24 November 2008

Obama Depression: More Speculation

Most of us, of course, think we know what a depression looks like. Open a history book and the images will be familiar: mobs at banks and lines at soup kitchens, stockbrokers in suits selling apples on the street, families piled with all their belongings into jalopies. Families scrimp on coffee and flour and sugar, rinsing off tinfoil to reuse it and re-mending their pants and dresses. A desperate government mobilizes legions of the unemployed to build bridges and airports, to blaze trails in national forests, to put on traveling plays and paint social-realist murals....Today, however, whatever a depression would look like, that's not it. _BostonGlobe
The economic future of the US and the world depends very much on whether Obama fulfills his many promises--raise taxes on the "rich," institute a stern limitation on US industry for carbon dioxide output, bail out prodigal--and non-viable as presently structured--unionised industries such as automakers, move government even more aggressively into private sectors of the economy (such as healthcare, housing, income re-distribution etc). If Obama does what he promised, the US and world economies will be extremely stressed for decades to come, with minimal chance for a true recovery until Obamonomics is repealed. What will it be like? Here are a few mainstream speculations:
In a deep and sustained downturn, home prices would likely sink further and not rise, dimming the appeal of homeownership, a large part of suburbia's draw. Renting an apartment - perhaps in a city, where commuting costs are lower - might be more tempting. And although city crime might increase, the sense of safety that attracted city-dwellers to the suburbs might suffer, too, in a downturn. Many suburban areas have already seen upticks in crime in recent years, which would only get worse as tax-poor towns spent less money on policing and public services.

....even longer waits at ERs, which are even now overtaxed in many places, and a growing financial drain on hospitals that already struggle to pay for the care they give uninsured people. And if, as is likely, this coincided with cuts in money for hospitals coming from cash-strapped state and local governments, there's a very real possibility that many hospitals would have to close, only further increasing the burden on those that remain open.

....Students unable to afford private universities would opt for public universities, students unable to afford four-year colleges would opt for community colleges, and students unable to afford community college wouldn't go at all. With fewer applicants, admissions standards would drop, with spots that once would have been filled by more qualified, poorer students going instead to wealthier applicants who before would not have made the cut. Some universities would simply shrink.

...Depression, unsurprisingly, is higher in economically distressed households; so is domestic violence. Suicide rates go up in tough times, marriage rates and birthrates go down. And while divorce rates usually rise in recessions, they dropped during the Great Depression, in part because unhappy couples found they simply couldn't afford separation. _
Just as many venerable financial institutions have recently failed, been bought out, merged, or been bailed out, so will many long-lived institutions such as hospitals, universities, retail chains, charitable organisations, and non-profits find themselves unable to continue. In their place will spring up large numbers of start-ups in the white, gray, and black markets.

Illegal bootleg activity will skyrocket. At the same time distribution gangs (think Crips and Bloods on steroids), gang warfare (as under prohibition), and extortion rackets will bloom.

You will begin to see the type of urban environment that Robert D. Kaplan has been describing in Africa and Central Asia for well over a decade. Obama has promised to create an America that the rest of the world can respect and imitate. Instead what we may be seeing is an America that imitates the worst of what the rest of the world has suffered from all along.

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Blogger Pamela said...

Although your description is dismal, I do feel that it is accurate. Obama promised a new direction, but will we all survive the outcomes of his policies.

Holding on to hope

Sunday, 22 February, 2009  

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“During times of universal deceit, telling the truth becomes a revolutionary act” _George Orwell

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