The big crash – America plunges into Depression

Alexander Cockburn: Young Americans have given up watching the news. It’s too depressing

Column LAST UPDATED AT 16:31 ON Thu 8 Jul 2010
Alexander Cockburn

It's the worst of times. America is plunging back into Depression. Only one out of every two Americans of working age has a job. Forty years ago that would have been okay. Dad went to the factory. Mom stayed at home to mind the kids. These days, just  to keep the show on the road, mom and pop both work and the kids go to daycare. 

Start looking for work now and on average it will take till next April for you to find something. Across the last two months, more than a million Americans simply gave up seeking employment, even as benefits are running out. Ironically, if you quit looking for work you count as officially "discouraged", and don't figure in the official unemployment stats, which is the only reason that number hasn't shot up  to record highs.

Somewhere near 10 million Americans without work aren't getting any kind of cheque. One in every five children is living below the poverty line, sometimes by as much as 50 per cent – classed as "extreme poverty". Across America, in state after state the till is empty. Barack Obama's home state of Illinois is effectively bankrupt. So is California. Forty-six of the 50 states are buried under huge deficits.

The stimulus has failed. The housing market is in free fall. A couple of months ago market analysts predicted there will be five million more foreclosures between now and 2011 and it looks like they're on target. Forty per cent of delinquent homeowners have already loaded up the SUV, thrown the plastic chairs in the swimming pool and tossed the house keys back at the bank. Worse still, only 30 per cent of foreclosures have been re-listed for sale. The banks have been keeping them back to avoid flooding the market.

For tens of millions of Americans the house is as central and crucial a financial asset as a pig was for an Irish peasant family in the 19th century. The pig, as the old Irish saying went, was "the man beside the fire". It had the place of honour. The pig died, the family starved. Knock 20 per cent off the aggregate value of housing in America today and that means sunset years of penny pinching and, of course, yet one more knife in the belly for the overall economy.

And yet... if not the best of times, you can hardly say that America is broke. It's not. As the economic columnist Carl Ginsburg remarks, "America is awash in cash. This is a very, very rich country with piles and piles of cash. Private US accounts today contain approximately $10 trillion in cash and liquid assets.  

"On the corporate side, non-financial US corporations are holding more than $1.8 trillion, constituting a 26 per cent increase as of March from one year earlier - the largest increase on record going back to 1952."

The problem is that the banks don't want to put money out, because they think ordinary Americans are too broke to pay it back. Ordinary Americans agree. They've carried America forward through the past decade on the backs of their credit cards and they can't totter another step. They're out of juice.

In the measured argot of the IMF, "Financial crises typically follow periods of rapid expansion in lending and strong increases in asset prices. Recoveries from these recessions are often held back by weak private demand and credit reflecting, in part, households' attempts to increase saving rates to restore balance sheets. Globally synchronised recessions are longer and deeper than others."

(Political footnote to the foregoing: the recession of 1980 finished off President Jimmy Carter: the recession of 1992 did for George Bush Sr and put Bill Clinton into the White House.)

Of course America is wildly rich. How else could it find room in its heart for the legal tax write-offs that allow Americans to deduct contributions to Israelis establishing illegal settlements on the West Bank? How could it pay the $2 million in direct and indirect bribes to the Taliban a week - or is it a day? - in Afghanistan to allow its supply convoys down roads so that the counter-insurgency against the Taliban can continue, if not prosper?
 
Counter-insurgency means drones that kill civilians and do the Taliban no end of good. But drones mean jobs in jobless America. The Wisconsin National Guard is planning to build a new $8m base for unmanned drones. Whiteman Air Force Base in Missouri is to be a drone base control. In South Dakota, Rapid City's nearby Ellsworth Force Base also recently won a drone contract.

In none of these places was there much of anything but joy at the news. "There was great news for Ellsworth Force Base and for the Rapid City community," declared the local Black Hills Fox Channel. Missouri Congressman Ike Skelton said he'd worked for a year to win the Predator. The Rapid City Journal editorial page was ecstatic: "Ellsworth and its many supporters have done Rapid City and South Dakota proud."
 
It's the best of times for Republicans who have scant sympathy for out-of-work people anyway and who have every political incentive to ensure that by mid-term election day, November 2, they'll be able to hang America's latest "worst of times" around the necks of Obama and the Democrats.
 
Dean Baker, who co-directs the Center for Economic and Policy Research in Washington DC, explains the Republicans' heartless maths: "State and local governments have cut their workforce by an average of 65,000 a month over the last three months [as they have to do, because they are legally bound to balance their budgets]. Without substantial aid from the federal government this pace is likely to accelerate. The Republican agenda in blocking aid to the states may add another 300,000 people to the unemployment roles by early November."

The Republicans'  blockage of extended unemployment benefits promises similar dividends. Unemployment benefits are not just about providing income support to those who are out of work, they also provide a boost to the economy, which is why the Republicans have been especially keen to cut them off.

It's the worst of times. People are down. I meet young people every day who say they've simply given up watching the news. It's all too depressing.

The Washington Post ran a story on July 6 by Kimberly Kindy that established that "in the 77 days since oil from the ruptured Deepwater Horizon began to gush into the Gulf of Mexico, BP has skimmed or burned about 60 per cent of the amount it promised regulators it could remove in a single day."

As of Monday July 5, with about two million barrels released into the gulf, the skimming operations that were touted as key to preventing environmental disaster have averaged less than 900 barrels a day.

As William Empson wrote in his poem Missing Dates:

Slowly the poison the whole blood stream fills…

The waste remains, the waste remains and kills.

Who can feel it's anything other than the worst of times when the Gulf of Mexico is set to die before our eyes. ·