Long-term Effects Of High Unemployment, Recession and Devalued Currency

Does the average person not think it odd that when the country goes into a recession, unemployment spirals upward like a two-bit skyrocket, and the value of the U.S. dollar plummets to lifetime lows - that the cost of everything, including things produced in the USA, goes UP? That's how it strikes me, anyway... but I'm not an economist.

I am an observer of human behavior, though, and here's what I think we can expect to see as our current government-sponsored economic disaster continues:
1. As experienced older workers who - for the most part - draw higher wages, lose their jobs due to personnel cutbacks and impending retirements (retirements which corrupt employers love to avoid paying), they will find themselves taking entry-level positions just to earn a living so they can support themselves and their families. That's the way the older generation is wired - most of them still have what is called a "work ethic". (They have worked all their lives, and will continue to do so, if/when work of any kind is available. These people have character flaw called "personal pride". This pride will dissuade many of them from applying for unemployment compensation, even though they have paid into it all their working life, and that same pride will not allow them to stand on a street corner holding a sign asking people who are working to give away that which they have earned... at least, not until they are totally discouraged, and their family is going without.) This creates another problem...
2. Older, experienced workers are now competing with youngsters just entering the workforce. An employer (in any business other than one which is "youth-oriented") can now pick up proven workers for the same cost as a totally inexperienced worker. Because the cost in wages is the same, the experienced worker will probably get the lion's share of whatever work is available. The experienced worker is also less apt to have lost time (illness, work-related injury, pregnancy leave, etc.), so the employer will snatch him up and call it a bargain at that price.
3. There will still be high unemployment among the older segment of our population, but the youthful worker will see an excessively high unemployment rate - probably double that of the experienced worker. The younger generation will be quickly frustrated because they are used to getting what they want and getting it now. They will foment civil unrest - protests, vandalism, rioting, burning, looting, etc. - to the country. Metropolitan areas will feel the effects first, followed some time later by the suburbs. Rural America may feel it somewhat, but with nowhere near the passion - or the impact - of the disturbances in the cities. Existing street gangs will mobilize to take full advantage of the chaos, and new street gangs will be formed. "Turf" will gain even more importance than it has among gang members today, because it will literally become a matter of survival for them. Many gangs are fairly well organized, and in some instances they outnumber the police... and they are better armed.
4. Citizens who have otherwise been law abiding their entire life, will commit acts of theft, burglary, strong-arm robbery, and armed robbery when those things necessary for the survival of their family become generally unavailable.
(At this point we may reach the worst case scenario, which goes like this)5. Martial law is declared, and curfews established - by the same people responsible for the financial crisis. U.S. military forces are called out to quell the disturbances, and are told to use all necessary force -an intentionally vague, and politically satisfying term, which gives those issuing and those executing the "orders" a reasonable level of deniability. For the issuers it would be "That's not what we meant.", and for those carrying out the orders the retort becomes "But that's what you said!", when both parties are pointing at the other while trying to explain away the high body count.
6. The government is now seen by the populace as out of control and running amok, and the citizens take up arms to defend themselves against a tyrannical government. Half the military defects and joins the revolution.
7. Enemies of the United States now see their opportunity to pick a side, support them, and then eliminate them once the conflagration is ended... or, perhaps they will not pick a side. Rather, taking full advantage of the chaos, they will wait until our numbers have been decimated, and then just invade and kill or enslave the remaining population.

As I see it, the bottom line is this -
1. People are naturally inclined do whatever they feel they must to protect themselves and their loved ones.
2. People will engage in uncharacteristic, immoral and/or illegal behaviors, when threatened with extermination. What do they have to lose at that point?
3. Loyalties will be restricted to family, close friends, and a fairly small group of like-minded individuals. All others will be looked upon with suspicion and considered a potential threat - until they prove themselves to be otherwise.
4. A government that does not represent the expressed, free will of the people is a government well worth replacing! Such a government would be a "domestic enemy" of the people, and under the United States Constitution should be replaced.

And those are my thoughts about the social probabilities of an extended financial crisis. Just thoughts... not a plan, not a call to arms... more of a "HEY! Look at these unsatisfactory possibilities that could come to pass." Could our country become nothing more than a series of armed camps with private checkpoints every 10 blocks or so? I believe it could... but I pray that it won't.

"May You Live In Interesting Times" - ancient Chinese curse

Interesting times, indeed! Any point in time is "interesting" for somebody... whether they are struggling for their life, or fly fishing in a quiet stream. Interesting is a relative term - relative to humdrum or boring. Our present time is one I find quite interesting.

Among those things of interest to me are the troubles in the middle East, the world-wide recession, the election of a socialist as the President of the United States and his appointment of various incompetents to Cabinet posts, "swine flu"/H1N1 virus, what is essentially the nationalization of two-thirds of the US automotive industry and many of our financial institutions, and the preference a 2" long fish is given over the jobs of 80,000 farm workers - causing an immediate and critical shortage of American grown vegetables from California. Let's look at them one-by-one.

The middle East of which I write consists primarily of Afghanistan, Iran, Iraq, Israel, Pakistan and all the other, relatively calm, "flyover" countries in between.

Afghanistan has its own unique set of problems. For decades (perhaps centuries) Afghanistan's main cash crop has been heroin, and the leadership had been primarily Islamic fundamentalists. The paradox is that, even in a major narcotic producing country such as Afghanistan, drug abuse is illegal. And punishments for breaking their drug laws are much more Draconian than our own. Death is about as severe as a penalty can... get short of perhaps death by torture. Add to that problem a heavy influx of Western military personnel, bringing with them a perception (real or not) of invasion, and a reactive, militant Taliban, and you have a fine recipe for chaos! The intelligent thing for the Taliban to do? Sit quietly and do nothing. Sooner than later, the Western forces will depart, and then Aghanistan can go back to business as usual. Turn that blind eye toward the heroin poppy crops and drug "smuggling" (nudge-nudge, wink-wink), reinstate Sharia law, subjugate females again ... all the fun things of Islam.

Iraq gets the same recommendation: cool your heels until the West leaves, then complete your struggle for control against the democratically elected government. They will quickly fold, and you win! Why fight against a multinational force with superior technology, weaponry, and training. You have something they don't... the desire to be there! Leave them alone and they will get bored and go back to wherever they came from. They are not there to take over your country. Besides... who but you would want it? I see it as nothing more than a gigantic litter box!

Pakistan... what can I say about Pakistan? They're having some internal strife, caused by the Taliban in the Swat valley. They also seem to have the motivation, and the forces and necessary logistics ability, to deal with that strife. The West should just sit back and watch from afar, as the situation there develops. Let the Pakistanis decide their own destiny. If the government asks for assistance perhaps provide logistical support, but no "boots on the ground".

The real problem in the middle East is Iran. Perhaps not the people of Iran, but the mentally deranged leadership of Iran. Their "elected" president, Mahmoud Ahmadinejad, and their religous leader - who is the actual power in Iran - Ayatollah Ali Khamenei, are two nuts from the same tree. First of all, they believe that Israel should be "wiped from the face of the Earth", which is a position that sounds pretty much non-negotiable right now. It's almost as if "Kill the Jews, and Death to The Great Satan (that's the USA)" has become their national motto. Add to that attitude, the fact that today, May 20th 2009, Iran announced the successful launch of a Sajjil-2 missile with approximately a 1,200-1,550 mile (2000-2500km) range, which can easily reach into Israel. Now, throw in Iran's unmonitored, super-secret nuclear program, and Israel has a genuine reason for concern. In the past, the surrounding Arab nations have discovered that Israel does not like surprises from outside their country. In fact, when it comes time for somebody to jump up and yell, "SURPRISE!!", it's the Israelis who prefer that role. It is not outside the realm of belief that, for some time, Israel has been busying themselves developing strategies to deal with just that type of situation before it becomes a problem for them. Can you say preemptive strike? History has shown that the Israelis don't start trouble where there is none - they specialize in ending those troubles!

And, speaking of surprises... did the world-wide recession come as a surprise to you? It caught me off-guard, for sure. Luckily, I have no personal investments, or at least no direct personal investments to watch evaporate. I'm sure my credit union has some going with my money, but I still feel that it's relatively safe, even though my money may be inflated more than the Goodyear blimp. For decades, The USA has been the world's largest consumer of those things we call "consumables". We have done our part! Our consuming of consumables made consumption by lesser consumers look miserly. So what happened? Unfortunately, I do not have even a tenuous grasp of international economics, so I can't make an educated guess. What I can do is provide this quote attributed to Abraham Lincoln:

1. You cannot bring about prosperity by discouraging thrift.

2. You cannot strengthen the weak by weakening the strong.

3. You cannot help small men up by tearing big men down.

4. You cannot help the poor by destroying the rich.
5. You cannot lift the wage earner up by pulling the wage payer down.
6. You cannot keep out of trouble by spending more than your income.

7. You cannot further the brotherhood of man by inciting class hatred.
8. You cannot establish sound social security on borrowed money.

9. You cannot build character and courage by taking away a man's initiative and independence.
10. You cannot help men permanently by doing for them, what they could and should do for themselves.

Abraham Lincoln

Since the 1940s these “Ten Points” attributed to Lincoln have been widely reprinted. They have appeared in such places as magazines, Christmas cards, and the Congressional Record. However, the Library of Congress and Lincoln scholars believe that any connection made between Lincoln and the “Ten Points” is spurious. On the other hand, they are "good ol' homespun, common sense" statements - the type for which Lincoln was known.

As for the President and his Cabinet appointments - what is, is! Sadly, the American people must now live (hopefully) with it. I find Obama's apparent lack of birth certification interesting...

"Swine flu"... SCARY! Well worth being aware of, but not worth putting oneself into panic-overdrive. It's interesting that there have been relatively few fatalities from the H1N1.

Nationalizing private industry and financial institutions is socialism at its finest! Next will be the unsuccessful attempts at firearms confiscation, control of food supplies by banning home gardens, rationing of fuels, national health care, etc. It will be interesting to see just how all that plays out.

Eliminating the critical irrigation system to the largest single produce-growing area of our country - California - to save a 2" long freshwater smelt! However, smelt are not naturally freshwater fish, but were introduced into the freshwater ecosystem by man! Isn't that interesting? Somebody needs to start a "SAVE THE HUMANS" campaign!

There is always a chance I could be wrong about this, but we certainly do live in "interesting times".

Shades of 1929!

The government won't make it official, because that would reflect poorly on the administration, but we are in a recession - bordering on another depression. It's been almost 80 years since the beginning of the "Great Depression" of 1929, which lasted until 1941, so we were about due for one. We had four lesser-known (except to economists and historians) depressions in the 1800's, each of which lasted between five and seven years. So, in a relative sense, the 20th century was a much smoother one, depression-wise. One biggie, but no roller coaster rides.

The root causes of the Great Depression are still uncertain, but a drop in the Gross Domestic Product (our ability to sell what we manufacture) initiated a high unemployment rate in the United States. The unemployment rate represents what is not produced that could be produced. The unemployment rate, these days, is a misleading statistic anyway. An individual is counted as unemployed if the individual is over the age of 16 and is actively looking for a job, but cannot find one. Students, those individuals who choose to not work, and retirees are therefore not counted in the unemployment rate. Nor are the under-employed (those who desire full-time employment but cannot find it), or those who are not drawing unemployment compensation from the government (those who have not filed for unemployment, or have exhausted their unemployment benefit). In 1929 the unemployment rate in the USA was 3.2%. In 1930 it had more than doubled at approximately 8.5%., and by 1933 our unemployment rate had hit 25%. (Source: www.sjsu.edu) That means that one person in four who was capable of working, and actively seeking employment was just S.O.L.! Keep in mind also, that at that time in our history, the labor force was over 90% male. Women may not have even been included in the statistics.


So, what's going on today? In August of 2001 our unemployment rate was 4.9%, based on:

		Description
Total civilian population	212,135,000	(excluding those under 16, members of the military, and persons in institutions)
- Not in Labor force	70,785,000	(retired, students, individuals choosing not to work)
= Labor force	141,350,000	(total population minus those not in labor force)
- Employed	134,393,000	(individuals with jobs)
= Unemployed	6,957,000	(individuals without a job and actively searching)

(Source: www.econedlink.org)

But, that was seven years ago. Today we have offshore outsourcing of American jobs, combined with in-sourcing of technical and professional people, added to the reported 12,000,000 (and constantly growing) illegal aliens. And we have an ever-increasing export deficit, and we are becoming more dependent on overseas sources - many of which are less-than-friendly to the United States - for goods and services. Where is our unemployment today? As of May 2008 our national unemployment stands at 5.5% - 2.3 percentage points above 1929, yet roughly 3 percentage points below 1930. We now have a "civilian population" of 154.5 million - that's slightly over 51% of our total population of 301 million - for a decline of 57,635,000. Where did those 57.6 million people go? Did they die? Surely mortality rates would be offset by those coming of age.

According to the U.S. Census Bureau, in 1990 there were 16.7 births per 1,000 population (those would be the people who will be 18 at some point in 1908). In 2007, the last year available from the U.S. Census Bureau, there were 8.1 deaths per thousand. That's less than ½ the number of people who had been in the employable age range for the previous 2 years. (I could find no figures giving specific numbers of either births or deaths, nor could I find statistics showing the number of people in the 16-30 age range who would have been excluded from the "civilian population" due to education, military or institutional status.) How do you have a birth rate twice that of the death rate, and lose 57.6 million people from the workforce? I am amazed at the number of things in this world that I just simply do not understand.
Our GDP has remained fairly stable since 2006 reflecting a growth of approximately $1 billion, which is a good sign. Although that amount is significantly larger than my monthly check, $1 billion is not a lot of money when your talking about a total GDP of $14,000,000,000,000 ($14 TRILLION). To review we have a 5.5% (official, if not totally accurate) unemployment rate, and a stagnant GDP. Then add over 5,000,000 welfare/Medicaid recipients (whose only skill seems to be spreading their legs and letting the taxpayers pick up the tab), and corporate offshore outsourcing of hundreds of thousands of American jobs. Now OPEC is actively engaged in driving our economy further and faster down the road to ruination, and transportation costs are killing us at the gas pump, retail stores, and others offering goods and services. Additionally, the U.S. dollar has been devalued by half around the world! Does the inevitable outcome escape our elected representatives in Washington D.C.? Let me spell it out for them - D.E.P.R.E.S.S.I.O.N.! And what gifts does the depression bring? Civil disturbances, increased crime rates, and perhaps rioting ... or possibly even another revolution. I do not wish to see any of these things happen, but I fear that unless the government changes the course our country has taken in the last 50 years, these will be the consequences of our inaction.

I hope that someday I can say, "That prediction I made back in 2008 was wrong! Our government finally grew a set, and re-directed our economic policies. Today our country is as prosperous as it was in the 1950s, our borders are secure, and we depend on nobody outside the United States for our fuel needs!"

I'm Gil, and I approve this blog!