Can you believe that there are still silly people who deny that in the pages of
the great classics of the past can be found invaluable lessons for today? Take
this passage from Johann Wolfgang von Goethe's 1806 masterpiece Faust:
This
senseless, juggling witchcraft I detest!
Dost promise that in this foul nest
Of madness, I shall be restored?
It should be obvious to all
that, today, this is the internal monologue of a respectable journalist
wrestling with his conscience over a lucrative job offer from Rupert Murdoch’s
Fox News. The "senseless, juggling witchcraft" is an obvious reference to FOX's
morning on-air personnel, all blond midwestern corn-fed clones as identical in
appearance and perkiness as the warbot
clones cranked out on the planet Kamaino from Star Wars. As for the
"foul nest of madness", well, there's always Glenn Beck.
Last week, New York Times columnist Tom Friedman wondered whether the United
States was actually still governable at all. Looking at the recent experience
of Glenn Beck in moving high up from the bubbling cauldron of white resentment
into the triumvirate (Beck, Rush Limbaugh and Bill O'Reilly) of the right-wing
electronic media opposition to Barack Obama, one wonders whether it's worth the
effort.
Beck leapt off the sinking ship CNN last year. While there, his signature
moment was in 2006, asking newly elected Minnesota Congressman Keith Ellison,
the first Muslim elected to the US Congress, to "prove" he wasn't a threat to
the country, even though the US Constitution, which Beck says lies at the core
of his ideology, explicitly promises Americans the presumption of innocence.
Moving over to more ideological kith and kin at Fox, both Beck and Fox soon
realized the remarkable value-added Beck brought to the network. At 46 years
old, his ratings demographic skewed far younger than the wheezing titans of
Limbaugh and O'Reilly, whose viewers' ages sometimes looked as if they had
passed out Nielsen ratings diaries in the colonic rooms of nursing homes. As
any current content producer from MTV to the Metropolitan Opera has or is
learning to their discomfort, to get the young eyeballs, you got to give 'em a
show.
That he has given his radio and TV audiences in droves, with performances that
ooze spectacle, bombast, histrionics, exaggeration and embellishment. A caller
who agreed with Obama's call for national healthcare reform was met with an
extended, alto voiced screamfest ordering the caller to "Get off my phone!",
something Beck could have done easily and instantaneously with his line dump
switch.
Mined out of the polling data obtained by Republican strategist Frank Luntz
that showed how nervous is the 57% of white America who voted against Obama in
2008, Beck's latest screeds are usually in some way connected to America's
deteriorating budget position, with its projected US$1.5 trillion deficit for
the current fiscal year.
This he accomplishes in many ways, among them, by comparing America's Federal
Emergency Management Agency to the Nazi SS and the Stalin-era NVKD as the
principal actors in the upcoming imprisonment of the white middle-class and its
subsequent resettlement to re-education camps where there will be a
"slaughterfest", then, in a display of detective deductive reasoning worthy of
a schizophrenic cabbalist, while observing examples of Mexican worker and
Italian Futurist mid-20th century artworks on display at New York's Rockefeller
Center, the home of Fox archrivals NBC and MSNBC, Beck allows the viewer to
come to the obvious conclusion that all criticism of both Fox and himself are
just part of the continuing vibrant communist conspiracy operating and thriving
in the US Democratic Party.
But perhaps the mad among us are like broken (analog) clocks, in that they are
right twice a day. Beck, while probably not meaning to, recently gave just
about one of the most insightful and discerning analyses of the current
economic situation
First installed near Times Square in Manhattan in 1989, then moved to the
Avenue of the Americas, is the National Debt Clock, a continually updating dot
matrix (like a sports scoreboard) compilation of the ever-expanding US national
debt. From 2002-2004, the clock was turned off, as the final effects of the
Bill Clinton era fiscal surpluses were actually spinning the numbers backwards.
Now the clock is spinning wildly higher, driven mostly by George W Bush's tax
cuts, two unfunded wars, and the costs of rescuing the financial system that
fell on top of the incoming Obama administration upon assuming power just over
12 months ago.
What Beck did was to find the deficit clock, and a lot more besides it, online,
(see www.usdebtclock.org). Beck is
mostly interested in the total debt numbers, currently approaching about $13.3
trillion. Falling in with Frank Luntz's iron polling discipline that has
Republicans who looked on Reagan-Bush-Bush deficits with equanimity but Obama
deficits with horror, Beck rasps poetically, half as US history teacher, half
as Cicero in a summer stock presentation of Julius Caesar.
First, we
need to stop living in a fantasy. America has fundamentally changed: We're not
going back to where it was unless we admit we have a problem. And it's all
based on one word: debt. As Thomas Jefferson wrote to James Madison in 1789:
"Then I say, the Earth belongs to each of these generations during its course,
fully and in its own right. The second generation receives it clear of the
debts and incumbrances of the first, the third of the second, and so on. For if
the first could charge it with a debt, then the earth would belong to the dead
and not to the living generation. Then, no generation can contract debts
greater than may be paid during the course of its own existence." ... Our
national debt has become a freakish, fat, hairy giant that's stealing from our
children's future and dishonoring our Founders in the past.
But
any look at the website points at debt as less the country's disease, but
perhaps its cure, at the very least; debt is currently the feeding tube keeping
the national economy alive until it can emerge from its coma.
In contrast to the street-front debt clock, containing only that one number of
the national debt, www.usdebtclock.org contains about 50 figures, all updated
in "synthetic" real time - the actual numbers are not from direct measurements
of what's left in tellers' desks or coin-counting machines, but are
calculations based on previously established linear algorithms.
The most important part of the website is that not all the numbers are going
up. Many are going down. If debt is the ultimate public evil, that should be an
unmistakable public good, but very few in America thinks things can be
described as "good" right now - usually, another four- or six-letter word is
used.
Obviously, the US National Debt is rising, at a rate of around $2 million a
minute. That works out to about $40,000 of debt per citizen, $113,000 per
taxpayer. US Federal spending, at over $380 billion with still eight months
left in the fiscal year, is rising at a rate of about $4 million a minute, but
Federal revenues are only rising at a rate of about $2 million a minute, thus
the deficit, at about $145 billion, is rising about $1.7 million a minute.
The budget component items range from the Medicare/Medicaid medical care
programs for the elderly and indigent, currently at $87 billion and rising at
about $400,000 a minute, to individual congressmen's pet projects, called
"earmarks", and, at about $2 billion, are now rising in cost at a rate of about
$80,000 a minute. The category called "defense/wars" , including the combat in
Iraq, Afghanistan and everywhere else, is currently at $74 billion for this
year (about 80% more than the numbers for interest on the Federal Debt) and is
rising at a rate of just over $1 million a minute.
So is the United States debt situation a tale of damnation and woe, of
profligacy and excess? Hardly.
Total US personal, as opposed to government, debt is now just under $17
trillion, and is falling at a rate of about $900,000 a minute. Mortgage debt is
falling at a rate of $800,000 a minute. The value of corporate assets is
falling at about $350,000 a minute, small business asset values are falling at
$170,000 a minute. Consumer debt, such as auto loans, is falling at a rate of
$30,000 a minute, and credit card debt, the symbol of American indulgence and
excess to the same extent as la Marianne being the symbol of freedom in France,
is falling at about $150,000 a minute.
There are many other data fields other than the ones I have analyzed; taken
together, looking at the calculus, slopes and rates of change of the data is
like taking a pretty advanced college econometrics course. The 20th century
socialists who dreamt of controlling state economies from the "commanding
heights" of socialist planning would have given their pince-nez for such data
processing and analysis capacity.
The most ambitious of these was Chilean president (1970-73) Salvador Allende's
attempt to wire the economy, and by extension much of the society, into a
centrally maintained government data analysis and control matrix called Project
Cybersyn. This collected data on everything from crop production to factory
inputs for analysis by the government; unfortunately for Allende, it never
could measure the degree of hunger in the population, nor the storm of
murderous animus US president Richard Nixon and Henry Kissinger (Nixon's
National Security Advisor and then secretary of state) would let loose on the
country through the military coup of 1973.
Many times over the past three years, I've written about the situation where
the private sector withdraws from its given responsibility to provide liquidity
and fresh capital to a growing economy. The name of this process, of course, is
deleveraging, and www.usdebtclock.org shows its grim inexorability, second by
second, minute by minute - it never stops.
In this light can be seen the necessity of Barack Obama's fairly standard
Keynesian application of the large federal budget deficits arising mostly from
the current dire economic circumstances, lesser so from the Obama stimulus and
bailout programs.
But for the American people, whose proclivities to tell pollsters they hate
deficits is second only to their continuing habit to vote for legislators who
will deliver onto them ever greater and greater deficits, confusion reigns. Are
old-fashioned Yankee thrift and frugality now being superseded by a new science
and morality of macroeconomic indulgence?
In the fertile soil of this befuddlement, the opposition Republicans see a
chance to plant the seeds of their future. They're now claiming not that
government spending is the palliative for the economic troubles symbolized by
deleveraging - it's the downturn's cause.
This theory, sometimes called "crowding out", conveniently ignores the reams of
verbiage we have been forced to suffer these past few years about what we now
know about the causes of the downturn - low interest rates and lax regulation,
the real estate boom, subprime lending, excess leverage, ratings agency
malfeasance and the like.
It is also demonstrably untrue. US Treasury 10-year note interest rates,
currently around, 3.6% continue to hover within 100 basis points of the
historic panic lows of the 08-09 winter; this would not be happening if
government demand was bleeding the markets dry. Indeed, www.usdebtclock.org
shows current US government interest payments, due to those low interest rates,
at a very reasonable 12% of current spending.
If you're going to be a drunk, you'll have better luck being one when liquor
prices are cheap; likewise being a debt addict when interest rates are low.
Obviously, when the economy recovers and private-sector demand for loans picks
up, government spending will have to be controlled; otherwise, you would have
crowding out and much higher interest rates. The very process of withdrawing
government stimulus in order to commence dealing with the deficit should temper
economic growth for most of the rest of this decade. Americans may have to get
used to 7% unemployment rates as full employment, where previously this was
defined as 4% or 5%.
Will Americans accept this, or will the political system continually oscillate
between screaming, childlike whines and foot stampings of both of the right and
left, as the country, desperately searching for the prosperity it never earned
but always borrowed, tries out the next, and then the next after that,
harebrained scheme some economics peddler is pushing on late-night television?
If by then any foreign investors have $100 left denominated in dollars I'd be
very surprised; then again, people do frequently lose their bank account
passbooks.
As for the paranoid fringe ever seeping deeper and deeper into the American
political psyche, the Palins, the Limbaughs and the Becks, I am reminded of the
brave little fellow who once raised his hand to question the great professor
Friedrich Hegel after a lecture: "But Herr Doktor Professor, your theories are
not consistent with the facts."
"Well" Hegel roared. "So much the worse for the facts!"
Julian Delasantellis is a management consultant, private investor and
educator in international business in the US state of Washington. He can be
reached at juliandelasantellis@yahoo.com.
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