the R word

Recession is hitting the US and by extension many world markets. As usual nobody wants to say the bad word and anyone who warns of recession qualifies their statements with conditionals so as not to upset the markets. Sweet talk aside, it seems pretty clear that we are already in recession and that this recession will be a lot worse than any we have experienced in recent memory. We have reached the end of the line when it comes to overvalued assets. First we had stocks and when stocks crashed we were "rescued" by housing. Now housing and with it credit and lending are heading for the toilet.

Experts predict housing prices in overvalued markets such as California, Arizona, and Florida could fall 30% or more. Other, less speculative markets could see drops of 20-25%. That is enough to send a chill down anyone's spine. Stocks too need to give up a lot of artificial gains to be in line with corporate earnings. Bad as that all sounds, I am afraid it is just the beginning. Our biggest bubble is one of artificial prosperity and stability. It is one that siphons wealth away from everyone to fill up the coffers of the very rich.

We have an economy that is largely based on discretionary spending instead of necessities. While some see this as "advanced," it is fundamentally flawed. It is also unsustainable in the long run due to population pressures. Such an economy needs ever more people to feed the greed of those on top. That is one reason women had to join the workforce in the latter part of the last century. It was called emancipation. It is truly ironic how all signs of trouble are given labels that denote progress.

It did not stop there. Ever more hungry for worker bees, we turned to India and China, our new source of cheap goodies. And that move puts us on a collision course with China and India. It is our real foreign policy issue. Not terrorism whose impact is largely symbolic. Terrorism is a political bubble. One whose importance has been inflated beyond reason.

While feeding this frenzy, America has developed large internal fault lines. Some talk about two Americas. The reality is more like three Americas. There is the America of the super-rich, who are continually getting richer by forcing ever more unsustainable policies, aided by the media and puppet politicians. Media control has assured that their success has been better than expected and we have seen what is probably the longest run of "rich getting richer" the country has ever experienced.

The second America is that of the middle class who are struggling to keep up appearances. Their wealth is largely a mirage. Sure there are big mc mansions, oversized SUV's, and other gadgets to show of to the neighbors. But where is the value in all that? The value is in perception. Homes in the desert can only exist by virtue of life-lines. Their intrinsic value is nil. They are in effect subsidized. Subsidized by cheap energy. Cheap energy that brings in water and allows for air conditioning, heating, and a lot of driving. Equally without value are the overpriced trucks called SUV's. And everything else that clutters the big house and uses inordinate amounts of energy. Cheap energy has created a dependent life-style that can only persist by ever longer supply lines supported by oil.

The third America is the America of the disenfranchised and poor. That America extends into the largest prison population of any civilized country. The prisons is where we put the young people, who would otherwise make too much trouble. The streets is where we put those who are neutralized by drugs and alcohol. And the projects and inner cities is where the rest hangs out. forever waiting for a better future.

All in all the inner cities are still a cut above the rest of the Americas, except for Canada. That is why we have to build a fence on the border. A fence that is supposed to keep out terrorists. Given that all known terrorists, including the famous 9-11 gang are well-educated, solidly middle-class and above youth, the rationale seems odd. These are not guys that would survive or thrive in Mexico or Central America.

The next move is probably a fence to keep the poor out. Such fences already exist and are called "gated communities." Another label that evokes images of progress. How long will it take before the gated communities develop real gates, with watch towers and armed guards? And army convoys to protect the supply lines.