Collapse stories prior to September/98
[Commentary © 1998 Philip Hyde, PO Box 622, Cambridge MA 02140 USA, 617-623-8080]
8/31 Leadership deal foiled in Russia - Communists balk, economy totters on eve of Clinton visit,
by David Filipov, Boston Globe, frontpage
8/30 US consumers are seen as key to market's fate, by A.Zitner, Bos. Sun. Globe, frontpage
[Every so often commentators come clean with the public and explode a myth that they and their colleagues have been spending millions of dollars and years and years to create. This article contains just such an explosion in question-and-answer form. Lest you miss the revelations in this unusual article, here they are - highlighted - and all from the last two columns, buried on an inside page (A14).]
But despite all the hype in recent years over globalization, trade is not as big a factor in the US economy as some people believe.
[Excuse me, shouldn't the wording here be "as you cheerleaders have been at great pains and expense over years and years to lead us to believe"? While top executives get millions even for ruining their own companies, every time ordinary American employees have complained about their lack of raises, they have been electrogoaded back into their shrinking cubicles of silence with the one word, GLOBALIZATION - and now you're telling us that globalization is not that big a deal?!]
Exports account for only 12% of GDP.... If world demand for US products dropped 10%...US GDP would fall [only] 1%. (Robert Litan, Brookings)
[So here it is quantified - globalization is only 12% of GDP - rounded down, to make it look smaller, to 10%. So 88-90% of the American economy is unaffected by globalization. Why don't these cheerleaders just parrot, "Don't worry, be happy!" It would save them a lot of breath. Whatever happens, they'll provide the valium. Will Rogers would have a field day at their expense. "Why they're just about as honest as a politician in election year!" And after 90% and 88% unaffected, here comes yet a third figure, spun lower to in case they need to double-reverse themselves and scare us with globalization again.]
"You have to think of the 85% of the economy that isn't significantly tied to international trade," said Tim O'Neill [any relation to Marjorie O'Neill Clapprood?], chief economist at the Bank of Montreal. "What you've got is a domestic economy that is doing very well."
[Don't worry, be happy! Though remember, the Bank of Montreal has relocated to Toronto on fears about the secession-brooding Quebec economy.]
Economists also say they cannot account for how American [consumer]s will act in the face of global uncertainty. For now, consumer spending is keeping [the] US economy robust, as companies build new homes, make products, and hire employees to feed consumer demand. But consumers appear to be spending freely because they are making money in the market and their jobs are secure.
[Americans are spending savings and credit card lines. WHO's making money in this market and WHOSE jobs are secure?? A minority of a minority of Americans own stocks - only 49% or fewer own stocks and only 49% or fewer of that 49% own stocks that aren't tied up in IRAs and 401Ks. And the top 5% own something like 50% of the stocks?! That's who's been making money in this market while it was still going up - adn the top 5% do not spend - THEY DON'T HAVE TIME, so they accumulate and concentrate wealth. And the more concentration, the less circulation. Rest of question, WHOSE jobs are secure? - these same economists are the ones that have been telling us for two decades "The Reality is that job security is history - so keep quiet and don't even think about a raise"?! These same economists want it both ways - heads they win, tails we lose!]
If the world's economic prospects continue to darken, there could be a steep downturn in the market, which could choke off the consumer spending that is the main [i.e., 85, 88 or 90%] fuel of US economic activity.
[No kidding! It's a miracle that this bubble has kept going this long - and only a tribute to the huge size and momentum of the US economy compared to 1929, and to the myriads of little socialist programs "in the basement" that have been centrifuging a little wealth out of the Black Hole in the middle. But even the biggest natural resource can be killed if we keep looting it long enough. "Looting" means condensing it and scrunching it up in a ball. "Biggest natural resource" means the US consumer market. And not even the biggest peacetime slice of socialism can save it - only socialism on a total war level can do that, and that is the lesson of the New Deal and World War II. If we don't learn from our nightmares, we get to repeat them. And so far, CEOs have not learned. They are still bashing their own markets through mergers, acquisitions and downsizing. They still have not learned that employee bashing is market bashing - bashing on that 85-90% which is the domestic consumer market that they depend on to save them from the collapse of Russia, Japan, Phillippines, Korea... and the rest of Asia and Latin America.
[But we can't really blame CEOs - yet - because until next week, no one will have published a dynamic, market-oriented guideline to show them at what relatively colossal levels they should be reinvesting in their own markets via their own employees. But next week I'm publishing TIMESIZING, NOT DOWNSIZING and TIMESIZING is the entry level to a series of such guidelines -140 pages, $14 - available from Groundwork Ideas Press, PO Box 117, Harvard Square, Cambridge, MA 02238.]
8/29 Panic pushes Asian markets to historic lows, by Indira Lakshmanan, and... Dow falls another 114 after rally fails - World markets continue skid in response to Russian crisis, by Kimberly Blanton - F1 Boston Globe
8/28 Russia woe jolts world, US markets - Dow plunges; investors look for safe haven,
by Kimberly Blanton - frontpage Boston Globe
8/27 Mexico unveils plan to combat crime wave, by Richard Chacn - A21 Boston Globe - [included because crime follows under-employment up and down and, never mind Mexico, prison building has been America's biggest 1990s industry]
8/24 Russia's turmoil ricochets; Tokyo takes hit; fear spans globe - Investors flee to U.S. securities,
by Sara Nathan - B1 USA Today
[At last, the actual word (collapse) appears -]
8/23 Tumbling ruble is no penny-ante crisis - Russian woes could lead to collapse of world's economy,
by Thomas Walkom, Toronto Star, frontpage.
8/22 Battered loonie [i.e., Canadian dollar] takes another half-cent hit as Asian flu spreads,
by Lisa Wright, Toronto Star, frontpage.
The loonie fell below 65 cents U.S. for the first time yesterday [Friday] - its biggest one-day drop this year - while Latin America and Russia appear to have caught the Asian economic flu bug. The Canadian dollar is worth 64.86 cents U.S., sliding 0.42 cents from Thursday's close....
8/16 frontpage - Joyriding economy hits a few bumps,
and A20... Economic analysts signal that joyride may be over, Boston Sunday Globe
Since the mid-1990s, analysts [viz., salesmen] have been peering into the humming engine of the American economy and looking up agog: It was all running so perfectly [ed. just like the 1920s].... But in recent months...corporate profits no longer climb the way they once did; consumer spending seems likely to run out of steam because of exhausted savings.... Analysts have begun to wonder anew how long the nation's economy can continue unscathed as countries all around flounder. "It's dawning on us that we're just about the only ones left standing...," said Robert Litan of the Brookings Institute.
8/12 Boston Globe frontpage headline - US stocks caught in worldwide tumble
[Ed. Will this wake up any of the clueless codgers in the executive suites to the true hollowness of their economic "boom" and get them timesizing instead of downsizing, and doing the longterm massive reinvestment in their own markets (that is, in their own employees) required to maintain those markets on a sustainable basis?]
7/3 Boston Globe page C3 from Bloomberg News - World Bank OK's $1B loan for Indonesia: Money part of funds pledged by organization to rescue plan.
The World Bank approved a $1B loan yesterday to help that country rebuild its economy and soften the impact of the financial crisis on the growing ranks of the poor. The money - part of the $4.5B the World Bank pledged to a $41.2B international rescue package put together last year - was held up six weeks ago when Indonesia was gripped by political violence that forced the ouster of President Suharto. "Its objective is to rebuild confidence...," said James Wolfensohn, president of the World Bank. [Ed: I was beginning to rebuild my confidence until my eye struck the article right below this one in the Globe - see below.]
7/3 Bos Globe C3 from Reuters - 'Lender of last resort' urging bailout - of itself: IMF needs US to take 1st step, OK $18b influx. ["U.S." - that's us taxpayers, folks, and do we have any referendum say in this matter? - no-o-o!]
One year and three record-breaking rescue packages into Asia's financial crisis, it is the International Monetary Fund that is in need of the next bailout. The Washington-based lending agency says its cash reserves have been depleted to dangerously low levels since the Thai baht crashed on July 2, 1997, and it rushed multibillion-dollar loans to Thailand, South Korea, and Indonesia. Asian, Russian and other emerging markets are still under pressure, and the IMF is asking for an immediate cash injection from the United States, its largest shareholder, and from other rich member states. [Ed: When are these clowns going to realize that the whole concept of BAILOUT implies LEAK, and plug the leak? What is the leak? Let's hear it again from good old G. K. Chesterton in his "pan-Utopian flaw": "The weakness of all Utopias is this, that they take the greatest difficulty of man and assume it to be overcome, and then give an elaborate account of the overcoming of the smaller ones. They first assume that no man will want more than his share, and then are very ingenious in explaining whether his share will be delivered by motorcar or balloon." As long as 1% of the population can gain title to 99% of the wealth, we have a leak, ohboy do we have a leak, because the more concentration, the less circulation.]
7/14 Bos Globe's Aaron Zitner D1 - IMF to tap reserves to help Russia: Move to supply $22.6b in loans puts new pressure on Congress. The IMF has used its emergency fund only nine times since it established the reserve in 1962. The last time the account was used was in 1978, when the US withdrew money in a bid to stop the declining value of the dollar, and in 1977 to aid the UK and Italy. In recent months, the IMF has warned that its regular reserves are low because of the financial crisis in Southeast Asia, which the agency has tried to ease by offering tens of billions of dollars in loans to South Korea, Indonesia, Thailand and the Philippines. Borrowers such as Indonesia are calling for even more loans. [Let the one independent U.S. Congressman do the editorializing this time:] "The IMF bailout of Russia is an enormous scam that will not only not help the Russian people, but will continue the destabilization of their economy, causing increased poverty and misery," Rep. Bernie Sanders, Indep. of Vermont, said yesterday. Sanders said the IMF loans merely funnel US tax money to Russia, which uses it to repay "large banks and speculators who have made risky loans to Russia at high interest rates."
And let's not forget the Chrysler bailout, the S&L bailout, the Mexican bailout necessitated by the Peso Collapse ten days after NAFTA was passed -
(I'm trying to hold it back, I'm trying to hold it back, oops it's slipping out - the obvious conclusion...)
Current economic theory LEAKS OCEANS - top execs maintain a World War II workweek against all inflooding technology, engineer ever larger aggregate labor surpluses, totally deny them in all of Murdoch's, Turner's and Gates's media à la "We have a growing shortage of qualified applicants so we have to import more cheap labor from India - fast!", concentrate more and more astronomical wealth thus decelerating its circulation, and lobby Congress to drag taxpayers into bailing out all the resulting bankruptcies and recessions. Currencies are collapsing all over the world - the Canadian dollar is down to 66 cents US. But all our blithering Fed chief worries about is inflation! And don't you dare mention the word "depression." The Democrats under FDR solved Depression once and for all with the Big Bandaid - oops sorry, the New Deal and the Great Society and the War on Poverty - no honestly, it was World War II and Korea and Vietnam with abortive ignition in the Bay of Pigs and Iran. Then the GOP tried a few abortive ignitions in Panama, Grenada, the Arabian Gulf (while our English and Israeli friends tried them in the Falklands and Entebbe) but the GOP's big Pentagon makework campaign really backfired by winning the Cold War. No Cold War?! How now do we scare the dough out of our wealthy? We've got to appeal to their long-term self-interest for a change and to what's left of their intelligence after they've gotten spoiled rotten by 30 years of growing labor surplus and got used to thinking of amputating their own corporate empires and domestic markets as real smart strategy.
4/18 America's bubble economy - cover story, The Economist (Britain's answer to Time, Newsweek and US News &c, but less parochial, smarter, and better undercurrent of wit).
This is a story that Pres. Clinton must have seen because right after this he asked MIT's Lester Thurow if we had a perfect economy or just a bubble. Thurow answered in the Boston Globe a few days later trying desperately not to say it was a bubble but citing a lot of evidence that it was.