In life, they say, timing is everything. Here in Dymaxia, in deference to
some of the Russian novelists we love so much, we have another take on that; we
say: coincidence is everything. Take this week at that august body, we call
Congress. Our representatives --as D.C. residents we have to say that
figuratively, since we don't really have a Representative-- were busy crafting a
bill that would make it easier for credit card companies to come after us,
should our fortunes take a sudden dive.
We are, of course, not great advocates of debt. We think the credit card
companies should stop sending us all those invitations to roll up whatever debt
we might have so that we can comfortably go out and spend more. Instead, we
think they should be sending us warnings explaining that even a single missed
payment can double or even treble the interest we'll have to pay going forward.
Quite frankly, every time we read that the average US family owes $38,000 in
credit card debt, we wonder if any of the poor souls are ever going to dig
themselves out. Harvard professor Elizabeth Warren and her daughter, Amelia
Warren Tyagi, in their book: The Two Income Trap, have demonstrated that most of
those unfortunate Americans who end up in bankruptcy, get there, not because of
their profligacy, but because of life events that can happen to anyone. Often,
it is the death or disability of a spouse in the two-income family that throws
the family into a debt spiral, or the loss of a job, or a grave health crisis,
or a divorce that leaves someone holding the bag. Most frequently, that person
brought under, is now a single mother who has played the game by the rules all
her life.
Congress by its actions has proved once again, that in Washington, lobbying is
everything, To make that plain they managed to keep a loophole in the bill that
makes it possible for people with very high net worths, to shelter their assets
in certain kinds of Trusts, while in the same bill, ordinary folk are
forced to cough up shelter and wheels. Our Washington legislative leaders also managed to
kill any provisions that would have limited the rate of interest the credit
card companies can legally jack up and charge their customers. President Bush, a prime
supporter of family values, has promised to sign the bill.
To get back to our opening, we say that for us coincidence is everything
because we like to think that the laws of the universe, at least that universe
bounded by the Beltway, have their roots in irony. Take this week, just as Congress was clamping down
on debtors, the US trade deficit figures came out for March and for the
umpteenth time in a row they set a new, even more unbelievable record. This last
month the US bought 60 billion dollars more goods and services from the rest of
the world than it sold. And not just from China and Japan but from just about
every country and trade bloc in the world.
In other words, just as Congress was expressing its displeasure at laws that
allow ordinary citizens to get out from under possibly life crippling debt
burdens, the US was in the process of borrowing from foreigners another 60
billion for the month, or three quarters of a trillion for the year, and that
is, of course, on top of a crushing overhang of trade debt that goes back for years.
If they weren't such willful actors in the theatre of now you see it, now you
don't, these Representatives of the people might have noticed that after three years of
policies aimed at lowering the value of the dollar and artificially pumping up
the economy on the backs of borrowers, the trend is supposed to be turning
around. In other words, the trade deficit should be shrinking; a cheap dollar
should mean that US goods and services are cheaper while foreign goods get
pricier. What they should be worrying about is the
amazing shift that has seen US manufacturing, and now service jobs decimated as
plants, facilities and know-how head off to Asia never to return. Do they wonder
what it means when no one is about to open a big furniture manufacturing
facility in North Carolina while other facilities
still operating there pack up lock stock and barrel and head off over the
Pacific horizon?
Congress, of course, doesn't have to look abroad to see debt. They are operating
this year, as they did last year and the year before that, on their own massive
deficit and they will operate that way for as far as the eye can see as long as
they continue to push to reward their buddies with their unreal tax policies.
This month, just as last month, the unbacked dollars we print and spend abroad have
once again been
soaked up by the oil producers, and the exporting nations led by China, Japan
and Korea, then
recycled back into the system. Foreign institutional and private bankers continue
to perform this spiral-like, hypnotic dance, hoping against hope that the center will not
collapse.
In this don't ask, don't tell scenario that has served to freeze our gaze: The indefatigable US
consumer, undeterred by debt, rising fuel prices, rising housing prices,
stagnant wages, a weak job market, a sinking stock market, continues to run up
more debt in their eternal quest for more tchotchkes. The foreign bankers,
undeterred by the flow of ever greater mountains of greenbacks fresh off the
printing presses, continue to fill their coffers with more and more US
T Bills, pushing long-term interest rates down even as the Fed tries to push
short-term rates up, while Congress and the Administration make believe
everything's hunky dory and the public worries just a little more... well, about paying their
bills.
Bankruptcy is an issue. The President in a speech in West Virginia pushing his
plan to privatize Social Security made the point that the system could go broke
since the surpluses it has built up over the years have been converted as loans
to the government, in the form of Treasury Bills. The President warned that
those Treasury Bills, held by the Social Security Administration, might just
turn out to be worthless paper. Were any of those bankers from China, Japan, Korea and
Saudi Arabia who routinely buy those same T-Bills listening when he said that? We hope
not.