Wisdom from Ian Welsh on economic challenges

I always find lots to like in Ian Welsh's work. His How This Economy Is Going To Play Out at FireDogLake is no exception. Ian ends with "FDR wasn't just a man. FDR was a movement. So let's start making an FDR." and darned if that will not haunt me for a few days. Like my long departed father, I'm, with the addition of some time in the academic trenches that he never got, a huge FDR fan. As for Ian's writing, I'll share this:

... overall we're in a gray zone where the train trundles on towards that light in the tunnel, and nothing is going to turn it around until a new Congress and new President are sworn in.

And when they do get in, what are they going to do? The truth is that even they don't really know. There are no easy answers because the US (and the world, in a sense) has dug itself into a hole that is bigger than the pile of dirt on the side. More damage will be done than there is free money hanging around to fix. The miracle of leverage in reverse is going to remind everyone why "over-leverage" is something old style brokers considered the greatest mistake anyone could make.

The old, oil based, suburban sprawl economy based on forever rising house prices, on easy credit, on subdivision after subdivision--on running up credit cards and on leverage piled on leverage piled on arbitrage, is in the middle of cracking up, spectacularly. While there will be a short term reduction in the price of oil, in the long term oil is still going up and the America of the sprawl economy; the economic geography of America, looks entirely different at $4/gallon gasoline than it does at $2/gallon gasoline. Huge swathes of exurbia and suburbia become simply economically unviable. Zombie Burbs. ...

Ouch! I'm not sure our current corporate media and uninformed citizenry deserves another FDR yet if and when the bourgeois start getting pinched on a large scale perhaps things will shift. I hate to see it come to that. Still, the electing of so many of these jokers we have now was done by these very same folks that may very well about to be in a world of hurt. You reap what you sow. John Gunn