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"We're creating an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property." – George W. Bush, October 2004
The "ownership society" that President Bush was so proud of three years ago turned out to have a very short life. The housing market is in the middle of a serious dive that may end up in a fiery crash, and the rest of the world is buying up all the paper that mortgage companies are unloading as they attempt to maintain the illusion of control.
According to a recent Pew Research poll, half of the Americans surveyed now think that they live in a society of haves and have-nots. That's nearly twice the number of folks who felt that way 1988, and most of them see themselves as one of the have-nots.
They'll get a little of their money back this year as the government throws some cash back to taxpayers in a futile effort to stimulate the economy. The companies and corporations responsible for trashing the mortgage banking system will get rescue money as well – and boards of directors will continue to pay their top people multi-million dollar bonuses despite their failure at the job they were hired to do. Stockholders in those companies may not like that behavior, but they won't pull their money out of those stocks until they need cash just to pay their bills. And many of them will, very soon...
A service economy based on consumption requires that people actually have some money to pay for goods and services. The American economy has fallen because most people just can't afford to buy overpriced, poorly made replaceable crap as often as they used to.
The government can no longer fix the economy, if it ever could. The primary function of our national government nowadays is the redistribution of the People's money, because nobody has any faith in federal programs anymore. That would seem to be a good thing, given the Fed's history of foolishly squandering money, but it hasn't worked out that way.
In 2001, the US Treasury had a surplus. On paper, at least, the government was showing a profit from its operations. The Bush administration recently announced that, over the next two years, the government will spend $817 billion more than it takes in. A lot of financial analysts say that number is ridiculously lower than the true federal deficit.
Running up a string of $400 billion annual losses should end, once and for all, the illusion that Republicans always have sound fiscal management policies. But it probably won't – the mythic figure of Ronald Reagan still casts a long shadow over the faithful from his place beyond the Hollywood sunset.
Outside of our borders, it's a less friendly world these days for the once-mighty dollar. One euro is equal to about $1.50 these days; at the current rate of depreciation, a year from now it may well cost you $1.75 for every euro you buy in exchange. Several upscale shops in New York City have already begun to encourage their patrons to pay for their luxuries with euros. That's a trend that should continue to grow.
The dollar was pretty much a universal currency just a few years ago, but today you can't use dollars in many places that always accepted them before. At the Taj Mahal palace in India they stopped accepting them for entry fees, and for good reason – the dollar dropped 10 percent against the rupee last year. Even the once-laughable Mexican peso held its value against the dollar over the past twelve months.
By the time the mortgage market collapse works itself out, perhaps 2 million people will have lost their homes. Some of those will be second homes or vacation properties, but only a few. People who could afford a second home aren't getting pinched as hard as those first-time homebuyers whose income stayed low while their house payment ballooned up.
But all of that doesn't mean there's no money floating around out there. According to the Center for Responsive Politics, the 2008 presidential race will be the most expensive in U.S. history with around $600 million raised by all candidates. Hillary Clinton alone has raised more than $100 million in donations; Barack Obama is right behind her, with much of his money coming from the same sources.
Investment banks, commercial banks and real estate companies have already handed out more than $40 million in campaign contributions. Goldman Sachs, Citigroup, Morgan Stanley, Lehman Brothers and Merrill Lynch are the biggest corporate donors so far. Lawyers and law firms have donated $32 million; like the bankers and realtors, they'll expect to see some return on their investments.
The television, film and music industry has given $6 million so far, a drop in the bucket compared to the money they make from entertaining the American public. They're strongly supporting Democrats over Republicans, as $5 million of that total has gone to Clinton and Obama.
Oddly enough, despite a long run of record profits (last year the three major oil companies made a collective profit of $70 billon) the oil and gas industry isn't a major player this year in the popular game of Buy-A-Politician. They've donated less than $2 million so far, but it's early yet. They may step up that spending, but then they may not need to. Not one candidate remaining in the race has any plans to redistribute any of those obscene profits from the sale of a public resource back into the pockets of consumers.
In an election year, people tend to vote in favor of their personal economic interests before any other consideration. In America we tend to view our laws the same way we view our lawmakers – most of us would break a law just as quickly as we would vote for a corrupt politician, as long as there's money in it for us.
Politicians who invoke a fear of being overrun by foreign invaders can deflect that tendency towards our own self-interest, as we've seen graphically demonstrated over the past seven years. But no amount of smoke and mirrors can overcome the reality of stagnant or shrinking incomes in a time of rising prices throughout the marketplaces of America.
Meanwhile, the cost of Dick Cheney's military madness is something none of the remaining presidential contenders care to mention. The president wants Congress to dole out more than half a trillion dollars for the military over the next few years, and that amount doesn't even include the cost of the neoconservative attempt to expand the American Empire into Iraq and Afghanistan.
That failed effort is running up a bill of somewhere around $3 billion every month, an amount that varies when different people try to add up the numbers. Sadly, when faced with the fear of being accused of not "supporting our troops", Congress will continue to pony up whatever money the administration wants.
As a country we may be broke and falling ever deeper in debt, but there's money available to drop bombs and fire rockets every day into the streets of foreign cities where "collateral damage" will kill some dark-skinned innocent children. So it has always been in America, and so it will remain, no matter who gets elected this year.
So is the money you make worth the price that you pay
Can you make it to the end of the line?
Don't the wind blow cold
When you're hanging your soul on the line…
Graham Nash
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