Universe On The Couch

The swearing in. Fuck. Bush and company again. So what do the next four years hold...

We continue in Iraq. Our people die and the country remains in anarchy. Iran and North Korea continue on the nuke path. China and India grow. China and Japan finance our debt reluctantly with our low rates and falling dollars so we can buy more of their stuff. Bush pushes more tax cuts and more spending. American spend like crazy and build up more debt. They put money into the stock market thinking they will go up. Business as usual.

But this cannot sustain long. Interest rates are so low already. Consumers have tapped out their home equity and borrowed up to their gills. Not many can afford a home in some areas. Their is no real market for goods outside of the USA. Our trade deficit is huge. We even have a trade deficit with Palestine and Afghanistan! The whole thing is running out of steam.

One big shock and turmoil begins. Another 9-11 scale attack? Or worse? Showdown in the Middle East? Korea? Epidemic outbreak?

Here is one possibility. Israel sees Iran as a threat and bombs the hell out of them. Of course they succeed and destroy the nukes. We publicly are outraged while high-fiving them in private. This inflames the Muslim world and Israel is kicking all their butts with weapons from us.

The price of oil skyrockets. They don't want to give any to USA or our allies. The cost of gasoline goes up so Americans have less to spend on other stuff. So retail suffers. Businesses including agriculture get crunched with higher costs, tough to pass on with slowing consumer demands. People become unemployed and underemployed. Those with jobs get scared.

Americans tighten their belt. The house has been tapped. Wages are flat. Some will go bankrupt. Where to cut? Hold off on that new car, TV, sofa,... And maybe nix that health club membership. Or that overpriced cable, at least the premium stuff. Do you really need the Internet? Or that cell phone? Forget going to the movies or out to eat.

So business suffers. More jobs are lost. Homes, many now financed with little money-or none as down-payment and with the equity tapped out, hit the market, even as foreclosures. Home prices tumble. Mortgages go underwater, meaning they are higher that the current home value.

Interest rates go way up. Lending is risky and higher rates counter higher risk. The home market suffers further. Fannie and Freddie and Ginnae fall and take much of the market with them. The government seeing the results of that starts another monumental bailout. The Dow goes below 5000 and people are wiped out. Banks fail, pensions are bankrupt, 401's and such are toast.

Tax revenues are a fraction for bloated governments. Unable to raise money by taxing, they look at cutting spending. We are at war so that is preserved. Social Security is a sacred cow. Can't touch Medicare since seniors are a powerful voting block. Education and anything to do with kids will suffer. As will anything for the poor. But it will hardly be enough.

So the usual cop-out: Inflate. Borrow. The dollar sinks and sinks. Foreign investors bail on all things American since it isn't worth much. The money people managed to keep safe is now markedly reduced in value.

So a hyper-inflation and Depression! People are pissed. They aren't the tough individuals of the thirties. This is the whiny entitled America. They will throw a tantrum when the bottle is taken away. The elites will prosper of course. The poor and middle class will be on fire.

Bush will blame the Democratic liberals from FDR to Johnson to the current donkeys. He will cite scapegoats galore. Rove will spin something to get the majority behind him with more false promises and revenge on those culpable.

The Patriot Act and II will give them a ready data-base. The police state will take over. Goodbye freedom. Confiscate the gold of those that were wise enough to see what was ahead. Fundamental Christianity as the state religion. Those morals now law and enforced by tribunal. Books are burned. Citizens are implanted with a tracking devise. Your DNA is stored in a database.

OK that is a bit extreme. More likely things will churn along. The fraud will slowly suck the life out of the middle class. Jobs will keep leaving. The dollar will lose value. Stagflation will take hold. Wages will not keep up and neither will entitlements. The published inflation figures will be a dishonest manipulated underestimate of inflationary impact. People will wonder in five or ten years what happened?

OK economics is very complex and the experts never agree either. My most certain prediction: Bad things are going to happen.