A Warning for Washington

The political and financial elites gumming up the works in Washington, D.C. would be well advised to start paying closer attention to what is happening out in the American homeland far removed from Wonderland on the Potomac.

It doesn’t matter if those elites call themselves Democrats or Republicans, progressives or conservatives.

Sooner than most of these elites expect, the world as they know it could come crashing down on their heads.

Readers, enjoy your morning coffee while browsing through this very diminutive sample of the tectonic movements rippling across the United States as the country’s political and financial elites in Washington play Russian roulette with the country:

Economists warn that another financial crisis is on the way

“Even as many Americans are still struggling to recover from the country’s worst economic downturn since the Great Depression, another crisis – one that will be even worse than the current one – is looming, according to a new report from the “non-partisan Roosevelt Institute,” a group of leading economists, financiers, and former federal regulators led by Nobel Prize winner Joseph Stiglitz. The report says that, “In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so lucky. The threat of the doomsday cycle remains strong and growing. What will happen when the next shock hits? We may be nearing the stage where the answer will be – just as it was in the Great Depression – a calamitous global collapse.”

Any group of economists that labels itself non-partisan and has deep roots in entities like the IMF and United Nations clearly isn’t non-partisan. The Roosevelt Institute is unabashedly liberal (leftist, progressive…whatever). But the article is interesting insofar as it warns that a second financial tsunami could soon engulf the United States and the rest of the world, rich and poor alike. We looked online for the report, but haven’t found it yet. Any readers who find the report are encouraged to forward us the links so we can post it here.

Fuel Taxes Must Rise, Harvard Researchers Say

“To meet the Obama administration’s targets for carbon dioxide emissions in the transportation sector by 14% from 2005 levels by 2020, Americans may have to experience a sobering reality: gas at $7 a gallon, says a forthcoming report by “researchers” at Harvard’s Belfer Center for Science and International Affairs. The 14% target was set in the Environmental Protection Agency’s budget for fiscal 2010.”

Given the current state of the US economy and the depression – yes, depression – that large swathes of the US heartland are suffering today, any EPA rules imposed on the average American family by Big Government in Washington, D.C. likely will spark a popular rebellion. Gerald Celente’s Trends Research Institute forecast in 2007-2008 that the US government could face tax revolts, food riots and other forms of public protest by the time the 2012 presidential elections roll around. One indication that Celente could be right: arms purchases by private US citizens have soared over the past two years. Talking (hollow) heads in the mainstream news media attribute this to a racist backlash to the election of the first black president in US history. But numbers crunchers that follow small arms sales to the general public in the US say that all ethnic groups are buying weapons.

New ghost towns: Industrial communities teeter on the edge

“In the America where things are made, the recession has been a depression. According to a new Northeastern University study, one in every six blue-collar industrial jobs have disappeared since 2007, matching the drop in overall employment in the Great Depression. In 2009 about 1.3 million factory jobs vanished. For the first time ever in US history, the government announced in January 2010 that most union members are government employees, not private sector workers. Sometimes oblivion is a ghost town with tumbleweed blowing down Main Street and the doors of the Last Chance Saloon swinging in the desert wind. But most 21st-century ghost towns will not be deserted. People, many unemployed or underemployed, will fill the bars, stoops, corners, clinics, jails and social welfare offices.”

America, the Fragile Empire. Here today, gone tomorrow — could the United States fall that fast?

Niall Ferguson, one of the great analytical minds at large in today’s world, asks, “…what if history is not cyclical and slow-moving but arrhythmic — at times almost stationary but also capable of accelerating suddenly, like a sports car? What if collapse does not arrive over a number of centuries but comes suddenly, like a thief in the night? …there comes a moment when complex systems ‘go critical.’ A very small trigger can set off a ‘phase transition’ from a benign equilibrium to a crisis — a single grain of sand causes a whole pile to collapse. Not long after such crises happen, historians arrive on the scene. They are the scholars who specialize in the study of ‘fat tail’ events — the low-frequency, high-impact historical moments, the ones that are by definition outside the norm and that therefore inhabit the ‘tails’ of probability distributions — such as wars, revolutions, financial crashes and imperial collapses. But historians often misunderstand complexity in decoding these events. They are trained to explain calamity in terms of long-term causes, often dating back decades. This is what Nassim Taleb rightly condemned in ‘The Black Swan’ as ‘the narrative fallacy.’ In reality, most of the fat-tail phenomena that historians study are not the climaxes of prolonged and deterministic story lines; instead, they represent perturbations, and sometimes the complete breakdowns, of complex systems. Causal relationships are often nonlinear, which means that traditional methods of generalizing through observation are of little use. Thus, when things go wrong in a complex system, the scale of disruption is nearly impossible to anticipate. If empires are complex systems that sooner or later succumb to sudden and catastrophic malfunctions, what are the implications for the United States today? First, debating the stages of decline may be a waste of time — it is a precipitous and unexpected fall that should most concern policymakers and citizens. Second, most imperial falls are associated with fiscal crises. Alarm bells should therefore be ringing very loudly indeed as the United States contemplates a deficit for 2010 of more than $1.5 trillion — about 11% of GDP, the biggest since World War II.”

And, last but not least:

A new CNN national poll reports that “A majority of Americans think that the US federal government poses a threat to rights of Americans” A majority – 56% – of people questioned in a CNN/Opinion Research Corporation survey say they think the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens, while 44% of those polled disagree. The survey indicates a partisan divide on the question: only 37% of Democrats, but 63% of Independents and nearly 70% of Americans who identify as Republicans say that the federal government poses a threat to the rights of Americans.


About Caracas Gringo

Representing less than 0.00000000001515152% of the world population as of 31 December 2011.
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One Response to A Warning for Washington

  1. Peter says:

    Agree that the looming crisis will be devastating if drastic fiscal measures are taken.


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