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Archive for November, 2008

I think I’m beginning to see a trend here, one cow said to the other. Have you noticed that whenever any our friends go into that red building over there that they never come out again? I think I figured out why: I don’t think the farmer is entirely on our side…

How many people would rather not look at their 401k statement these days? Most probably. We’ve heard a lot about the economic meltdown, the collapse of the stock market, and the resulting devastation of the average American’s 401k. For people who are close to retirement the loss of 40-50% of the value of their 401k is devastating news and means that many will not be able to retire.  Many of those who have recently retired are now wondering if they will have to go back to work and if there is any work available for them.

We haven’t heard much about the devastation of people’s 529 funds. These funds are similar to 401k plans in that they encourage people to put money into them that will then be invested in the stock market. 529 plans are intended to be used as a way to save money for children’s college tuition expenses. Last year Congress passed legislation making these plans even more attractive by making 529 contributions and the earnings exempt from income tax.  People poured money into these plans hoping to thereby have enough money to send their kids to college.  Now their 529 plans are pretty much in ruins, just like their 401k plans.

Our Republican President and Republican members of Congress have repeatedly tried to alter the present Social Security System of guaranteed government pensions to one where people would invest their Social Security contributions in the stock market, just like the 401k and 529 plans.  Imagine the devastation that such a modification would have had for our nation’s retirees, especially those who depend completely on their Social Security check for all of their expenses.  Taken collectively, these actions and proposed actions by our government might seem only stupid or irrationally exuberant – as Alan Greenspan might say. Maybe they were just dangerously optimistic. There is however another way of looking at it.

It is my contention that the ultra wealthy class of America – the top 5% of the population who are overwhelmingly Republican – and who control our present government, feel no sense of responsibility for the average American. Rather, like the farmer, they look at us as sheep to be shorn or cattle to be led to slaughter.  So it is that they make new laws and entice us into the trap of investing in their businesses, knowing that the stock market is anything but a sure thing and is the last place you should put money that you know you will need in the future.  These wealthy students of Machiavelli look at the general population as a source of money for them – period. And they use the power of government to enable their schemes to lure innocent, untrained, trusting citizens to put their hard-earned dollars into stock that will inevitably fail – but not before the ultra-wealthy sell off their own shares. Don’t worry about them- most of them (except maybe the incredibly greedy financial guys) know when to sell.

Now our government is using billions of taxpayer dollars to bail out the banks and insurance companies that are owned by the wealthy, and to make loans to businesses.  It just goes on and on.  Come to think of it, calling the current Republican-led government Machiavellian would probably be an insult to Machiavelli.  These people are in a league of their own.

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Back in the 1960’s, when John Kennedy and Nikita Khrushchev were going eyeball to eyeball over the Cuban Missile Crisis, there was a small group of military and civilian analysts who were paid to “think about the unthinkable”, i.e. global thermonuclear war.  The idea was that even in the worst of all eventualities there was always the opportunity for one side to win and the other to lose. The analysts were paid to figure out how we could win a nuclear war.

In the spirit of these analysts, I have decided to try to determine how any of us might survive if we find ourselves in the worst of all possible worlds – a world where John McCain is President and Sarah Palin is the Vice-President.  The first thing we would have to realize is that, maverick or not, John McCain is a Republican – that’s why the GOP supports him, and that’s why Dick Cheney recently endorsed him.  In spite of all his rhetoric about change, John McCain is not an agent of change.  At least that’s not how I see it.  The election of John McCain would be the equivalent of electing Herbert Hoover’s son to deal with the Great Depression. (Did Herbert have a son? I don’t know – but you know what I mean.  McCain is essentially the “son” of George Bush.)  We should expect a continuation of economic policies similar to those implemented by George Bush – no surprise there. But what would the result of all that be?

Remember that, despite all their objections, the Republican Party is not the party of Joe the Plumber – it is the party of Goldman Sachs and Morgan Stanley.  It is the party of the wealthy elite who use the power of government to pass legislation that fosters their ability to build extreme wealth at the expense of the ordinary citizen. We should therefore expect more government funding infusions to the banks (which the wealthy people own). We should expect continued deregulation of the marketplace so that wealthy investors can create new types of derivatives and swaps that will enable them to attain vast fortunes while no one is looking.  We should expect continued favoritism towards the established fossil fuel companies and a complete lack of progress towards alternative energy.  We should expect the privatization of Social Security, the elimination of Medicare and Medicaid, and the elimination of employer subsidized health care.

So how do we cope (those of us who are not in the top 5% of the income bracket) with four more years of Mini-Bush?  First, before I panicked, I would wait and see if Wednesday morning really does bring us the dark headline: VICTORY FOR MCCAIN!  Then I would use whatever is left of the smoking ruin of my 401k to buy financial stocks, oil company stocks, health care stocks, and pharmaceutical stocks. I would dump the stocks of all U.S. manufacturing companies.  I would buy stock in companies that either sell imported goods (like Wal-Mart) or provide low cost services and which pay their employees a marginal wage – places like fast food companies, etc.  Long term, we will be heading for a two-tiered economy: the upper tier will consist of the sharks in the financial, health, and fossil fuel industries, and the lower tier will consist of the vast majority of people who will work in the “services” industry.  The only hope for those in the lower tier is to invest wisely in the businesses of the upper tier – just don’t have the illusion you’ll ever actually join them.

I recall during the height of the Cuban missile crisis, when the entire country was at the highest possible state of alert, and the nuclear missiles in their silos were all fueled and ready to launch, that we were still going to school every day! However, the people whose job it was to think about the unthinkable were obviously thinking about us students too.  One day we had a drill where the school fire alarm sounded and everybody had to quickly duck under their desk, as if a nuclear bomb was going to explode outside the windows or something. I think the idea was that our desk would provide a shelter for us.

On another day they sounded the alarms again at school and we were all told to walk home. It was some sort of exercise, I guess. I usually took the school bus, but there were no buses included in this drill. It took me about 45 minutes to walk home.  I guess the analysts figured I would be safer when the bombs fell if I was hiding under my own bed – assuming I could walk faster than the missiles flew.

Ultimately, when we think about the unthinkable, we can come up with all sorts of plans to try to deal with the situation, but if we take a step back, I think that there is no escaping from the fact that a nuclear bomb is still a nuclear bomb, and John McCain is still John McCain, and there’s not a lot we can do to save ourselves from either one.

It’s a pretty scary thought.

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