The smoking ruins

I am staring at the smoking ruins that were my modest 401(k), which lost 1/3rd of its value in the past two months. This points to the problem with the notion that "defined contribution" pension plans like the 401(k) can ever substitute for a "defined benefit" pension plan like the corporate pensions of old -- none of us are professional fund managers, none of us have access to all of the wide range of investments that professional fund managers have access to, and thus to a certain extent we're reduced to just throwing darts at our 401(k) plan's list of funds and allocating money accordingly while hoping that they don't all go down in value at the same time. Which is what has happened to my own 401(k) -- every fund available to me has collapsed in value.

But what's true of my 401(k) is also true of this entire country. We've all lost a significant part of our value over the past 28 years of Reaganism. The industrial infrastructure has hollowed out and been replaced by one asset bubble after another, each popping more violently until we reach this last one, the real estate bubble, which has popped more violently than everything that preceded it. And so now Obama is going to take office shortly, and... then what?

The problem is that Obama can't create a new illusionary world where everything is okay, because everything is not okay. Bill Clinton might have been able to preach bullshit about how there was full employment and the sky was the limit and yada yada yada, but he had the benefit of an asset bubble in dot-com stocks to pump up his Presidency. When people are making money buying and selling stocks and using that to buy seemingly endless amounts of cheap Chinese goodies, it's easy to believe that despite the collapsing infrastructure, despite the disintegrating industrial base, everything is okay. But we don't have that luxury now, and Obama is not going to be able to recreate that same illusionary feeling of everything-is-great that Clinton was so adept at doing.

The American people are in for a rude awakening. The USA is not #1 in anything anymore except high-tech military weaponry, and that's only because Europe prefers to invest in its people rather than in military weapons not needed to counter any existing threat anywhere. The USA is no longer the world's #1 economy, ranks somewhere between South Korea and China on the list of industrial nations, has a health care system ranked somewhere between Croatia and Bulgaria despite spending more money than any other country on the planet, and has a decaying transportation infrastructure plagued by 28 years of underinvestment under the Reaganism theory of tax cuts for the wealthy (thereby reducing money available for infrastructure) and privatize everything (meaning that spending on public infrastructure fell to bottom basement on the priorities list). The U.S. has a serious energy shortage that is currently being funded by the Federal Reserve printing dollars with all the abandon of a Weimar Republic finance minister, and when the current crisis is over, we're going to all be standing in the rubble of our economy without much to show for it - no jobs, no industrial base, no fuel, and seas of foreclosed McMansions too far away from what few jobs and shopping venues remain to be habitable.

At that point we're going to have to all work together to pick up the pieces, but my biggest worry is that we won't be able to do that. American exceptionalism is firmly engrained in the American psyche. From the first day of school our children are taught that America is the best and greatest and most free country on the planet, and anyone that might contradict that is automatically considered "un-American". But soon there will be a day of reckoning because reality is simply not going to cooperate with that illusion any longer, and then what? Well, we know what happened when the German Empire collapsed. The German people were not willing to believe that their failure in 1918 had anything to do with a failed geopolitical strategy, and were eager for some scapegoat to blame for their failure in WWI. Adolph Hitler gave them one. It took another war, and the complete and utter destruction of the German nation until its population were reduced to cold and shivering and starving remnants huddled in the ruins before the German people realized there was no easy answer, that they themselves were responsible for the destruction of their nation. Only then could the German people come together and re-build their nation into the current prosperous and democratic Germany.

So November 4 is only the beginning. If Obama is elected, as seems likely, there is little he can do to stop this long hard slide to the bottom. It was created by our own choices over these past twenty-eight years, and most Americans aren't willing yet to admit they chose wrong. Only complete and utter national disaster will manage to do that, and the first casualty of any utter national disaster is always the President who presided over it. My prediction: Like Jimmy Carter, Obama will similarly be a one-term President. And then another follower of Reaganism will take power after Obama. And if, ten years from now, I am not squatting one of those abandoned McMansions growing food in the vast back yard and going hunting for the deer and rabbits that have moved into the neighborhood, I will be very surprised, because I'm not seeing much other than disaster ahead. Obama might delay the day of reckoning, while McCain would make it faster... but the collapse is coming, and it's coming hard, and there's not a whole lot we can do about it other than wait for the bottom and hopefully a return to sanity on the part of the American people.

-- Badtux the Apocalyptic Penguin