May 18 2009
Surviving the Crash
Surviving the Crash-In Spite of the Government
The War on the Middle Class
©2009 Bruce David
www.poormansurvival.com
In the old days a man who saved money was a miser; nowadays he’s a wonder. - Author Unknown
Regardless of government efforts to cushion the blow, the impact of the auto industry bankruptcies on the economy is already devastating. It’s largely because of auto industry layoffs that unemployment is surging again. There is a large ripple effect of businesses and families that will suffer. Consider the fallout being predicted.
· Gut the nation’s auto dealer network, employing over 1 million Americans …
· Cause a chain reaction of failures among auto makers and parts suppliers, employing another 1.7 million …
· Wipe out any positive effects from the economic stimulus package
· Sink the U.S. economy into a new, hair-raising decline.
The real lesson to be learned is that the government cannot and will not be the economy’s ultimate savior. So the first thing you must do BEFORE GM fails is to learn this lesson.
Why will the government ultimately fail to come to our rescue?
Because the crisis is too big — enveloping 195 sovereign nations … 6.7 billion people … over 100 trillion in debts … more than a half quadrillion in global derivatives. For more than 30 years the government has acted in collusion with Wall Street to dilute the earnings of the middle class.
The government’s resources are not infinite, they’re limited — by politics, by internal conflicts, by bureaucracy, and by the extreme difficulty of financing its follies.
And because no one — not even the most powerful government on Earth — can control the accelerating chain reaction of events.
The government will also fail to avoid another Great Depression.
Beginning with the Clinton administration, our national basket of goods, or how the cost of living was reported to the world, had been tweaked to under report inflation and the cost of goods by an average of two percent. It never reflected our actual declining standard of living or the downward mobility we’ve faced. Consider how energy costs were removed from the equation. (one of the ways the government kept the cost of living increases to Social Security recipients at a lower rate – see http://www.shadowstats.com/
for the correct data). This also fooled international investors into supporting our national debt. The American press only mentioned this sleight-of-hand in passing but the foreign press took notice.
The economic insecurity among the middle class became commonplace. Median family incomes stagnated for more than five years; millions were deprived of health insurance, and more household income went for necessities such as food and fuel. Income instability has now grown faster than income inequality and folks were borrowing themselves to the hilt on their real estate holdings.
The chance that a household would at some point experience a 50% drop in income (the typical family represents a two-income household) rose from minimal in 1970 to one in five by 2002 (even worse for a single mother). From her book, The Two-Income Trap, Elizabeth Warren, a professor at Harvard Law School, wrote:
Middle class families have been threatened on every front. Even with two paychecks, family finances are stretched so that a very small misstep can leave them in a crisis…they were faced with higher costs, increased risks, the old financial rules of credit were re-written by corporate interests that see middle-class families as the spoils of political influence.
Her last statement is a reference to the credit card firms and their rewriting card contracts to include horrendous fees and raising interest rates for late payments, lowering credit lines, etc. In the 1970s a credit card agreement ran about a page long; today it’s about 35-pages and written in tiny legalese.
Essentially, Wall Street and our government declared war on the middle class without any thought to the future – only short term profits. Who cares if burger flippers can’t afford $40,000 cars, we’ll just our profits from fees.
What will save us?
The answer to that is two-fold. First, always remember Americans are resourceful and have a can-do attitude. We will get through this, but not without dramatic changes in behavior. We will revert back to a better sense of community and family where members help each other. We will also change our consumption habits – we do not need the latest toy or designer label clothing to be happy.
We will redevelop our habits of self reliance; growing a garden, repairing our own clothes, becoming more energy efficient and so on. The priority everyone needs to keep in mind – do not panic.
Stopping the greed of Wall Street traders, the ones who crucified the American public, will be a larger challenge. I’d beware of recent upticks in the stock market as they’re probably minor blips when viewed in the larger picture of unemployment and failing governments.
Second, once it has become crystal clear that it is our government who has over stepped its bounds and has grown too much, taxed too much, ignored or chipped away at many rights and has minimized what the founding fathers set forth in the Constitution about their legal parameters of authority – then, and only then…the government must retreat from its excesses and greed. If this does not take place, the worst of actions might happen such as rioting and martial law or another revolution.
The following websites offer a variety of self help tools to help you beat the recession and to assist you in developing a more useful mindset for the future. Most of the tools are free.
Useful resource site which offers their seminar program handout
Living Better on Less, which includes an online video of The Cure for Affluenza
http://www.minimalistgroup.org
http://www.poormansurvival.com
