Journal tomhudson's Journal: The legitimization of crime and trade barriers 16
Will the middle class embrace crime?
But before I get to that - trade and tariff barriers will come back with a vengeance over the next few years. There is simply no way to avoid it. In a healthy global economy, a tariff barrier is a self-inflicted wound. In an imbalanced global economy, only trade and tariff barriers can start to even out the imbalances.
Now, back to the main topic
At first, the idea seems outlandish. White-bread-eating middle America (and Canada and Europe) turning to crime en masse? And yet, the middle class, and the upper lower class, have seen that crime pays - and it pays big. Implode the financial system via various frauds, get a bail-out, a bonus, and more work. For 30 years, this has been an increasing trend, where people in positions of power or authority just don't seem to have to obey the same rules everyone else does.
We saw a similar deterioration of the social fabric with prohibition. A stupid law brought disrespect for all laws.
This time, it's different!
You betcha! Why? Because this time, the disenfranchised are increasingly educated, intelligent, and don't buy into the whole "it's your fault if you fail" puritan scheme of things. They see that, no matter what they do, they are the ones being squeezed, milked, and discarded, and that it's simply unfair.
The system is rigged, and they know it. And they have this wonderful thing called the Internet to share their gripes. they know they are not alone. So the odds of social pressure keeping people "in their places" is much reduced.
10 scary predictions for the rest of the decade:
- White collar crime will rise - steeply. Odds: Certain
- Bank of America will go bankrupt. So will Citi. So will Freddy Mac and Fannie Mae. Odds: Very high
- The underground economy will be the only sector to experience growth this decade - and it will be big growth! Odds: 100%
- The end of floating currencies "for the duration of the crisis." Odds: High
- Tax fraud? You betcha! When you have tens of millions of educated, intelligent people pushed to the wall, you'll see so many fake receipts and shell companies that it will be impossible to unwind. Everyone will claim that they were "scammed." At the end of the day, everyone will have a side business that loses money. Odds: 50% of the population by 2017 will not pay taxes.
- Social media will become untrusted as the government data-mines it to try to expose tax fraud. Odds: Very high
- Major cities will be completely hollowed out as their revenue base collapses. This will be done as people sell their homes to each other for massive losses, same as happened to farms during the depression when any outsider who tried to bid ended up a bloody pulp - or their bids just fell on deaf ears. Odds: High to very high depending on the locale
- Employers whose sectors are not protected by tariffs will continue to cut back on wages, with the end result being that they end up less efficient, then wonder when their sales fall through the floor. They will blame it on "the economy". Odds: High
- The new new economy will die. Monetizing eyeballs will be a useless strategy, as click-throughs become useless due to the geometrically increasing number of desperate scammers out there. Odds: High
- Electronics will keep getting cheaper, since that will be the only thing that won't have a ruinous tariff on it. Odds: High
Can it really happen?
5 years ago, nobody pictured houses that sold for $200,000 selling for under $25k - but now there are plenty of homes in Florida that pay no municipal taxes because they've fallen below the $25,000 homesteader's exemption.
When people are given a choice between seeing their kids starve and cheating, they will cheat. The first step will be the hardest, but after that
We saw the same trend with walk-aways. When I predicted them 5 years ago, everyone said I was nuts. "People will never just walk away from their home!" Now, the biggest factor in whether an underwater homeowner walks away from their mortgage is if they know someone else who did - and within the next year, everyone will know somebody. Housing still has a LONG way to drop, and a recovery is simply out of the question. When it does stabilize, it will be at a price point that doesn't require 30-year mortgages.
Then again, when I said GM would eventually go bankrupt in 2000, people said I was nuts. Or that Nortel stock, trading at $119, would drop below $10, and then when it was trading at $64, I said "below $3", and then at $40, I said "under a buck before it goes bankrupt" I was nuts. Or when I said the DJ would go well below 9,000 (it was at 14,000) and probably below 8,000, I was nuts.
Or maybe everyone else is, because they can't face the alternative?
Not all these things will necessarily happen. Maybe a meteor will hit us and wipe us out. But tariff and trade barriers are coming, because they are simply the lesser of two evils, and they happen to go hand in glove with foreign exchange controls. Either way, the consumer is going to be hit hard (tariff barriers raise prices) but a consumer with a job can at least buy some of those more expensive products, and that's what's going to tip the scales. Plus bringing factories home creates local employment, and makes politicians popular.
The alternative is a global 30% unemployment rate (we may still end up there, if only because the damage is deep). And that sort of unemployment will trigger wars, as politicians seek to externalize the problem as well as divert all that idle manpower.
Questions... (Score:1)
>Will the middle class embrace crime?
They always have. The middle class cares little about what is legal. They care about how likely they are to be caught. The more law there is, the less likely they are to be caught violating it because they're the middle class. The more law there is, the easier it is to find the poor out of compliance with it. That's not to say they have no morals - morality is a different question than law.
Prohibition and the populace. See above. The people will not obey a la
Re: (Score:2)
I didn't say that Google will fail - they're diversifying fast enough that they should be able to stay afloat and pick the choice bits of meat out of the boneyard. Their economic model, on the other hand, is going to change. For example, their online office stuff will, within 5 years, be in a fight to the death with Microsoft Office among governments that haven't embraced "good enough computing" and gotten off the upgrade treadmill. They both need the revenue streams, but only one
Economic classes largely are... (Score:1)
...artificial boundaries. Like with countless other things of today's culture, we're simply trained to think in terms of it due to the dominant set of philosophies of our current time.
Will the middle class embrace crime?
What do you think the housing bubble was?
Another example: Why did so many middle class people at Enron lose their life's savings when it popped?
Excessive greed (i.e. too much of an otherwise good thing) permeates all economic classes. And it's not like it needed to be taught, or one class ha
Re: (Score:2)
They also thought that if worse came to worse, they could sell the property and pay it off, and start over.
That worked really well - for a few years. And then it didn't.
N
Re: (Score:2)
The only game seems to be as a merc, small wars, a banker, the real tricky point is when will 'herd' wake up.
Follow the cash as it flows out to new global homes
As for stock in Tina Fey try something like http://en.wikipedia.org/wiki/Hollywood_Stock_Exchange [wikipedia.org]
If the idea is fun try maxkeiser.com/ for his insights into the next few years.
Re: (Score:2)
Re: (Score:1)
The difference is that many of them thought...
Just more societal programming -- we're supposed to think the little guy is less guilty because the bankers used teh "predatory lending" on them. Suffice it to say you would prolly find it startling just how much, of what we're supposed to believe, that I don't buy into. And I only grow more "fringe" over time.
Re: (Score:2)
Re: (Score:1)
Maybe where you live, but here in California only some were planning on refinancing. I.e. only a portion of the crooked consumers were thieving bastards only in the way that they saw it as a way to get themselves a home much bigger and more luxurious than they could afford or should have. The rest of the crooked consumers had no intention of living there/making it their "home", they saw houses as commodities to be flipped for "BIG MONEY FAST", either to bank the money or to upgrade to an even more ostentati
Re: (Score:2)
But it also goes for the predatory lenders as well. Countrywide should have been seized and the Orange Man should be wearing a matching jum
Problem (Score:2)
There's a problem with the scenarios what you propose, and that's the potential or even likely collapse of the financial or transportation infrastructure. I'm not entirely sure that the complexity of the US economy could withstand a giant shock. Less than two percent of the population produces food. How many people live within walking distance of water? No, this isn't good.
Re: (Score:2)
No water, no power, no agriculture.
The problem and solution is globalization (Score:2)
I blame the overall difficulties with our economy now on the mass exportation of jobs and money. The housing market was just the most visible bubble to be squeezed because houses are typically the largest asset any middle class person has.
The thing is, it's a problem to us only because we've spent the previous century on the heavy side of the scale. We of the middle class still believe we are entitled to everything we have and much, much more, regardless of how little the rest of the world has (we're now
Re: (Score:2)
We've seen 3 decades of "rush to the bottom" economies, and 2 decades where there has been no growth in middle and lower-class incomes. All the benefits accrued to the top few. There's a connection, and that was globalization and "free" trade.
As one of the few people who actively campaigned against free trade (I read the ac