Five Warning Signs of Continuing Economic Collapse

It’s not Armageddon. But it’s not economic recovery. We’re not all going to live happily ever after.

The Statue of Liberty front shot, on Liberty I...

We’ll not be returning to the status quo ante 2006. That’s gone forever. The assumption of endless growth and prosperity is over in America. The American Dream of the past half-century is cooked.

What about more jobs, jobs, jobs for American workers, like the politicians pretend they believe? They can’t deliver it. Not going to happen. Glimmers of recovery here and there, maybe; but it will be the exception, not the rule.

Reindustrialization of America? Maybe a little bit, but new industry won’t need factories filled with unskilled workers. Or any kind of workers. Automation, robotization, computerization. All signs point to fewer jobs, not more jobs.

The promise of more jobs and economic recovery is a lie, or at least a mirage. I have to believe that many knowledgeable people in high places are aware of the truth. But they dare not say it out loud. Too many Americans are still in denial.

In order for people to accept the loss of the endless growth and prosperity model, they have to be able to replace it with a substitute. Leaders of government and business have not been able to come up with a substitute. They don’t know what to do except dissemble, and hope for a miracle.

The signs of continuing collapse in the near term and medium term are all around. Here are five of the most important warning signs, based on events of the past few weeks in my home state, Maryland.

One. Failing infrastructure

A severe storm recently knocked out electric power to hundreds of thousands of people in the Mid-Atlantic states, in the middle of the hottest summer in memory! Power companies were unable to restore power in a timely manner, leading to anger and recriminations all around. Much talk of the need to bury power lines underground. It’s not clear that running all power lines underground would guarantee reliable electric service. For one thing, America needs more power plants to generate electricity, and an endless supply of fuel to turn the turbines. Coal, oil, natural gas, nuclear? In the past few record-breaking hot days, the power grid has been pushed to the brink. Americans believe that spending a fortune to build infrastructure is impossible. Power companies would pass on the costs to consumers through rate hikes.

Electric power supply is a serious problem, but rebuilding America’s water and sewer systems is equally daunting. A huge water main burst in downtown Baltimore the other day. The flood closed the streets, and then the pavement began to buckle because the dirt beneath was washing away. It will take at least a week to complete repairs and reopen Light Street in the heart of town. Such water main breaks are common in Baltimore. The water and sewer lines in most cities east of the Mississippi are 100 years old or older. The pipes are crumbling and dissolving beneath our feet.

Let’s not even talk about highways, bridges and railroads. The fact is, we’ve allowed the infrastructure to decay to the point of failure, and we do not have the will to repair it and replace it. You’d have to raise taxes.

Two. Overbuilding of retail — the next bubble.

As reporter Dan Rodricks discussed on his WYPR talk show yesterday, planners and developers are blindly pursuing retail growth in the Baltimore region, in part because retailing is the only major sector of the economy still functioning. We can’t make products in factories, so the alternative is more retailing and consumerism.

Malls and shopping centers know they can’t rent vacant stores. So they beg failing stores and restaurants to remain open. (“Hey buddy, want a three-year extension on your lease? How much would you like to pay? How about a dollar a month?”)  I can’t prove this is happening, but I think it’s more widespread than we know. Many retail spaces remain filled by businesses on life support. It’s like a Ponzi scheme. It’s a house of cards that will collapse, ruining investors and swelling the ranks of the unemployed.

Three. Education and Health Care

Many people brag that America has the best health care system in the world. It’s not true, of course. Ditto for public schools. We’re falling so far short in these two vital services that we’re in danger of becoming a sick and ignorant society. Despite repeated efforts, we’ve failed to reform education and health care.

Four. Failure of public and private finance

The banking and money system in Europe is a mess. And the European banking system is connected to the American banking system, like the knee bone is connected to the hip bone. Scarcely a week goes by without new revelations of financial corruption or incompetence.

When banking and commerce catch a bad cold, of course, government finance comes down with pneumonia. Tax phobia and tax cheating are rampant in  Europe and America. Cities all over America are going bankrupt. What’s to keep states from following? How about gambling? What a great idea! Manufacturing is gone, retailing is a house of cards, the banks are on the brink. Gambling will be our salvation! Seriously?

Seriously, that’s what political leaders in Maryland are thinking. A few years ago, Maryland voters OK’d five slot-machine casinos on the pretense of funding education. “Slots for tots.” People won’t pay taxes, but they’ll happily gamble their money away. Not to put too fine a point on it, these new computerized “slots” games are programmed to keep you playing, turn you upside down, and shake all the money out of your pockets. It’s worse than playing chess against a computer. The machines are programmed to win.

To date, three of the five Maryland casinos have opened, and they’re not making enough money to save the state budget. So leaders are desperately conniving to add a sixth, big casino, and introduce Vegas-style “table games” in all six Maryland casinos.

Oh, and the casino operators are sulking about their measly 33 percent cut of the profits. Solution: Give the poor casino operators a bigger slice of the pie, because they want it, and keep a smaller cut for the state. Wasn’t the whole idea of this gambling gimmick to fill the state’s coffers, fund education, and rescue the poor taxpayers? There’s a ton of money on the table. Which politicians are getting the payoff?

And Number Five: the “Black Swan”

A black swan, as explained in the book by Nassim Nicholas Taleb, is a highly improbable and unpredictable event with  extreme impact. For instance, a tsunami. Or a hurricane. With all the other problems holding back economic recovery, what happens when the black swan lands? Instant chaos, that’s what. Worst case, complete collapse.

Can you imagine a potential black swan? You’ve heard about the dust bowl of the 1930s? Consider a historic heat wave, along with a major drought decimating crops in the American breadbasket. Skyrocketing food prices would result, with shortages on the supermarket shelves. And that’s just in America. You’d have food riots in the streets in some of the world’s poorest and hungriest countries.

Five warning signs. Don’t plan on economic recovery and jobs. Prepare for unemployment and economic collapse.

— John Hayden

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5 Comments

Filed under Economy, Future

5 responses to “Five Warning Signs of Continuing Economic Collapse

  1. Theresa

    Bernie, now I’m more depressed in addition to being unemployed! Unfortunately, I think you are correct.

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  2. Thanks Theresa, for reading and commenting.

    Like

  3. RBNoah

    Hey, John…
    Really good take. Looks like number 5 is happening, darn it. The crop reports are dismal, at best. Might lose the highest percentage of corn – on record. Not good.
    Got ya bookmarked. I like your style !

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  4. We may not be experiencing an “Arab Spring” in North America, but Mother Nature is sure giving the continent a good dust up of increased and more extreme weather patterns. We may not have to wait long to see what creating “spin” does or doesn’t do for environmental debates, urbanization, or the outsourcing of food production to the developing 2nd and 3rd worlds. Here, in Ontario, we think i.e. corn will go from $2.00 to $7.00 bucks for the same quantity by next year… and, that by this November, we will know what an exponential increase in food prices will look like. I agree with other reviews – you keep it short and to the point – as well as “real”. (I’m also just finding your blog, so “chunking” your views with those of others here on WordPress, who appear concerned about the directions we are heading into, as well as what we might do about changing those courses.) It’s a glorious way to build a movement sometimes!
    Malcolm Gladwell is in your neck of the woods, and an anecdotal storyteller of stats. You have a similar flavour! Gloria Watkins is one of your gals, who was perceptive in getting a thought out there, to a world of people (and namely women), who already knew what fragmented day-to-day operations and schedules looked like, while multi-tasking. The truth is, more and more of us are sliding into that pit of having only minutes to absorb a thought, while predominantly engaging our minds and energy to the tasks that we are being paid for… and these tasks are menial. These tasks, as “stand alones”, will not contribute to turning a collective direction away from destructive humanoid patterns – one we seem hell bent to move toward. Hope you don’t mind if I bookmark you too…

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    • Thanks for reminding us about the food issue. Throughout history, we’ve had wars to take desired resources by force, and imperialism to transfer resources from colonies under cover of commerce. It will be interesting, and probably frightening, to see how we’ll fight over food resources in the flat world economy. War or commerce? Price controls, subsidies, currency manipulation, or old-fashioned violence. Countries have not hesitated to use food as a weapon. The ultimate ultimatum is: surrender or starve.

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