case. Unions are trying to make inroads with some of these groups (home health aides, for one). But governments and ambitious not for profits could encourage coops in which local workers in these fields pool knowledge, resources and job leads, set up insurance and pension plans, etc. I’ve seen articles about freelance writers doing this in NYC. That’s a model worth replicating.

          We need to make the jobs that exist and that we all need pay better. Let’s start by recognizing that efficiency is good within industries, but not necessarily in the larger society.

          1. readerOfTeaLeaves

            BondsOfSteel, thanks for clarifying; I’d misread you and agree very much with your point that Obama tweaked a broken system, and therefore… (shrug) so what? It wasn’t the ‘change’ so many millions of us hoped to see.

            SteveK, really interesting points; I tend to agree. Have made a note to read that PDF, given your comment.

            Leviathan: I’m still making my way through a very good title, “Mindful Economics” which makes a startlingly convincing case for co-ops. Need a better understanding, but this may be a really solid approach in the future.

            I happen to completely agree with SteveK that even elites don’t really know what is happening, that technology underlies globalization and that rates of acceleration are highly unpredicatable. We’re in unknown territory; at least the people who come here try to grapple with that unnerving fact.

            Sorry to be so tardy in responding to any replies to my own comment,,,

          2. SteveK


            Yes, technology has always been advancing….that’s nothing new. However, information technology has been advancing exponentially (that’s documented fact). Since we are now much further along, the curve is getting steeper and steeper–things are moving faster.

            The other main point is that information technology gets applied EVERYWHERE. In the past you had technology impact agriculture first (killed millions of jobs), then manufacturing. Now it is everywhere at once, but the biggest impact will be in the service sector. Once service jobs can be automated or easily offshored things will be tough…what employment sectors are left after that?

            I’ve heard quite a few people echo your point that we now have jobs that our gradparents could never dream of…so it will happen again. I’m not so sure. What jobs that we can’t imagine are going to get created the average people that make up most of the workforce. That’s 140 million and growing. Sure, people who go to MIT will be doing jobs we can’t imagine, but what about all the regular people? And let’s not forget the regular people are the consumers that drive the economy. That’s the main point that the book I mentioned (The Lights in the Tunnel) makes.

  22. Nick

    “Another thread was the decay in values….’

    Materialistic values completely permeate our culture and have driven those values not oriented to material gain from the field.

    The dominant form of Christianity in the nation sees no problem with a gospel of prosperity, with megachurches catering to a pampered bourgeois, and with supporting a warrior mentality. The virtues of the Sermon on the Mount are completely absent from this doctrine.

    Image really is everything in our culture. The cars we drive, the clothes we wear, the schools we attend–the signals of our class aspirations–are oriented to appearance rather than non-monetary qualities. Veblen’s analysis applies to all cultures, but it has become absurd in ours (sweet sixteen parties and million dollar bar mitvahs).

    Rising violence should surprise no one, where market values are ascendant, and where corporations have the same or greater rights than humans.

    1. Chester Genghis

      The gospel of prosperity is not Christianity. It is heresy; antithetical to Christianity.

      The fact that so many “Christians” accept it underscores your point though.

    2. Doug Terpstra

      “When fascism comes to America it will be wrapped in the flag and carrying a cross.” (Sinclair Lewis, in “It Can’t Happen Here”)

      Although aided by the manifest schizophrenia of Old and New Testaments, only diabolical brilliance could so completely transmogrify the healer of the sick and defender of the poor, naked, prisoners, children, tax-men, lambs etc., into a patriotic warmongerer, lord of moneychangers and defender of xenophobic, homophobic, Islamophobic high priests and Pharisees.

      Two books chronicle this perverse and dangerous mutation of Christianity (Churchianity) quite well:

      Chris Hedges, “American Fascists: the Christian Right and the War on America”

      Kevin Phillips, “American Theocracy: the Peril and Politics of Radical Religion, Oil, and Borrowed Money in the 21st Century”

      1. Progressive Ed

        A third book is “Liberal Fascism” by J. Goldberg. It well complements the other two mentioned above.

    3. Psychoanalystus

      “with megachurches catering to a pampered bourgeois”

      Indeed. If you haven’t already done it, check out the parking lot of your neighborhood’s megachurch. You’ll be amazed at the high density of Lexuses, Mercedeses, and BMWs.

      Ain’t that a blessin’!


  23. John Ronaldo

    aaah…the elites of McKinsey talking about the demise of the elites and anger of the common man. Will you get over this whole for-profit doomsaying? it’s getting quite tired. Either get off your ass and get involved in the actual policymaking world rather than complaining all day long. You seriously reside on the bottom rung of society. Worse than the Tea Partiers and Glenn Beck.

    1. Progressive Ed

      I would find it helpful if you could explain who Glen Beck is and what his ideas are. I haven’t watched TV for a number of years.

  24. BigBadBank

    Bravo Yves.

    Just as there is a level of taxation above which the country suffers, so there is a level below which it doesn’t function.

    1. Nick

      Have any studies been done on whether the spending habits of the rich support industries which promote a vigorous economy?

      For example, production of food is more important than production of yachts. Do high cost/high margin products skew an economy in less than optimal ways?

  25. purple

    In dictatorships it’s the wealthy who lose the most – at least in terms of money. For instance. Marcos in the Philippines liquidated the holdings of his rivals during his dictatorship.

    The founder understood this well and that is the reason for our so-called checks and balances.

    Yes, there is a deep power vacuum – and if the US goes down the entire world goes with us because we won’t go quietly.

    1. Ishmael

      Purple — your comment that the whole world will go with us is interesting. I am currently reading “Inside Hitler’s Bunker” which is the source for the movie “Downfall.” Interesting Hitler and many of the Nazi’s from the 30’s on repeatedly said that if they go they will take the whole world (or at least Europe/Germany) with them. I guess I would say it did not happen there and tend to think it will not happen in the US either.

      1. Doug Terpstra

        For a bit of side-splitting comic relief, see a recaptioned clip of “Downfall” showing Hitler discovering the extent of the housing crash, that his generals have been reluctant to reveal.


        I can imagine a similar, but not so hilarious meltdown in the White House later this year as Timmy, Benny, and Larry adjust their sweaty collars upon Obama’s discovery of just how badly the ‘recovery’ was bungled.

    2. Psychoanalystus

      “if the US goes down the entire world goes with us because we won’t go quietly”

      Why so? What are we to the world anymore besides “spender of last resort”?

      I think the world will somehow muddle trough without us, thank you.


      1. Valkyrie

        You are just looking at the giant suction of wealth and resources from the previously middle class -> the extremely wealthy. You are missing that this suction previously went from the southern hemisphere -> western nations.

        The people that run the banks that foreclosed on the middle class in America are of the same class as those who run the multinationals taking people’s land, abusing workers for pennies a day, clear cutting, mining, and polluting land, as well as the institutions that force globalization, privatization, elimination of social supports, and debt repayments from poor countries. What is needed is a worldwide revolution and this would come if a revolution in the US saw any success.

  26. Pavel Chichikov

    “Materialistic values completely permeate our culture and have driven those values not oriented to material gain from the field.”

    The victory of materialism is not complete, but those not in thrall to materialism are necessarily less visible. They are admittedly small in number, but their non-materialistic values will endure as materialism disperses in a cloud of mortal dust.

    I say this as a Catholic, who sees his faith most perfectly preserved in small closed religious communities dedicated to work, prayer and personal material poverty.

    1. Nick

      The values of the marketplace have turned greed from a sin to a virtue.

      Similarly, freedom has become a virtue for the selfish. This happened when individual liberty was taken out of the context of freedom within a community (the original right to bear arms in the Virginia Constitution was a right to bear arms on ONE’S own property–not conceal and carry, etc.).

  27. guicciardini

    Something like three or four people have angrily remonstrated against the assertion that the extreme right has a monopoly on strident, uncompromising opportunism.

    Well, them’s the facts. While an equivalence may have existed between the extreme right and extreme left in 1935, one doesn’t any more.

    The extreme left both inside and outside the US is a pathetic joke. Oh, I’m sure that they are vocal at times.

    But they are *powerless* – something the extreme right is decidedly not.

    1. Goin' South

      My recent experience would confirm that, at least in my locale.

      I’ve recently arrived in a Great Lakes city, intent on becoming involved in radical Leftist politics.

      I’ve tried the anarchists/libcoms with whom I have the greatest ideological affinity, but they fail to show up for meetings half the time and can do little but argue about personalities when they do.

      I was invited to a CPUSA meeting. The good news was that it made me feel young again even though I’m mid-50s. The bad news was that the whole meeting was devoted to electioneering for Democrats, even the most ConservaDem and corrupt of the local breed. When a book was mentioned that predicted the fall of Capitalism, one participant said, “I hope not before the election!!!”

      I attended another large meeting full of political activists and labor reps. It consisted mostly of the paid operatives pushing canvassing for Dems while the rest of the room grumbled about the good-for-nothing politicians of both parties. The paid bureaucrats were frantic that no one was interested in phone banking, etc. this year.

      Maybe there’s some other radical Left or even activist Left, but what I’ve seen here is indeed pitiful.

      And in my view, that’s tragic, because a vibrant Left is desperately needed in this country.

      1. Ishmael

        Thanks for the good laugh. A radical left is needed in this country. Harharhar. May I ask what for! You should change your label from Goin’ South to Lost in Your Shorts.

        How many times do radical left ideas have to fail in practice until we do not have to hear any more of this! To paraphrase Henry II, “Will not someone rid me of this idea.”

  28. i on the ball patriot

    Interesting post, some thoughts …

    What jumps out here for me is the scamericancentric viewpoints expressed when this is in reality an intentionally orchestrated global crisis created by a wealthy ruling global elite who have no allegiance to any nation state and who have hijacked governments through control of the global central banks.

    With that government control they have allowed corporations to become in effect mini nation states (many with revenues exceeding the GDP of real nation states) accountable only to the bottom line, that roam the planet, extract profit, and exert control.

    The wealthy ruling elite global plan of Full Spectrum Dominance includes controlling the nation state militaries, and the big guy, Mr. Global Propaganda. It is Mr. Global Propaganda who really controls Mr. Market and is also responsible for intentionally coarsening the GLOBAL culture over the past forty years creating intentional divisiveness as a prelude to creation of perpetual conflict in the masses. The plans end game is a global two tier structure of ruler and ruled with the ruled in a perpetual conflict with each other. Its a herd thinning and resource control operation, ironically by the same scum bag folks who orchestrated the misdirection and over consumption of the planets resources.

    Mr. Propaganda works to a global formula around the globe and makes possible in each nation state; blowing the debt bubbles, deregulating the nation states financial laws, importing foreign nationals, massive rural to city migrations, fomenting hate between those dislocated groups, encouraging right wing reactionaries to come out of the wood work, selling austerity programs, etc., all of which further fuel the divisiveness, create intentional chaos, and intensify the global perpetual conflict in the masses.

    Its time to broaden the viewpoint. Read some other nation state blogs, especially UK blogs, you will feel right at home and more readily see the top down Mr. Global Propaganda orchestration formula.

    Soooooo … scamericancentric viewpoints meet global problem.

    The other shoe dropping feeling is a global feeling. It exists in most all other nation states. Recognize the global scope of the problem and address it, or, get used to the feeling of sinking slowly into a well orchestrated series of increasing crime ridden plateaus and ever deep valleys of despair as the global herd is intentionally thinned. Recapturing your own government is step one, and as formidable as that is, step two is even more difficult. The rogue global control of the super wealthy must be dealt with and eliminated. This is a class war. The lines become more clearly drawn as each day passes. I believe Roubini is right on — less than one percent growth. By design!

    This is a unique and out of the ordinary problem. it will require unique and out of the ordinary solutions. Unless folks can reach out to each other globally and set aside the intentionally instilled divisiveness we are all screwed. A big part of forming that new alliance will be recognizing the unfair advantages of the past, as individuals and as nation states, and compensating for them.

    [Interesting aside; many scamericans who were on board with the Full Spectrum Dominance plan, or supported it through ‘party affiliation’, failed to read the small print – the domestic population of scamerica is included for dominance.]

    Deception is the strongest political force on the planet.

    1. Siggy

      I generally don’t agree with your comments. This time, however, your are quite relevant and expressive of the nature of the sea change that is occuring.

      The deception comment, however, is unnecessary and tends to impune earlier thoughts that had merit.

      1. i on the ball patriot

        Thanks Siggy, I generally agree with many of your comments.

        Yes, the deception comment can be off-putting and muddy the waters, but it speaks to our cannibalistic nature, something many are in denial about, and which ultimately has to be recognized so as to rise above it. Its an everything up front all at once approach. Time is short and it is also meant to promote skepticism. We are all way too trusting and have to be much more involved in, and vigilant about, our political alliances.

        Deception is the strongest political force on the planet.

      1. i on the ball patriot

        Great ‘gateway to the UK’ web site here, “Lenin’s Tomb” — if you can handle the Marx base — with many links to other solid web sites and publications (scroll down to the bottom right for links). Again, note the nation state focus, similar limited political choices, and all of the other ‘formula’ problems that they are dealing with that have been created by Mr. Global Propaganda.

        Deception is the strongest political force on the planet.

    2. PoP the ProP

      hammer hit nail straight on the head
      and again and again and again
      keep swinging partner
      lurkers are listening

  29. anonymous

    I’m extremely optimistic about the Republicans winning big in November. Unlike the Democrats, the Republicans have a real-live opposition willing to take scalps and stand up to the party machine. The Tea Party rank and file are as hostile to the banks and Wall St. as anyone on this board.

    I agree completely with the need for larger stimulus. My own solution which I’ve advanced before is simple. No bailout money for banks or homeowners. No extension of UI benefits.

    Direct government hire of all unemployed to paint schools etc.

    Partner failing US auto companies with Japanese, German, or Korean companies. Flush corporate and union managers.

    Go nuclear. Every state that wants federal help takes at least one new facility and one waste site. Only then do they get funds for high-speed rail and green jobs, etc.

    Sadly, none of that happened or will happen with the current crop of Dems in power. I think Republicans are going to be very protectionist and pro-business. I’d much prefer to see something close to my own approach, but the bottom line is people have got to go back to work before anything improves.

    I see the Republicans as much more ambitious and willing to take chances than Dems. And by Republicans I mean Scott Brown and Sarah Palin type Republicans.

    Inflate My Grades and his pals Tim, Larry, and Ben are not going to take from Goldman Sachs to create jobs for those in need.

    1. Chris

      If Republicans take power we’re in real trouble. How can you be optimistic when they have so many ideological extremists in their midst? Jesus!

    2. guicciardini

      Mate, you really don’t get where the GOP gets their moneys, do ya?

      They get it from Corporate America and Wall Street.

      And the party gets its marching orders from guys who say that opposing Wall Street bonuses and taxing PE guys are the functional equivalent to the worst excesses of the Soviet Union.

      You are *sincerely* deluded if you think the GOP will be any better than the Democrats on this. Were you in a coma from 1995 to 2007?

      The sad fact is that Obama was elected because people wanted an FDR, but they held the election in, essentially 1929 instead of 1932. Herbert Hoover did not become “Herbert Hoover” until after failing spectacularly. The country – and FDR – were willing to make enormous leaps of faith in 1933 only because of the disaster of the preceding four years.

      1. anonymous

        The GOP gets most of it’s money from the same class of people Dems do. So I do, actually, ‘get it.’ I also get that the Tea Party has about a billion times the backbone “progressive” Dems do. I watched Dennis sell-out the public option for a ride in Air Force One President Got the Fat Cats’ Backs. Remember the politics of fear the WH played? If you don’t give the Health Insurance industry 32 million new customers, Obama’s Presidency Will Be Destroyed!!TM.

        I stated clearly my preferred choice. That isn’t going to happen. People need jobs and if the GOP doesn’t deliver quick, then there’s going to be real talk of a third party.

        I wouldn’t be surprised to see a major trade war break-out, with a large number of Americans refusing to purchase any Chinese products, etc. Something has to kick start employment and manufacturing.

        Patriotism, protectionism, and pro small business.

        1. Psychoanalystus

          “I wouldn’t be surprised to see a major trade war break-out, with a large number of Americans refusing to purchase any Chinese products, etc.”

          And what would that do to the dollar and our debt to China?…


          1. anonymous

            Remember the Germans thumbing their noses at the reparations for WWI? There are a lot of seriously unhappy people out there. A lot happened around the globe between 1933 to 1936. Things may move faster this time round.

    3. Chester Genghis

      “Republicans are going to be very protectionist and pro-business.” Huh?

      That’s an incongruous statement. I realize there are many aspects to protectionism, but if anything pro-business interests have engaged in relentless scare-mongering of protectionism.

      Republicans will use protectionist or anti-protectionist rhetoric to suit the needs (and the audience) of the moment. But their policies will be decidedly anti-protectionist.

      1. anonymous

        Certainly Republican corporate politicians have been and will. But that approach may not sell this time round. The Joe Miller candidacy in Alaska is based, in part, in turning down federal pork, of the Stevens kind.

        My belief is that consumer confidence will improve once Dems no longer control the House/and or the Senate. Both the WH and the Republicans will try to take credit for what I predict will be a modest drop in unemployment and a slightly rosier view of the future. That’s barring the wheels coming off in Afghanistan or Iran.

        Think xenophobia and people demanding to buy “made in America” products. You can see the Tea Party getting behind that philosophy can’t you? Because if you can’t then you really don’t get what they’re about.

        1. Chester Genghis

          Don’t think so. GOP will use Tea Partiers as they’ve used the religious right in the past. They’ll give them lip service and continue to do the bidding of their corporate masters. (When in doubt, follow the money…)

          1. anonymous

            We’re not disagreeing about actions, only outcomes. The Republican corporate class will try to co-opt the Tea Party and buy individual officials. They will be successful in some cases.

            The law of unintended consequences is likely to play a big role, too, and there are plenty of issues that could turn things ugly.

            Idle hands, and all that.

  30. Ishmael

    Yves — Let us first look where you are talking to people at. New York City! Where are the big blood sucking squids located — New York City. Quess what happened, the people of this country have woke up and realized that NYC only survives by sucking the blood out of every where else in this country. If you do not believe this then look what one of the top objectives of the Federal Reserve is — to keep the center of banking in NYC.

    I split my time between LA and Oklahoma-Texas-New Mexico. LA seems to be slowly sinking because it and California were built on Financial Services and Real Estate. Much of the shadow banking system was located in So Cal. On the other hand, Oklahoma (especially), Texas and New Mexico are doing pretty well supported by oil, nat gas and other commodities.

    With that said, I was back in Oklahoma a few weeks ago during the primaries and I have never heard such hatred of Democrats and bankers. I believe there could be real divides in this country and the south, mid-west and west are really getting tired of being sucked dry.

    As far as guns, so what. I think everyone should carry a gun and be taught to shot one. I have had guns since I was 8 and most people I know in Oklahoma and Texas have one. The only real problem now days is ammunition. Ever since Obama was elected there is not enough ammo and that is especially true about 380’s for small little carry hand guns.

    I think in the end, the sucking will stop and NYC, Chicago and LA will probably go through financial crises and get much smaller.

  31. Pavel Chichikov

    11:08 AM writes:

    “Direct government hire of all unemployed to paint schools etc.”

    “Partner failing US auto companies with Japanese, German, or Korean companies. Flush corporate and union managers.”

    “Go nuclear. Every state that wants federal help takes at least one new facility and one waste site. Only then do they get funds for high-speed rail and green jobs, etc.”

    You say you look forward to a big Republican win? Your suggestions require a *very* big and aggressive government.

    1. anonymous

      True. That didn’t happen. I’ve lived in right-wing small government economies. Those who can’t or won’t work get screwed. As I noted, up-thread. Obama was and is a creature of corporate America. Progressive Dems sold out the poor and the unemployed. I can live with small government Republicans as long as people have work.

      Right now they don’t.

      1. Progressive Ed

        “Obama was and is a creature of corporate America. Progressive Dems sold out the poor and the unemployed”. No.
        The Movement and the President understands that the shifting of America from a capitalist state base on relatively free markets to a Progressive state based on the reduction of small businesses (the home of individual liberty)and the central control of the economy using one or two large corporations in each sector of the economy takes time. It’s evolutionary, not revolutionary. Have patience!

        1. anonymous

          I see no evidence to support your claim that I Need A Big House in Hyde Park is anything but a member of the corporate class. Wishing otherwise has cost millions of mostly poor and middle-class people their savings, the jobs, and their dreams.

          He and his wife made something like 5.5 million last year and kept all, or most of it. He likes the suits, the cars, and the golf courses. She like the shopping and the private tours.


  32. Ishmael

    I do not believe in the one person one vote system. If you are a free rider then you should not be allowed to vote. I would only give the write to vote to those people who pay net income taxes above a certain moving average over a 5 year period. That would get rid of the system which we now have where large blocks of people vote for those who will give them the most.

    The mega wealthy throw out little crumbs to lower income people paid for on the backs of the middle class.

    1. Maude

      There is so much wrong with that suggestion that I don’t even know where to start.

      Here’s one…
      You do realize that Congress can legislate tax rates don’t you?

      1. Ishmael

        Maude — Are you addressing me. Of couse I understand Congress can set the tax rates. That is why I say only those that pay taxes should have the right to determine the rates. Why should someone who pays no money in have the right to determine how it is spend. That makes no sense.

        Right now we have a larger group of people who are net receivers from the government than we have of net payers. This is another one of those unsustainable trends in this country. Personally, I believe the taking of money from one person to give money to another is a form of enslaving. What else can it be?

        My comment has been the norm through out history far more than the current system. Probably one of the big reasons this country is so screwed up. The free riders have too much say.

        1. saint grottlesex

          Affluent people aren’t afraid of taxes. The petit bourgeois can’t tolerate them, though. It’s the status anxiety, isn’t it? Don’t worry, if you can’t afford civilized-country taxes, there’s plenty of people richer than you who can.

          1. Ishmael

            saint — guess you missed the Steve Schwarzman contention that taxing private equity overlords more on their carried interest was like HItler invading Poland or maybe Schwarzman is not affluent enough for you. Maybe affluence starts at $20 billion for you. Really, I guess if you are attempting to insult me by saying I am not wealthy enough I would have to agree with you. As I said, else where, Progressive ideas are really regressive because by putting high taxes on the people working to get ahead you keep them from accumulating wealth, becoming self supportive and really discourage them from working hard.

            Your use of Marx is quite impressive.

          2. saint grottlesex

            Like you have to worry about the high brackets, yeah right. You have no inkling of bracket creep. It is utterly beyond your ken. And nobody’s fooled by your big talk about taxes. It used to be you could fake out girls with this right-wing ‘good provider’ mating strategy by parroting GOP slogans. Nobody’s that gullible any more. The typical right-winger is a scrabbling loser ridden by social anxiety. So give it up, you phony. Lie about your girth instead, that’s less patently ridiculous.

          3. st grottlesex

            Fact is, it doesn’t matter how much we tax you, you’ll work like a dog because you have to. Now actual rich people could blow it off, but we’re brought up not to be so mean-spirited. We don’t begrudge helping less fortunate souls like yourself, even though you’re always on the make and you can’t ever relax.

    2. Psychoanalystus

      I like that. And, since the rich don’t pay any taxes, they’d be automatically prohibited from voting, right?…LOL


  33. Dameocrat

    Ishmael. I think our country is being sucked dry by both the bankers in New York, and the extracters in Texas and Oklahoma, neither of whom make money on anything creative. The idea that Obama has done anything to raise the price of ammo is delusional. I would only give the right to vote to people who don’t confuse the right with write!

    1. Ishmael

      Dameocrat — You must have a poor comprehensive reading skills. I never said the price of ammo went up I said that it is hard to find. Two seperate things. Also, if you do not believe gun sales went up due to Obama’s election you must not read newspapers.

    2. Ishmael

      Dameocrat demonstrates the belief of most what is currently rebranded Progressives (even though most of their policies are regressive). The people in Oklahoma and Texas are hard working people (I have ran into them in oil fields and mines all over the world) who invest their sweat and capital to make a living, but Dame hear belittles their efforts as not being “Creative.” Maybe she should look around and look what oil brings you — everything from transportation, through plastics, petrochemicals as well pharmacuticals.

      Progressives first look down their nose at hard working people and then retreat to their self righteous statements about American Indians, slaves and women (see below). Her statements demonstrates the Progressive so called intellectual elitism which if it wasn’t so sad I would find kind of humorous.

      They hide behind the shield of doing for the People but deep down they really dislike working people because they are not “Creative.”

  34. lalaland

    IMHO the biggest problem facing America is it’s citizens think they know way, way more than they actually do.

  35. MinnItMan

    This is what “infrastructure” spending looks like today:


    I wish I was more than 10% kidding. This press release release is more interesting for what it doesn’t say. The existing MERS system typically drops loans that have been fully foreclosed, so either these are loans that haven’t been foreclosed, but where the owner has abandoned, or they are fully foreclosed loans where the “owner” probably prefers not to be immediately determinable (for example, Deutsche Bank Natl Trust Co. frequently takes possession, even though BOA is what shows in the MERS system. My understanding and experience is that DBNTC’s ultimate interest would not show in the MERS system). Local government is looking for somebody to pay taxes and do maintenance. I’m thinking MERS’s member may not be that happy about this.

  36. Dameocrat

    I would also like to point out Ishmael’s tax plan would allow the bankers to vote and all the people who lost their jobs as a result of what they did would lose it. Also the oil men that got us into the war that caused the mess we’re in today would have it too. Bleck.

    1. Ishmael

      Dameorcat — you really show no understanding of numbers. First I said a moving average so if you lose your job for a while you would still have the right to vote. Secondly, the number of middle class and upper middle class people as well as tax paying blue collar workers out number the so called banksters by about 100 times.

      Really got you worked up that you might lose the votes you purchase with OTM (Other People’s Money)!

      When this country was founded the Founding Fathers understood what I am saying and only gave the right to vote to land holders.

      The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.
      Alexis de Tocqueville

      Oh and those big bad oil men. I guess you believe oil which lies under a persons ground should be given to the state. Why don’t you go get in your car and drive out into the country so you can cool off.

      1. Dameocrat

        yeah the founders gave the right to vote to guys that parasited off of indian land, the work of slaves, and women.

        1. Ishmael

          Dameocrat since I have blood of several indian tribes in me and my great great grandmother lost her life on the Trail of Tears after their property was taken from them in Tenn, I think I should be more bitter about that then you. Personally, if you are saying give all the land back to the American Indians that it was taken from I say let’s do it!

  37. RichmondTom

    I would discount the comments about a decay of values. Older adults have been whining about the decay of values among young people since before Homer was a pup. Yeah, yeah – “Those youngins are out of control – sure is different than when we was kids.” – Thanks for the insight, gramps!

    1. Ishmael

      With regard to “infrastructure spending” it is difficult for me to understand the continual demand for this. First all we need to do is look at Japan to see what an enormous misallocation of resources government infrastructure spending is. If the purpose of infrastructure spending is to get money moving then why doesn’t the government just have a 3 year tax refund with a maximum and minimum of let’s say $50,000 and $500,000 with of course those who paid no taxes getting NOTHING! This would enable the middle class who are under water to get their head above water, those in the middle class who were prudent would have money to spend or invest (asset allocation of those with a profit motive is far superior to those just spending OPM) and ensuring the uber class will not have an enormous windfall.

      1. John L

        No, the purpose of infrastructure spending is to fix the infrastructure. Any economic stimulus it may create, welcome it may be, is secondary.

        Otherwise, the money could be spent to hire people to dig holes, and hire others to fill those holes back in, and it would be as effective.

        The need to overhaul the infrastructure is undeniable. Many interstate bridges, for example, were built 50 years ago and have reached the end of their expected lifespans. How many more bridge collapses are we willing to accept?

    2. Anonymous-scientist

      I’ll grant you that teenagers have always been a wild bunch… but a 1930s teenager was able to work with their hands if they needed to.

      1. Ishmael

        Anon-scientist — Quite true. Even up through the 70’s many teenagers were out working, at least in the Midwest. I knew guys who went on harvest at 16 (maybe younger), worked on cars, delivered papers, sacked groceries (still see some of that when I visit Oklahoma), mow lawns and etc.

        One of the reasons that the US forces advanced so rapidly during WW2 is because every man was mechanical. If a vehicle broke down every guy knew how to fix it.

        With that said, I many times work with young college grads and find many of them right on the ball. I had lunch with a young lady yesterday who is far sharper and on target than I (not that I am any reference) than I was at her age. On one consulting project she was my supervisor and on others I have been hers (she is mid-level at a consulting firm).

    3. Yves Smith Post author

      You don’t live in NYC, and this is children MUCH younger than teenagers. The kid who was beating up on his small frail nanny in the story was a very large roughly 5 year old. Current parenting style are producing narcissists on a mass basis. For instance, I saw a kid, no older than 10, probably closer to 8, on a bike nearly knock an old woman over, right in front of me. I said something to him. The nanny interceded and defended the kid! This is pervasive, you can’t say a negative word to children, they are simply not disciplined by parents or their surrogates. This is not a mere “the kids are rowdy” this is a breakdown in transmission of behaviors needed for society to function.

      1. Psychoanalystus

        “you can’t say a negative word to children, they are simply not disciplined by parents or their surrogates”

        How could you? If you only raise your voice at your child now, they call 911 and you spend the night in jail. What they need is a good spanking… and they’ll get it eventually, if not from parents then from life itself.

        Spoken like a true shrink…LOL


        1. KFritz

          That’s code language, I think for, “Children are like donkeys. They behave best if beaten occasionally.”

          If so, thanks for the wisdom.

        2. Skippy

          Dopamine control in this hyper environment is a guaranteed…snicker…EPIC FAIL.

          PS. its a feature, not a bug.

      2. Anomar

        There is definitely something very strange going on with our children for the past decade and a half. I don’t think it is just parenting styles although that is part of the problem. The entire social fabric is rent. Disdain for other human beings of any age is at an all time high for my lifetime. If you can bear to watch reality tv, it does nothing but teach vicious competition wrapped around disrespect.

        Americans have turned their faces away from each other, even neighbors who do not threaten their particular socio-economic status.

        Whether people begin running down the streets with guns shooting randomly in anger or just board themselves up and refuse to participate, we are in the most dangerous state since WWII.

        I don’t see Americans organizing a revolution unless some miracle of enlightenment strikes from the sky, convincing everyone that they really have nothing to lose.

        What would an anti-plutocratic force look like in the age of the Patriot Act? Does one storm the Pentagon? Mainly a set of offices.

        Does one commandeer Air Force One?

  38. parheel

    Some realities our bias want to dispute:
    1) China’s command economy has kicked our quarter to quarter governance for decades.

    2) The same qtr to qtr gov. has resulted in an inability to plan whether it’s R&D on the business level or political governance.

    3) Globalization has killed the goose that laid the golden egg (an upwardly mobile middle class). It will go down in history as a massive failure. Balance of trade is way way way more important than year to year deficits.

    We have other problems but what I’ve come to realize is that the so-called smart folks (whether Wall Street or politicos in Washington) are dumber than posts except when it comes to individual short term greed. They’ve got that down pat.

  39. dameocrat

    The rich are paranoid. I think there will be tea party inspired militia type violence in southern and mountain and high plains states, but it will be here and there not widespread and it will sputter out once their financial backers such as koch industries get scared of them and stop the money flow. Most of those states right wingers are cop worshippers, and will not ultimately side with law enforcement rather than anarchist right. They can’t piss off their body guards.

    The left will probably move to the green party and the green party will become ascendant. Moderate republicans will move to the democrats to support Obummer, who is definitely their guy. The palinists will be confined to the low population and southern states. The bankers and the extractors will be taxed not killed.

    1. DR

      “semi-retiring to manage family money.”

      The guy is anxious because he is finally realizing there is not enough renter streams to pay all the paper claims of the rentier class.

      Whoops, shouldn’t have written all those McKinsey reports touting the benefits of job outsourcing…

  40. Ishmael

    Basically, I believe we are in a slow motion de-evolution of the economy. We are moving away from centralization in NYC and Washington and moving back to local. I agree with the comments about pro-protectionism at least for products out of asia (I never buy cheap Chinese crap anyway — it is not worth the money). Return to localization of the economy with credit being decentralized again.

    Right now we have a large layer of state government and another layer of Federal govt supposedly doing the same thing, but nothing is happening. We need to delayer.

    We also need to demiltarize and stop being the policemen of the world unless countries pay for it.

    Credit will contract and that will require business and govt to both contract. The current system in unstainable.

    1. Psychoanalystus

      “I never buy cheap Chinese crap anyway — it is not worth the money”

      I was curious, do you own a cell phone, laptop, television set, microwave oven, or anything made of plastic? :)


  41. propertius

    He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.

    So, Yves:

    As one of hoi polloi who is unaccustomed to hobnobbing with our feudal overlords, I’m kind of curious about exactly what constitutes “barely holding on” and/or “hitting the wall financially” in these exalted circles? Might these poor unfortunates have to do without full-time “help”, or will they actually have to dip into principal to make ends meet?

    1. Anastasia Beaverhausen

      Well, it’s no different then when the rabble live beyond their means, except the upper crust exhaust their credit cards and home ATM’s on Maybachs and Louboutins instead of Lexuses and Juicy Couture.

  42. propertius

    One further data point:

    On a recent business trip to California, I noted that the Rolls-Royce dealership in Newport Beach had gone out of business. The Ferrari dealership still seemed to be going strong, though.

    Frankly, I agree with your pals that violence is a real possibility. I can’t understand why TPTB aren’t more concerned, unless they intend it as an excuse to clamp down and consolidate control.

    1. ginnie nyc

      Actually, Propertius, our overlord (M. Bloomberg) has a coordinated program to ship out-of-state job-seekers back home if they seek help through the NYC public benefits system (e.g. homeless shelter). They’re given a bus ticket and some cash. This program applies to single people and families. As document in NY Times, several million a year fund this project.

        1. Psychoanalystus

          Interesting. So, if on my next trip to NYC I stop by the unemployment office, I might walk out with some free cash? Thanks for the info… :)


  43. Psychoanalystus


    Thank you for this excellent post. As a professional observer of human beings, I agree with everything you wrote, and I too have been saying this for years (largely to deaf ears, it seems). The anger and frustration levels in the US are reaching a breaking point, and the social fabric of this country is under tremendous strain.

    Perhaps it would be difficult to envision a true revolution in today’s police state America, but it is easy to see the nation descend into chaos, if it hasn’t already (a situation which I am sure Wall Street will somehow find a way to profit from).

    Just today a friend from New York told me how more and more people from other parts of the country are showing up in Manhattan en masse, looking for work. I wonder if, after failing to find a job to feed their families, they may choose to head to lower Manhattan and try to engage in friendly communication with various rich people selling stocks and bonds for a living… :)


  44. T

    What stands out to me is that your upper-crust friends are blaming others for the problems facing our nation: “monster” children, “decaying values” (other’s, not their own) and of course “liberal pork”. I didn’t read anything indicating they realize the problems in our nation are largely the result of corruption in their own social stratum.

    Though you mention they expect an out spoken plutocrat to be the first with his head on a pike, you never mention whether they think he would deserve such a fate.

  45. El Snarko

    All cultures are conservative, but if Americans were that conservative there would be far less cable tv and video gaming. We are capable of assimilating advantageous change. Rather than the moldy quip about a “center right nation” I think it is long time we realize that we are essentially a nation of “takers” of available benefits when we find them.There has been so much paper success in the last three decades that a majority have too high an expectation of what is concretely achievable. This results in tension and avarice.In truth moving forward we will have less, but there is zero leadership from the big money boys and political “elites”. No one is taking a voluntary hit, and that is delaying the inevitable involuntary one.Your friends, while smart and perceptive are far too parochial in their concerns.

    Here is what I see from Ohio. The status quo ante ( as Yeves calls it) was th best and most seductive in history. What most all people really want is that to return in a form that is “reality based”, somewhat regulated, and available to them. Realistically being aced out of the goodies is creating defacto aristocrat/peasant dichotomies that are instinctively repugnant. The perfect analogy is the stadium seating at football games. From what I hear the world view from the “lodges” at the top of the stadium is much mucdifferent than that from the cheap seats. There, once the rooms are full an entirely game is played and watched. The cheap seats want to play as well.

  46. greg b

    I dont see anything happening til after CFB season. So that gets us thorugh early January.

    Yes, some of you will laugh but here in the south CFB rules. They will do nothing that will mean possibly having to be away from a TV or tailgate party on a Saturday afternoon. I actually think this is great for our country. A lot of peoples livelihoods depend on this institution staying in place and not missing a beat. Hell, after 9/11 people down here were furious that games were postponed. They all though it was giving in to the terrorists.

    These seasonal riuals have a strong stabilizing affect on our social fabric and I dont think they can be underestimated. No one is going to get too many southern tea partiers to do anyhting too disruptive during CFB season. If something might cause a game to be cancelled they wont do it.

    1. Ishmael


      Being from Oklahoma I totally understand. A couple of years ago I was in a conference room in Century City and they asked where I was from. When I said Oklahoma they said, “Well I guess you are going to watch the Rose Bowl.” I asked why and they told me that OU and USC were going to play for the national championship. I am like huhh, by the way I am here for business — let’s get to it. They could not believe I paid that little attention to football.

      Bread and circuses dude!

      1. greg b

        Bread and circuses, exactly.

        What we need is a CFB season that runs from mid August to mid February. That’ll take these secessionist out of commission for 6 months.

        1. Ishmael

          greb b —

          There is a reason that OU has one of the best cardiac care units in the state at Owens Stadium. A large number of overweight football fans with OU engraved in their teeth have coronaries while attending the game. Rather sad really.

  47. craazyman

    Once football season gets underway, folks will calm down.

    It’s always hard right now, waiting for the big show to start and the cool skies of autumn. Nobody will riot or rebel as long as the NFL is on the tube and the beer is flowing. Really, think about it. Then it’s Christmas and rioting is out of the question.

    I actually saw Orion in the eastern sky at 4 am last night. It was like a prophet of tranquility, the reassuring return of an old friend, majestic and eternal. This is what the Greeks had in mind, with all those statues, that balance and poise. As soon as the leaves go, everything will be OK. Even if the market dives.

    I worry more about Mexico. Pretty soon they’ll all be here and there won’t be anyone left there because they’ll all be either dead or gone. And when they get here, they’re usually on their best behavior. Most of them, anyway. Nobody really wants to be a communist. It’s just a compromise like going on a diet.

    1. paz

      I have no doubt you are correct about Orion bringing much relief to the Greeks after a summer of chaos.

      Having lived through the Mexican economic crises of 1994 I can say their solution and our solution look very similar. It might be because they have one of the same principal architects, Larry Summer.

      The 1994 crises consolidated wealth into a small number of hands, especially Carlos Slims, but collapsed the authority of the central government… mostly because of unemployment.

      Although there hasn’t been an open revolution in Mexico, regional forces are now more powerful than the central government..

      Anyway, I think if you want a good preview of the United States in a few years you need only look at Mexico’s history. Remember the Zetas, the infamous evil drug lords were once prized special forces operatives. Trained here in good ‘ol USA. If the crisis continues I don’t see a ‘revolution’ per se.. but a collapse of central government authority and the rise of opportunists: Pendergasts, Rockefellers, and probably a General Jack D. Ripper mumbling aimlessly about precious bodily fluids…

      But cheers! For now, Orion is upon us and we can slumber ’till the ides of March.

    2. MyLessThanPrimeBeef

      Craazyman, speaking of the NFL, bread and circuses, do you know if a gladiator ever became a Roman emperor? Or they were simply happy to be the emperors’ lovers?

      1. craazyman

        I think many were gladiators given the way they did politics in those days.

        Some out of necessity after they became emporer, and others to get there.

        But I think Commodus actually performed as one on many occasions, after he was emporer, if I remember my Gibbon. There were probably a few others. They all seem completely nuts to me. But then, so do most people, even now. LOL.

    3. Psychoanalystus

      “I actually saw Orion in the eastern sky at 4 am last night. It was like a prophet of tranquility, the reassuring return of an old friend, majestic and eternal. This is what the Greeks had in mind, with all those statues, that balance and poise. As soon as the leaves go, everything will be OK. Even if the market dives.”

      Actually, in Greece it’s pretty darn hot in the fall too…


  48. MyLessThanPrimeBeef

    Two things

    1) Do not fear pain (for you fearmongers and debt-fetish-ists) – no more short-cuts. If China could undergo a chaotic Cultural Revolution in the 60’s, and today still own America, America can handle anything.

    2) Make sure pain is shared equally – if you can do this, people will buy the former without having to resort to calling others deficit-terrorists.

    I look forward to a real leader to tell us that, instead of issuing more debt.

    1. MyLessThanPrimeBeef

      I know this question has not been asked in at least 2 generations, but the time is fast approaching:

      Are we willing to sacrifice ourselves (I am talking about pain sharing) today so future geerations can have a fair chance to compete with other nations?

      This means stop worrying about a second dip and start thinking about the fundamental problems that a crisis like this affords us to an opportunity to correct but we have so far not done.

      So, forget about more infrastructure projects, more debt, etc.

  49. Hugh

    I was just writing yesterday that yes, it could happen here, that revolution has been in the air many times in US history. As I have also said many, many times, the system is unsustainable and our elites are so given over to looting that they are incapable of reform, even to save themselves. And I have pointed to 2011 as the time when we are most likely to hit the wall. We will have another collapse and when that happens the odds of revolution will be higher than at any time since the 1770s. I cannot over emphasize just how corrupt and committed to corruption our leadership is. Our economic conditions are pretty bad but it is the complete corruption of the political system that takes this and renders the situation catastrophic and revolutionary.

  50. Ronald

    Let me get this straight, since Americans are not buying a new car with the tow package for the boat and ATV every 3 years combined with numerous remodeling projects on the house and of course landscaping for the new 2nd vacation home, we should now expect a revolution in fact an armed take over by the left or right!

    1. Hugh

      This is the modern version of “Let them eat cake,” right? What your probing analysis fails to take into account is 15 million unemployed, 25 million un- or under employed, and several million beyond these that the BLS no longer even bothers to count. Total un and under employment in the economy is probably close to 30 million or 20%. Add in the tens of millions of homeowners holding underwater mortgages and millions who are either in or will be going into foreclosure. Recognize that most of these are families, not single individuals. Look too at the levels of personal debts of all kinds. Then consider our nation’s crumbling infrastructure and deteriorating education system. And let us not forget that 1% own a 1/3 of the country or that the top 10% own 2/3 of it. Or that our elites nearly drove the whole economy off the cliff in 2007 and 2008. Or that they only avoided this by massively bailing themselves out at everyone else’s expense. Or that they then proceeded to pay themselves out of this largesse huge bonuses like nothing had happened.

      Yeah, it must all be about those 2nd vacation homes. Your mentality is precisely what makes revolutions inevitable.

    2. i on the ball patriot

      Ronald, there is NO “new car with the tow package for the boat and ATV every 3 years combined with numerous remodeling projects on the house and of course landscaping for the new 2nd vacation home” going on here …


      And it is not limited to scamerica.

      Deception is the strongest political force on the planet.

  51. MichaelC


    He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.

    The top 5-1% (120k-189k) (per this
    http://philsbackupsite.wordpress.com/2010/08/26/who-rules-america/)have hit the wall already.

    In high cost areas you’re as middle class as the national average middle class, until you enter the 1% club, then you’re comfortable, but still a (well paid) worker till you reach .05 (at about 400k).

    So the assesment sounds about right to me.

    My foolish hope is that some leadership will emerge from this sliver of people (this sliver ( top 1-.05) is where the regulatory class resides economically) that will finally encourage the 80-99.5 contingent that the plutocrats can be beaten back.

    Paging Eliz Warren. If Obama were to replace Geithner, who personifies putocrat wanna be as far as I’m concerned, fires Summers, and finally breaks with the Rubinites before the electorate breaks with him that would be a clear signal that things could ‘break their way’, assuming your lunch mates aren’t the plutocrats, of course.

  52. Argel

    Why would we have a revolution now when we didn’t during the Great Depression?!? What has changed to make one more likely now? By that I mean a revolution by the people. If anything, a coup o some sort seems more likely (eg fascism).

    1. Hugh

      During the Great Depression, you had politicians like FDR who started out not that far off of Hoover moving steadily to the left, enacting jobs programs, building infrastructure, creating Social Security, and reforming the banking sector. FDR’s transformation had a lot to do with seeking to head off the revolutionary forces in the country.

      What you have to understand is that our elites have basically been indoctrinating us for decades that we are not a revolutionary society. They have done so because it obviously serves their interests to do so. But as I have pointed out in the past, we have experienced pre-revolutionary periods in our history every 30-40 years from the Revolution and Constitution writing to Jackson and the bank crises of the 1830s, to Lincoln and the Civil War, to Teddy Roosevelt, trustbusting, and the social and labor movements at the turn of the century, to the FDR and the Great Depression, to the Sixties, to now. The difference between these periods and now is that today there is no reform or alternative leadership on the horizon to release the pressure that is building.

      Finally, I would just point to the idea that revolution always seems inconceivable until revolutionary conditions pertain. If the economy collapses again next year, will revolution then seem so farfetched? You could say that we have been experiencing a slow motion counter-revolution or coup for some time now as evidenced by the steady erosion of Constitutional protections, the increase in corporate power over the political and legislative process, and the construction of the surveillance state. How can we accept so easily these kinds of counter-revolutionary changes and be so disbelieving about a populist revolutionary response to them?

    2. ReaderOfTeaLeaves

      In the 1930s, the nation had not been lied into wars, nor had it squandered treasure (and it’s reputation) in situations like Abu Gharib. It had a reputation as a moral force that has now been called into question.

      Noone likes to deal with a bully.

  53. PJM

    Actually, I dont think that will come a revolution in USA. Maybe some giant global riots will spread around american cities but what will come next isnt so beautiful. It will come racial tensions as a separatist movement across USA. It will come the proteccionist and isolationist view and the open view about the world. Later, these forces will collide in one great war and USA will be splited. Do you remember the roots and causes of American Civil war? It wasnt only racial tensions but economic, political and social tensions.

    American culture is too much agressive and violent. Not only we can see that in Hollywood but even in the financial system, were Wall Street suchs everybody around the world. (How many had forgotten the Eighties? Where the globe was sucked by Wall Street and their Hitmen?)

    American culture is so agressive that 1% of american population is behind bars, living in cells.

    American culture is so agressive that every 10 years USA makes a war to feed the militar-industrial complex.

    American culture is so agressive that a large share of americans believe that they deserve carry a gun and shoot someone who doenst like or isnt agreable to them. A lot of americans believe that doing Justice by their own hands are better than using the corrupted and expansive legal system. A lot of americans still believe that putting a rope on the neck of their dislikes are a better justice than using courts.

    This kind of society can live together when the times are prosperous and exists plenty of jobs and opportunities to all. This kind of society can grasp social tensions if is busy making money or shopping. But when this society cant shop or making money, the social tensions and the famous melting pot cracks and put all the violence above the human wax.

    I think USA will not survive to the end of the American Empire. We will see more and more tensions between cristian latinos and WASPs; between whites, broen and black. We will see more tensions between the north and the south; between the rich New England and the poor “new mexico” in the Pacific Coast.

    We will see how USA didnt developed a nation but only a society with various nations, cultures and even religions. This multicultural and religious society only can live together when money is plenty and opportunities exists. This society, today, is glued by money. Without money that society cracks. And splits.

    I agree with someone who said that the fall of USA will bring troubles to the rest of the world. In fact, today USA is a political system that generates risks and instability to the world. Isnt anymore reliable. The generation who fought the “conservative system”, about 40 and 30 years ago and made the cultural revolution in California looking to India, is worst than the previous generation. That generation is worst and what is more sad, made their children small dictators, spoiled and without social empathy with others.

    Is this the end of USA. I believe so. Unless a miracle comes and americans turn to the past and learn with it. Learn to avoi some past mistakes and to imitate the good things. Learn the real values that made USA great once.

    Im pessimistic about this current USA. Is a modern fascist system. But maybe, in the end, we will see the brave american pathos again as in the past. Men like Washington, Franklin or even Truman and Roosevelt (who denied the nazism inside USA, when some wanted to have an american Hitler) are needed in USA. Can I dream to see the return of the great american pathos? I hope so.

    Best regards.

    1. Psychoanalystus

      Good points, PJM, especially about America being a violent society. It is all that and much worse. It is a culture built on fear and domination. As a psychologist I have often wondered about this, trying to understand it. It permeates every aspect of society, including work relationships and relationships between men and women. It also distorts everything, making some things very difficult.

      I’ll give you an example. If you ever visit the US, observe how women usually avoid looking men in the eyes, especially men they don’t know. I believe the reason is to avoid any possible aggression. And let’s face it, American men are, on average, brutes. When I was young, single, and looking to meet women I was frustrated by this. How could one meet a woman if women always look away? So I went to Europe, met lots of women, and eventually married one from there. Best thing I ever did. And I’m raising my daughter in Europe as well.


      1. PJM

        Dear Psychoanalystus,

        Actually I never noticed that curious point about women looking in the eyes of men. As a foreigner and tourist we feel the things more differently.

        But I remember the first time I noticed the violence and the agressevely of the people when I was traveling around USA, to know more about USA. The first days of the trip, in S. Diego, I was traveling in a urban bus and I needed some information and asked to the driver. A women in fact. I crossed an yellow line in the bus floor that I didnt noticed and I was violently harassed by the woman driving the bus, as if I was a criminal. Or something else. She even didnt give me the information that I wanted. Períod. Sge didnt ansewr only screaming and saying to be behind that golden and sacred line.

        That it was the first time I realised the violence in the social relations in USA. It was a shock, of course. Later I discovered how violent is the american society in others aspects.

        1. Psychoanalystus

          Indeed, your experience with the bus driver is very relevant.

          A weird aspect of American society is the “person in uniform” syndrome. Everyone wearing a uniform, be it a policeman, a fireman, or a bus driver, feels compelled to yell out orders to those around. Pretty embarrassing.

          I fly often between Europe and the US, but it never fails to be shocked by customs officers, yelling out orders to unsuspecting foreign tourists, usually about that darned yellow line you mention. I’m usually thinking to myself, “These people spent a lot of money to visit the US, they came here to spend their hard-earned cash in this country so we can pay your inflated salary, and this is the first impression of America you offer them???”


      2. Stephanie

        Psychoanalystus –

        As an American woman living in a large city, I do tend to avert my eyes from others while on the street or bus, but not because I fear violence. It’s usually because I want to be left alone, and not have to explain to random men that I’m married, that no I’m not going to give them my phone number, etc. — in other words, I’m avoiding exactly the type of interaction it seems you were hoping to have with women in the U.S.

        That said, my experience traveling in Europe were that in large cities the Germans and the Dutch, at least, are as good at avoiding eye contact as anybody in the U.S.

  54. Skippy

    When the rules of the human condition are set by predatory individuals wrapped up as employment, nation/state, its good for you, trust us (blindly), it ends in tears.

    Economy’s = consumption + expansion – degradation/reduction of planet/scarcity – quotas = conflict.

    Skippy…a world set in perpetual conflict over Job’s….ROFLMAO…we kill, diminish, destroy and lament for what, our jobs…sigh…homo sapien lol we gave that title to our selves…its not like any other creature had a say in it…recount!

  55. callingnew

    The global corporate elite must destroy national identity to further their aim of unrivaled dominance, much as the nation trumped the tribe. Our freedom will be taken under the banner of world cooperation. It’ll be like that old coke commercial. “i’d like to teach the world to sing, in perfect harmony.”

  56. Simon

    Well this is just what I’ve been thinking for a while now. It was always on the cards just a matter of when. So this is a very good heads up. Some important people thing there could be a shake up sooner now rather than later.

    Uncertainty is never fun but it is a simple fact of life. Lets hope that if there is a regime change we don’t get the worst possible option. It does suck that a disaster for the US could mean disaster for the world.

  57. PJM

    This is a special link to Yves, who reads a lot mr. Ambrose E-P.


    This news is good news. The analysis of trade between Portugal (remember the PIG of mr. E A-P, dear Yves?) and Germany. And what is the reality? Actualy Germany exports around the world is pushing for our exports too. The meaning is: Germany is driving the Europe outside the crisis. Even the PIGS who benefits with german exports.

    Some pundits should realise that mr. A E-P are only biased opinions against the continental europeans because he cant admit that UK is screwed because follows USA like a poodle. Mr. A E-P hates PIGS and only what is british and american is good in his opinions. Others are trash. He is sad because he wrote that Irish will be better that us, PIGS, because theyre… Well, theyre some kind of british. lololololol

    Its sad seeing Yves following that nasty analysts because she doesnt understand these frustade guys. ;) In fact, a lot of americans loves to read that opinion maker who changed his view about economic policy in UK because the government changed and he is allways with the power who rules the number 10.

    Its sad to see a lot of honest americans following these kind of bullshit opinion makers.

    But that is live, right?

    1. Timo

      Yes, Mr. AEP has an agenda or at least is very biased. Euro is great for both parties: Germany and other “Nordics” get the benefits of not so strong currency and Mediterranean countries get the benefits of stable currency and lower interest rates.

  58. SteveK

    This is a fascinating and disturbing discussion. As someone who lives and works in Silicon Valley rather than NYC, I’d like to offer another thought. I believe—and there are many here who would agree—that the fundamental driving force behind the extreme concentration of wealth and income that we now have is TECHNOLOGY. (And globalization, but in many instances that has been enabled by technology).

    There is no doubt that the elite are benefiting from that trend, and that beginning with Reagan, they effectively destroyed the things that might have acted as a countervailing/mitigating force: unions, progressive taxation, etc.

    The point, however, is that even as the elite manipulate the system, they do NOT fully understand the implications of what is happening. Those of us who are deeply involved in technology sense that things are moving faster than ever before. Unemployment may well increase dramatically. Income inequality is very likely to accelerate to unthinkable levels: there is simply nothing to stop it, other than perhaps the type of revolution or uprising that has been discussed here. There is a point at which the system will simply no longer function, and I don’t think anyone realizes how fast we may be approaching that point.

    I realize this may sound far-fetched, but I encourage everyone to think about it. Here’s a book (available as a free PDF) that gives the most effective presentation of this issue that I’ve seen:

    The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (http://www.thelightsinthetunnel.com).

    I also think that we need new economic models, perhaps a completely new paradigm, and this book does actually propose a very interesting one—although it is, of course, politically unthinkable. I don’t think mainstream economists are capable of producing a solution: they are essentially brainwashed with the mathematical models they learn in graduate school, but those models are outdated and built upon silly assumptions.

    Also check out the author’s blog http://econfuture.wordpress.com and this post in particular “Did Advancing Technology Contribute to the Financial Crisis” (http://econfuture.wordpress.com/2010/04/06/did-advancing-technology-contribute-to-the-financial-crisis/)

  59. Timo

    USA is much more rigid class society than countries like Germany, Netherlands or Sweden. Much more vicious and harsh class society than UK, about the same level with Brazil but Brazil has been improving a lot in recent years, a genuine rise of middle class there.

    New York is going to burn, that is most uppity city with “let them eat cake”-elite AND with a huge number of poor people. USA will most likely break apart, one way or another within 10-15 years. Maybe at first to 4-5 regional groups of former states. Washington DC cannot hold things together much longer anymore.

    1. Psychoanalystus

      More rigid that the UK? I don’t think so, my friend.

      The UK is basically a feudal nation, with lords, prices, kings and queens, an unelected House of Lords, where all land is owned by these these so-called blue blood aristocrats, and the boards of most major corporations and institutions are almost 100% men from aristocratic families.

      I realize it is now fashionable to bash on the US (I do plenty of that myself), but the fact is, the country has been one of the most upwardly-mobile nations.

      But I have to say, it remains to be seen how it shall be in the future.


  60. Ted K

    I’ll be surprised if this comment uploads because I have expressed my extreme displeasure with the way Yves mishandles her links and she gets to manipulative with comments that don’t agree with her train of thought.

    But I do take her at her word, and I do think this is a bit of a “red flag”. Certainly has some wheels turning in my mind on some stocks. One of the big things really bothers me is how FINRA controls price supervision on the NYSE (New York Stock Exchange) now and we hear Yves Smith and Tyler Durden going off on SEC but almost never criticizing FINRA. Another sign of how people are just totally incognizant of the economic/social “strata” in which they belong.

  61. Cold Wind

    The Republicans stand to win big in the next election. Will they end the reign of the Federal Reserve, dissolve the US interest in the World Bank and IMF? Don’t think so. Will they put an end to derivatives trading that is sucking the life out of world finances? Don’t think so. Will they bring the jobs back to America by imposing necessary tariffs on imported goods and services? Don’t think so. Will they act to repudiate the trillions of dollars in bad debt engineered by the Federal Reserve and Goldman Sachs? Don’t think so. Will they end the series of ruinous wars in the middle east that serve only the perverted interest of Israel? Don’t think so. Will they act to stop the slide into dictatorship and police state rule that is crippling our nation? Don’t think so.

    Let’s face it. Americans are a stupid lot for putting up all this criminality.

  62. Arciero

    Seriously, if you want to get a thought on what the country is thinking, why are you listening to a couple rich New Yorkers. Talk to a couple working middle-class guys in Peoria. What New Yorkers think and feel is completely out of touch with most of the rest of the country.

  63. Jerry

    I from the midwest and this is what I think is happening and will continue…..it is the underground economy…you know what I call “cash on the dash” I am self-employed reporting little to nothing….

    1. Psychoanalystus

      Are you saying the US will become more like Greece, Cyprus, Romania, and Bulgaria? I spend lots of time in those countries (in addition to the US), and the standard question when you buy something goes like this: “Would you like a receipt with that, Sir?” If you are dumb enough to say “Yes”, you pay sales tax (in Romania that is 24%, so only a crazy dude would say yes to that).

      And by the way, all the nations listed above are laughed at by Western nations, for their supposedly low salaries. However, there are likely more Mercedeses, BMWs, mansions, and Rolexes in any one of those countries than in Germany, France, and the UK combined. Yes, the official salaries are low, but the underground economy is probably 10 times the size of the official one. And you know what, there’s nothing wrong with that, because their governments are just as corrupt as the US government, so why send them money they would steal anyway.

      Long live the Black Market!


      1. Psychoanalystus

        I should also add that in all the Eastern European nations I mentioned above, their governments somehow find a way to provide citizens with excellent socialized medicine and free higher education. This is something that “the richest nation on earth” and “exporter of democracy to Arab nations” is utterly unable to do, despite its very efficient tax collection machinery (a.k.a., IRS).


  64. KFritz

    Re: Narcissistic Kids

    Perhaps we’re simply witnessing the evolution of a new aristocracy. The children of aristocracy have often been holy terrors. Think of William Zanzinger fr/ the “Ballad of Hattie Carroll.”

  65. Jerry

    Talk about children of aristocracy being holy terrors….we were driving on the interstate outside of an upscale Chicago suburb last Sunday when 20 tunners (small cars modified to go the speed of race cars)came racing by at 100 mps of more. The drivers were too young to pay the amount it would have taken for the modifications. One car had a passenger trying to paint her fingernails at the same time….They bypassed the side of the toll both which allows people with a pass to go thru without stopping but also takes pictures in case someone goes thru without a pass….guess they didn’t want license plates id’d……New Sunday after pass time of the children of rich and famous…
    Death potential for the rest of us……

  66. KFritz

    “He also noted that he believed that there were a lot of people (and he meant in the upper income strata) who were barely holding on, keeping up appearances, and hoping something would break their way. Some might get lucky, but most will hit the wall financially.”

    Am @ home today, writing this & not earning $ on account of this very problem.

  67. JBoyne

    I’ve said “a democrat is a republican who hasn’t made it yet”, but now it’s “a republican is a democrat who hasn’t lost it yet” – these ex-wannabe-elites are shocked to find they’re one of ‘us’ treading water outside the lifeboat.

  68. Anonymous

    I’ve been reading the comments here for the last few days and I have to say that if the upper-crust fears violent “regime change” or uprising; it is there own fault for pulling the crap they’ve been doing. I would like to make it clear that I’m not advocating violence, but I feel that destroying people economically, enslaving them with usurious debt, and rendering them homeless is perpetrating violence on said people. When powers are abused in that manner, it should be expected that someone might respond with violence.

    One of the reasons that these people commit the abuses they do is because they believe that they won’t suffer violence as a result (e.g. most people who are fired don’t kill their bosses). If some banks were burned, bosses killed, or truck bombs set off…it might convince a few people that treating people like crap has consequences.

    I also have to comment on the kind of people who say that FEMA camps, the military and paramilitary police are waiting for the people when they revolt. The US military was unable to pacify Iraq and they had a much smaller population. It was only by paying off insurgents that the generals were able to bring a facsimile of stability to Iraq. Do you really think that they’re going to be able to control a population of 300 million?

  69. Squib

    I’m glad the people in the upper class are afraid. THEY SHOULD BE. Us down here on the bottom are pretty pissed off and the fact that there are far more of us poor people than rich. Well you don’t need an organized revolution, just a mob with torches to change everything.

Comments are closed.