Chicken With His Head Cut Off

Perhaps it is I?

Here we are in the last week before Christmas. The time to cast fear to the wind and spend, spend, spend out of hope, love and tradition. Surely our best and brightest, the good men and women who run our government have things under control – unless they are all out reading their copies of The Pet Goat instead of the daily security briefs. Surely the pundits would be screaming even louder if something really bad was going to happen – unless they just don’t have the video, or are under orders from the top to lighten up the holiday buzz kill.

Is it just me?

The paper (is is time to use the phrase “My RSS Aggregator”?) this morning is again filled with fresh new announcements of layoffs and plant closings. Statistics of unemployment, bankruptcy and foreclosure. Stories on how the dollar is crashing. Oil prices dropping and OPEC cutting production. Billions lost on Wall Street. State and municipal budgets in budget crisis and services being cut. Same ole, same ole.

The sky seems to be falling.

Sure, big business is cutting back, but what small business – that sector of the economy where more than half of us work (two-thirds if you take out mining and manufacturing)? Small business is the home of the American entrepreneur (French word defined as, “A person over 40 whose projected salary, benefits and healthcare cost make them unemployable by big business and whose Willy-Lomanesque belief in the American dream drives them to risk anything they have so they don’t fall into what’s left of the safety net”). Small business has all but stopped, but not wishing to play Scrooge, small business has stuck their proverbial heads in the sand until after the new year.

The Ghost of Christmas Yet to Come.

While Scrooge could avoid the future shown to him and alter his and Tiny Tim’s fate if he changed, I believe it may be too late for what will happen next. Right now, retail is in a desperate race for cash, but not necessarily to pay creditors. There will be a wave of business bankruptcy filings in January and February, followed by a wave of supplier filings and the appearance of empty storefronts in strip centers and malls across the countr, which will lead to more problems in commercial real estate values, which will lead to foreclosures on commercial buildings.

But I get ahead of myself. So many of those working in small business are hourly workers, on tips/commissions or are not working full time (or have already had their hours cut back). They will be toast. In half the states, they won’t be eligible for unemployment benefits (Source: Economic Policy Institute). It is safe to describe these workers as just hanging on. They will be filing bankruptcy, losing their homes and facing eviction beginning in late January.

The trickle down becomes a flood.

We are interdependent. Every couple of jobs creates a job. Every couple of lost jobs, loses another job. And it will continue, cycle after cycle. The pressure on the safety net will shred it and with it the state budgets. And with each news cycle, the faith that is the engine of capitalism will be challenged. The new President, working with the new Congress, will pass a huge stimulus and in a few months, some will get help quickly, some won’t. Children will move in with parents, or the other way around. Friends will help each other. But with a giant stimulus and government cash pouring in, it is just a matter of time before inflation takes hold. If we are unable to manage it, it turns into double digits – with our without jobs, and forces interest rates to rise with them.

The sky knows no border.

All of the Americas are interconnected (source: Center For Economic And Policy Research). The world owns our debt. What if they dump the dollar out of self-insterest or worse, as an act of aggression? But hang on, Europe’s banking crisis may eclipse ours. Putin’s power comes from petro-wealth and with demand and prices falling, eventually his power will be threatened and the world will become very dangerous – ditto Venezuela, Libya, Iran, Burma, Kazakhstan, etc. and, yes, Iraq (source: Mother Jones). The manufacturing economy in China is collapsing with an estimated 130-230 million workers to be sent back penniless to their rural homes – just what is plan B for a billion people? Ditto the manufacturing collapse throughout Asia. How quickly will the outsourced jobs be cut in India? How quickly will foreign aid, not just our own, be cut in the poorest countries of Africa? As billions around the world struggle for jobs, food and basic services, just how unstable will the governments become?

But will the sky fall?

The idea of the dramatic Fed intervention in the markets was to renew confidence (I hadn’t lost mine at that point). The policy is and was risky. By blowing so much so quickly, we have caused exactly what the intervention was trying to prevent – creeping panic (my own included). Consumer confidence is now at an all time low (source: CNN Money) and proves we are all listening and watching what is going on. We may not be able to wait until a government is sworn in, parties, moves in, sets up and gets down to business. The news of January will be bleak and we will all be listening. I’m scared the sky is falling. The question now, is can we stop it?

Happy holidays.

Lee Leslie

Lee Leslie

I’m just a plateaued-out plain person with too much time on his hands fighting the never ending lingual battle with windmills for truth, justice and the American way or something like that. Here are some reader comments on my writing: “Enough with the cynicism. One doesn’t have to be Pollyanna to reject the sky is falling fatalism of Lee Leslie’s posts.” “You moron.” “Again, another example of your simple-minded, scare-mongering, label-baiting method of argumentation that supports the angry left’s position.” “Ah, Lee, you traffic in the most predictable, hackneyed leftist rhetoric that brought us to the current state of political leadership.” “You negative SOB! You destroyed all my hope, aspiration, desperation, even.” “Don’t you LIBERALS realize what this COMMIE is talking about is SOCIALISM?!?!?!” “Thank you for wonderful nasty artful toxic antidote to this stupidity in the name of individual rights.” “I trust you meant “bastard” in the truest father-less sense of the word.” “That’s the first time I ran out of breath just from reading!” “You helped me hold my head a little higher today.” “Makes me cry every time I read it.” “Thanks for the article. I needed something to make me laugh this mourning.” “If it weren’t so sad I would laugh.” "... the man who for fun and personal growth (not to mention rage assuagion) can skin a whale of bullshit and rack all the meat (and rot) in the larder replete with charts and graphs and a kindness..."“Amen, brother.”