The Worst is Yet to Come

Across the past generation American incomes, below the very rich, have remained essentially static, or have actually gotten worse. Year after year Americans work harder, longer, for less money in real terms. Political tranquility has been maintained by cheap gasoline, cheap food and, in recent years, the seemingly easy credit and tax deduction on home mortgage interest allowing middle-income families the illusion they owned a home. Gasoline is no longer cheap. The cost of food is going up. The subprime crisis has pitchforked thousands of Americans into forfeiture.

There’s worse to come. Since the subprime meltdown there’s been a lull. But now the so-called “Alt-A” loans, made to supposedly more credit-worthy borrowers and amounting to a trillion dollars, are allegedly about to go down the tubes, carrying banks and insurers with them. And this time Ben Bernanke, chairman the Federal Reserve, has no bail-out strategies left. He can’t lower interest rates to banks below the current 2 per cent, a level partially responsible for oil costing almost $130 a barrel. Round the corner looms hyper-inflation.

The sky is dark with chickens coming home to roost. America is in a terrible fix. But you wouldn’t know it from the politicians. Obams, Clinton and McCain flourish quick-fix recipes that are as inconsequential as a pop gun aimed at a gunship by an Iraqi child. Whoever is in charge come January 2009 will have to set as drastic a change in course as did Roosevelt in 1933, the last time the political economy faced this serious a crisis. Not that we need another Roosevelt, trying to bail out capitalism and stave off the left.