How F**ked Are We? Pretty Darned ...

Source: Decline of the Empire

The Empire’s Decline is usually a slow-moving affair. It took about 30 years to reach August 9, 2011. Things have deteriorated gradually, but that’s all changing. This week we are privileged to the watch the Decline in real-time. Where do we stand?

How Fucked Are We? with Bill Maher and Christina Romer. Thanks to Tim Iacono for the video.

That says it all, but let’s add the gruesome detail.

The stock market crashed yesterday, with the Dow Jones Industrial Average losing over 600 points after Standard & Poors, after the close of business Friday, downgraded the U.S. credit rating to AA+ with a negative outlook, which means that further downgrades are possible in the future. The Nymex oil price fell $6.41 to $81.21/barrel, proving once again that Academic Economists are surely right in thinking that oil prices always reflect supply & demand fundamentals.

Everybody with “skin in the game” has a corn-pone opinion about the ratings downgrade. Billionaire Warren Buffett is infuriated, saying America’s credit rating should be quadruple A (AAAA), a rating which only exists in his mind. Liberals like Robert Reich and Paul Krugman are also very angry because they know that debt doesn’t matter. As Alan Greenspan opined, debt can always be paid off by printing money (see the Daily Ticker video below).

And because we can print money, there’s no reason why the U.S. can not pay off it’s debts. The Daily Ticker’s Henry Blodget points out that we have to consider more than our ability to pay off our debts. We must also consider our willingness to do so. Just ten days ago—how time flies!—it appeared that the U.S. would not agree to pay the bills it had already agreed to pay.

Politicians are blaming each other, with Democrats calling it “The Tea Party Downgrade” and Republicans calling it “The Obama Downgrade.” That’s the spirit! More precisely, that’s the spirit which caused Standard & Poors to downgrade the United States.

Even when they are aware that debt exists, Democrats know that debt doesn’t matter, an attitude that delights the Big Banks and bondholders of all types, who have thus been most eager to fill up those left-leaning campaign coffers. President Hopey-Changey used his birthday break to raise money for The Obama Victory Fund. Democrats live in Disneyland, for they know that “when you wish upon a star, it makes no difference who you are. Anything your heart desires will come to you.” This happy demeanor also ensures the smooth operation of government, for which debt is like oxygen. Democrats are said to be compassionate. Unfortunately, they also clueless and spineless.

Republicans are corrupt and callous—they work directly for the Big Banks and bondholders of all types—except when they are simply mean & stupid, attitudes which also delight the monied interests, who have thus been most eager to fill up those right-leaning campaign coffers. Republicans oppose the accumulation of more debt when they are out of power, and pile it up higher & deeper when they are in power (chart above, click to enlarge). Their sole preoccupation is to regain power by any means. Hypocrisy, lies and ignorance don’t bother them—like bottom-dwelling pond scum, Republicans thrive in dark, anoxic environments. Republicans are said to be hard-hearted but realistic. Unfortunately, they are also unprincipled and unscrupulous.

Politically, that’s where things stand, and will stand for the indefinite future, so we can certainly agree with Christina Romer that we’re Pretty Darned Fucked. Happily for her, Christina skedaddled months ago. You might recall that when Christina was working for the O-Man, she and Jared Bernstein claimed that with the stimulus package (chart above) the unemployment rate would never exceed 8%. When you wish upon a star…

And remember, as Buckaroo Banzai said—

Hey, hey, hey, hey. Don’t be mean; we don’t have to be mean, cuz, remember, no matter where you go, there you are¹

1. Bankers, politicians, mainstream pundits, keynesian economists, other scumbags excepted.

Here’s the Daily Ticker video on the downgrade.

Bonus Video — the Depression classic Stormy Weather (1933) sung by Lena Horne

Read more at Decline of the Empire