Households at the Edge

According to a recent survey, many people would find it impossible to raise just $2000 in 30 days from any source - savings, credit, family, friends, etc. - in a pinch. The table below is extracted from the article, which is well worth reading.




The results are shocking to say the least, especially for the USA - supposedly the "richest country in the world." $2000 is not a lot of money when one aspires to a middle-class lifestyle; it could represent the cost of car repair, a home repair, a minor medical problem, and so forth.
These sorts of things crop up continually.

Mexico is no great surprise, but the fact that the UK, Germany, and the USA (all supposed major economic powers) rate worse than Argentina - a country with serious issues in its struggle to remain prosperous and civilised - should be cause for concern. This survey, if accurate, indicates that not only are half of UK, German, and US households there essentially broke, but most of the other half is so frayed financially they are in no position to help out poorer friends and relations; or perhaps simply socially support networks have collapsed. In either case (and both could be true) the situation is terrible.

This is not the sort of economic information we would like to see near the beginning of this Depression - and yes, we are still early on in this thing. Faced with falling income and no standby resources to fall back on, it is clear that more and more supposedly 'middle class' households are going to sink into financial ruin merely from routine financial stresses.

Our advice to our readers is simple: make sure you are living well below your means; that your net worth is rising and not falling; that you have ample financial resources (savings, lines of credit, willing friends or family) to draw upon should the need arise. This is serious stuff - it may require you to drop many of the trappings of middle class life in order to prevent ruin.

There are ample horror stories out there about people who discovered 'middle class poverty' by not changing their spending habits in the face of income loss. Typically they expect "something is going to happen" to fix their deteriorating situation: a new job; selling the house; etc. But that "something" never happens.

More and more, what were for many once reasonable expectations - say, getting a full-time job - are going to be as likely as having a winning lottery ticket. In a nutshell, this is why getting through the Depression is going to be about survival. Don't delude yourself; ignore the blather on the telly; get real about what is happening.

The Rising Attraction of Socialism

A new Rasmussen Reports telephone poll has found that the percentile of American citizens who favour socialism is 20%, while 53% said capitalism is the better system. This is a very interesting trend, one that we will be watching with great interest. Although 20% is a relative minority in the United States, it is impressive to see this form of Governing garnering such popularity in the U.S.

This deserves a bit of reflection: socialism is antithetical to the American ethos. Socialism is a system which, in a basic interpretation, emphasises the importance of supporting the society as a whole. The Scandinavian countries, Germany, Switzerland, and Canada (as examples) all exhibit successful application of socialist policies; unsurprisingly, these nations give the appearance of being able to more easily soften the harsh blows of the Depression - it remains to be seen how that softening holds up in the future.

As the U.S. is a nation which promotes the individual at the cost of the greater society, socialism is typically regarded as a perversion at best, and a whole-sale attack on "freedom" at worst. For socialism to be supported by 20% of the Citizenry, we can only assume that the 2007 Depression is beginning to make people feel the need for a change.

We can't argue against that need. However, we suspect that people have the idea that President Obama is the man who will bring promised change. As we've said on numerous occasions, we do not think he will deliver the kind of socialism the 20% of Americans are expecting. The United States, since it has been so adamantly opposed to socialism (to the point of its being an outright violation of the Constitution), has no particular framework upon which to build a functional socialist system.

President Obama was elected on the promise of change, and that change is commonly considered to smack of socialism. However, if the continual, hapless bailout-ing of super-huge, super-insolvent banks, and trashy, useless, bankrupt automobile manufacturers is any indication, the Obama Administration's peculiar brand of socialism is the kind previously discovered in the Soviet Union.

It should be said, though, that the Government is merely building upon what previous Administrations have put in place. This is true going back further into American history than most would care to admit. One can point, and rightly so, an accusing finger at President Herbert Hoover as the first major lemon socialist. Lemon socialism is not proper socialism; it is sovietism.

The Delusion of American Exceptionalism

On occasion, when we have argued about such things as the collapse of the United States, we have been presented with an interesting rebuttal. It typically runs along the lines of "that can't happen here." When we press for why the United States won't someday fall apart, we hear merely a repetition: "This is America, that can't happen in America."

Well, we beg to differ. No country, or society, in all of history has ever proven immune to disruptive events. Never has a society forever improved without downfall. Great debates can erupt over, say, the nature of the peak of the Roman Empire, or the British Empire, or the Russian Empire... the list goes on, but each has an eerie similarity. One could argue a nation's development follows a bell-shaped curve: a nation starts from obscurity, rockets to its height of power, and then falls again to obscurity.

That's not to say a country's trajectory downwards is a one-way trip. Some countries have reached a hight of power, gotten trashed, pulled themselves out of near or utter ruin, and went on to best their previous peak. Places like Germany and Japan come to mind. These two societies have been through more than one peak-and-bust cycle, and today are considered some of the most stable and industrious countries on the planet.

The United States is a country, a society like any other. It is subject to the same possibilities of decay and collapse as any other country. It is also the longest-running experiment in democratic government, and experiments do not always result as one expects. The United States, one way or the other, will eventually end and become something else. To declare otherwise is tantamount to hubris, which was a favourite plot device of Ancient Greek tragedy. Those plays always had messy ends.