Fried: The War on the Middle Class is the Only One That's Succeeding
By Eric Fried
1:05 a.m. MT Apr 16, 2008
How bad is our current economic crisis? Here's a clue: Official government apologists, who spent months denying we were even in a recession, now admit our economy is in a “downturn,” but say the recession will be shallow and short-lived. In other words: Run for your life!
The “sub-prime” housing market meltdown is spreading through the global financial system. Millions of Americans are faced with losing their homes, unemployment is rising almost as fast as the cost of food, fuel and health care, the value of the dollar is tanking, and politicians—fearing the wrath of voters—are tripping over each other to propose solutions. The economy has surged past the endless war in Iraq as the No. 1 issue for most Americans, although they are really only one issue.
What the heck happened? Actually, the seeds of the current crisis were planted long ago. Three decades of conservative economic policies aimed at lowering taxes on the wealthy, smashing unions and “unleashing” corporate America have reached their logical conclusion. With real wages below 1970's levels despite decades of rising productivity, middle class families now generally need two bread winners just to stay afloat. When that wasn't enough, people began running up credit card debt as fast as the federal government ran up the national debt. Still struggling to keep their heads above water, Americans borrowed heavily against the equity in their homes, lured by easy credit and the myth that housing values—like the stock market—only go up. Last year, for the first time since economists began measuring, we Americans collectively owed more money on our homes than the amount of equity we possessed.
Some folks are blaming the victims, saying people voluntarily took on more debt than they could handle, and that the government should not reward financial speculators. But did people really know what they were getting into? Did they read the fine print on their adjustable rate mortgage contracts? Honestly, how many of you except real estate attorneys read every word written in tiny type in legalese on every document they thrust at you during closing? Many of these NINJA loans (No Income, No Job or Assets) based on knowing falsifications by unscrupulous lenders should never have been made in the first place. No one cared, because with deregulation and lax federal “oversight,” bad loans could be re-sold as securities and corporate insiders could cash in … until the pyramid scheme collapsed. Now the Federal Reserve wants to bail out Bear Stearns, on the grounds that they're too big to fail, while Joe Homeowner is on his own. It's the same old “Socialism for the Rich, Capitalism for the Poor” medicine we've been swallowing for years.
You can't run an economy on credit forever, while systematically dismantling its manufacturing base. Henry Ford understood that if he paid his workers enough, they could buy the cars they were making, and he could sell millions of Model T's. What do we make in America now? And why do we assume we can waste $3 billion dollars each and every week occupying Iraq without it bankrupting us, just like the Soviet occupation of Afghanistan bankrupted them? War is a great racket for well-connected crony corporations like Halliburton, but a huge burden on the rest of us. It's no coincidence that the original proposed economic stimulus package cost $150 billion, almost exactly what we blew in Baghdad and Basra last year.
If we want to avoid another Great Depression, we must learn from the last one. Letting the free market fix its own mess didn't work for Herbert Hoover, and it won't work now. Even Sen. John McSame realizes that, and is already singing a different tune. We need to end our oil addiction, create millions of green-collar jobs, rebuild our infrastructure, and have the feds bail out Main Street, not Wall Street.
In short, we need a new New Deal.
Eric Fried is selling apples on street corners at eric@pvgreens.org
