Our Children and Our Children's Children
Yes, our children and our children's children will be paying for this bonus and that $600-per-person check last year; but they will be paying for considerably more than two rounds of pandering handouts that will be largely ineffective against a freight train of recessionary forces that will not let up until a sufficient level of asset devaluation has been realized in its own course, at its own pace, and for our own good.
Our children and our children's children will be paying for a lot more than a wad of C-notes stuffed into our pockets in a frenzy of hasty counter-cyclical fiscal policy crafted over the past week.
As a starting point in the calculus of accounting for the debt our progeny will bear in our names, our children and our children's children will be paying for the wars our leaders prosecuted. By some estimates, when all is said and done, the war in Iraq alone will have cost $3 trillion.
Moving on to other highlights and sidelights of our generous gifts to the future, our children and our children's children will be paying for all the government-authorized infrastructure of domestic surveillance and other "security" and law enforcement pork, the rampant building of prisons, the trillions of dollars in money handed out to financial institutions, car makers, and other companies, as well as the interest on the money we have been borrowing at the rate of hundreds of billions of dollars a year.
But here's the really good news: not all of what our children and our children's children are going to pay will be in cash money. By having labored under year after year of trade deficits of staggering proportions, we have been exporting dollars to foreign central banks in exchange for cheap imports from those countries, one of which, China, has for years been deliberately and systematically pegging its currency at a ludicrously low level against the American dollar to the purpose of making its imports very cheap here and our exports very expensive there.
Those central banks that accumulated foreign reserves of greenbacks lent some of that money back to us at the federal, state, local, private business, and personal levels. (Yes, if you borrowed money for a home, a car, or even college tuition, through the labyrinthine complexities of global finance you were actually borrowing money from foreigners who had gotten that money from you every time you bought cheap imported merchandise.) What the foreigners did not lend us of those greenback foreign reserves, they used for equity investments in everything from real estate to corporate stocks.
That means the foreigners with those greenbacks have now taken both of the two so-called "claims on future cash flows": they have the "prior claim" due in debt service and retirement of principal owed to lenders, and they have the "residual claim" due to owners after debt obligations have been satisfied (as the prior claim).
That means our children and our children's children will pay in cash for our excesses of the past eight years and those we are about to commit in trying to right that awful time, but they will also pay in loss of control over their own destinies because we have consigned them to sharecropper status on the very land their ancestors toiled to the bone and died valorously to make theirs and pass on to future generations of Americans.
But it goes even beyond that awful fate: for the past nearly eight years, in our name the United States government has killed, tortured, and otherwise disrupted the lives of countless people in places as far-flung as Iraq, Afghanistan, Pakistan, Guantanamo Bay, secret prisons in Second World countries, and in our very own nation's cities, factories, and farms. While we, ourselves, are a quite docile people (notwithstanding our folkloric bravado to the contrary), those of other nations may not be so willing to forgive and forget our violence against them.
The bitter call to vengeance will echo across generations for peoples we have wronged, and we very likely will find that all of our talk of "hope and change" does nothing to quell the fire of rage that will burn in the hearts of men and women whose fathers and mothers, brothers and sisters, aunt, uncles, and cousins we harmed so savagely when we let slip once again the remorseless dogs of our national soul at its very worst.
We, ourselves, can talk all we want about "Not in my name was this done" and "Never again," but those flaccid jingles will blow away as dust in the fire and shrapnel unleashed upon our descendants by the children and the children's children of the men we tortured in our nationalist zeal, the families we slaughtered in our pre-emptive wars, and the nations we shattered in our unbridled hubris.
We are the recidivist addicts, convulsing through our history from one bout of hegemony to the next, with precious but all-too-brief periods of sworn rectitude before our next debilitating high in manufactured casus belli and self-righteous manifestations of hypocritical morality.
Yes, our children and our children's children will pay: they will pay in cash, and they will pay in blood; and worst of all, they will pay with their own precipitous falls to the gutter from the highs of fiscal and military recklessness they learned from us, their ancestors who could not wash the blood from our hands before passing the future to the broken heirs to the throne of Empire in its nightfall.
We shall be most fortunate if the debt they will pay in our name comes due only after we are safely sequestered in the insular, eternal comfort of our graves.
The Dark Wraith has spoken.
Comments
Wrote Jersey Cynic:
Wrote Peter of Lone Tree:
AP Investigation: Banks sought foreign workers:
Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.Caught this first over at Cannonfire where the comments are worth noting.
The dozen banks now receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.
"Help stamp out poverty; choke the living shit out of a banker."
Wrote Jersey Cynic:
Oh Peter I wanted to post this one when I read it yesterday. I was hoping Liz would share her thoughts (she has many years experience in the banking "industry") . It's so obvious at my current bank (not for much longer -- Sovereign -- it's on the list of potential failures -- and I'll be pulling my few dollars out shortly) that the higher-ups are all from other countries. Gee....can't imagine why they would want foreigners in charge. I can't wait to hear 2Truthy's rant on this one. I have had it. Lately, I'm spending most of my time lashing out at the BOE and school administration. (I'm trying to get a good explanation from ANYBODY as to why Civics Class was removed from the curriculum years ago and why they won't bring it back. WE know why -- I'm just trying to get someone else in a position of "authority" to answer this -- ha ha ha -- I'm really making them squirm) This whole banking fiasco is not good for my state of mind at the moment.
Wrote Anna Van Z:
Jersey, that is so right on! Don't let your kids do the student loan route!!
I worked my way through the first 5 years, but then I doubled up on coursework in grad school and lived on loans. BIG mistake. I didn't borrow all that much, but if you don't pay it back right away, you never will be able to - they add so much interest and penalties, you just can't ever get on top of it.
Financially speaking, I feel utterly trapped and hopeless. I wish someone had told me the things you are educating your kids about!
Wrote Progressive Traditionalist:
Good evening, Mr Wraith.
Excuse me, but I'm sort of new to economics...
But doesn't it make good sense, from a strictly economic point of view, to skip out on the bills after going on a big spending spree?
Do we not live in the best of all possible worlds?
Wrote Jersey Cynic:
Anna - I don't understand some of the parent's out there. I guess the word NO is not in their vocabulary anymore. I got my kids used to the word very early on. Maybe it's easier for us to say no to the kids because the money just isn't there and I refuse to buy on credit anymore. It's taken us 20 years to get out of debt (except for the mortgage debt). We lost most of our 401 value during the tech bust (early 2000's when hubby was employed by Lucent). Any monies we can start to save now MUST go toward retirement. Sorry kids, you're on your own! If more parents would just show their kids what the loan repayment for a 20,000/year loan for 4 years would be.
(It's $921 per month for 10 years). A few years ago, I started giving the kids the pile of monthly bills and I have them write the checks out. They get the picture.
I've been meaning to write to you to thank you for the heads up on the C2010 jobs. I took the test a few weeks ago, got a 95 and should be hearing this week on my start date!!! I may soon be employed!!!
Wrote Dark Wraith:
Good morning, Progressive Traditionist.
Below is my response to a very similar question put to me over at Big Brass Blog concerning the consequences of defaulting on our public debt, so much of which is owed to foreigners.
The short answer
We would loose upon ourselves Hell.
The slightly longer answer
We have enormous stores of American dollars in the central bank of China, and we need those bucks to show up at our Treasury auctions, where we beg the world for one fix after another of borrowed money to keep alive, from one budget cycle to the next, our uncontrollable penchant for living beyond our means and using money that is not ours to feed our insatiable appetite for a materialistic life far more abundant in its goods and services than anyone else in the world experiences.
Even though what China has done to the American economy through its undervaluation of its currency is, in my judgment, a slow-motion, aggressive, prejudicial act of war, we would be more than merely stupid were we to engage in predicates to open warfare with the Mainland. First, the liberal rhetoric, joined in chorus by our own Pentagon, about how much less China spends on its military is sheer folly because the numbers we crank out for them are based upon their own ridiculously low value of their currency relative to ours. The truth of the matter is that, while their military is not nearly as technologically sophisticated as ours, any scenario in which there is a straight-up, U.S.-China conflict would be vastly to our disadvantage. In the grim version sometimes called a "twilight scenario," we can nuke them, and they can nuke us; the difference there being that they have a considerably shorter fall back to the Stone Age than we do.
If we default upon even a fraction of our public debt to them, the rest of the world will wash its hands of us, and we will find no lenders anywhere whatsoever. Our GDP would contract so fast and so hard that we'd be longing for the boom-town days of the Great Depression.
A Better Answer
We need not default on any public debt because we have an alternative, one that has been used before all over the world, all throughout history, and in relatively tame doses even here; and this alternative is acceptable, albeit bad. The alternative solution is hyperinflation, which will erode the face value of debt outstanding to the extent that we are willing to cause our currency to be watered down.
Consequences of hyperinflation are awful, but they are not as awful as the consequences of turning the world against us if we partially default on our debt or if we lob the tempting but rather problematic ICBMs back and forth with China.
Remember: the Chinese routinely win international ping-pong tournaments.
Although not, myself, a particular fan of any sport, I shall stipulate that the occasional lesson can be learned by watching our international adversaries in the Olympics.
Now, if only there were a category at the Games for Obsessively Borrowing Beyond All Reason, we here in the United States would bring home the Gold Medal without even so much as breaking a sweat.
The Dark Wraith holds high the torch of Excellence in Fiscal Irresponsibility.
Wrote Peter of Lone Tree:
Ya' know, Wraith, if you'd only warned us about these things, say 3 or 4 years ago, we could have made some prepara...
HEY! Who just took a big bite outta my ass!?
Wrote Minstrel Boy:
Now, if only there were a category at the Games for Obsessively Borrowing Beyond All Reason, we here in the United States would bring home the Gold Medal without even so much as breaking a sweat.
my 3rdX could coach that team. to gold and beyond.
Wrote kelley b:
The economic collapse is an inside job.
It's 9-11, Act II.
Wrote Peter of Lone Tree:
The economic collapse is an inside job.
It's 9-11, Act II.
And considering how the economy's collapse has been a bit of a drawn-out affair, could both "Acts" be considered "controlled implosions"--that being one of the terms I've heard to describe the events of 9/11?
Wrote Anna Van Z:
<b>Regarding Grousing:</b>
What's sounding really, really good right now: Running away to a remote island in the South Pacific with about two tons of books, then spending my days reading under a palm tree, stringing necklaces of shells, splashing around under a waterfall, and growing 10 foot cannabis plants.
And it would never be colder than 65 degrees. Mmmmm...
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Your host of this Weblog is an award-winning college teacher and writer who specializes in economics, finance, mathematics, business administration, computer hardware and software skills, and English grammar and composition. His extensive writings on the history of the English language appeared on About.com in the avatar of the Selig Wraith in the 
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Good Morning Dark Wraith,
I had to look up recidivist --
noun
a convicted criminal who reoffends, esp. repeatedly.
adjective
denoting such a person : recidivist male prisoners | women are rarely recidivist.
so women are rarely recidivist -- hmmmm
(expect for the majority in politics - eh?)
anywho -
I am now positioning my children to continue into adulthood with no debt. It's been a challenge -- like taming a wild horse.
#2 will be off to college this fall and will not be taking out a student loan to go away to school. She will attend the local university and commute. Actually, mom will be dropping her off because I won't be funding (taking out a loan) for another car. She is starting to get it. I have the kids watch this great video repeatedly:
http://www.storyofstuff.com/
Wish me luck!