It is easy to conclude that Americans are stupid. How could they vote Bush into office twice? How can they not understand how Washington really operates as one party dedicated to maintaining the dominance of the financial elite. Well, Americans are not really stupid. Rather, they are just distracted. Americans work harder than any other people. A typical couple with children both work 40 hours a week or more. They have a long commute on top of that and when they are home, need to do all the business of running a household as well as spending some time with the family. In the their meager spare time, they try to relax. Most don't feel that they need to fully understand the functioning of the financial system or deep questions of political philosophy. When it comes to politics, most make up their minds quickly. They go with their gut. They certainly don't have time to do in depth research into the issues. That is what the news is for right? Well, that is the other problem. The news has become dominated by large corporations and doesn't offer a wide spectrum of opinions. This isn't conspiracy theory. They are just businesses and have learned that the most profitable business model is to focus on feel-good entertainment not highly controversial subjects. News stations have learned that you get more viewers when you focus on Eliot Spitzer's sex scandal than the UN oil for food scandal or the travesty in stealth bail outs of powerful financial firms.
But the times are a changing. People laid off from work, suddenly find themselves with more time to think about why they are out of work. The moral and financial bankruptcy of our way of life is becoming all to obvious. It was common sense after all, that a unsustainable trend could not continue. House prices couldn't rise forever with wages being stagnant. The Chinese wouldn't finance our over-consumption forever. Every adult who has ever dealt with their own household budget gets this now. That is why 45% of Americans think we will have a repeat of the Great Depression. This number is perhaps only 10% for actual economists who are supposed to know better. However what economists think doesn't matter. It is the spending and investment habits of ordinary Americans that will determine if demand returns enough to support the economy. If people think we will have a Depression and act accordingly, you can be assured that we will.
The Obama/Geithner/Summers/Bernanke plan of financial engineering our way out of this crisis has zero support. The people don't buy it. The markets don't buy it and even the news organizations, for example New York Times's Paul Krugman don't buy it.
It is all pretty simple when you look at the big picture. The wealthy class of the world, the net savers, made bad loans to the net borrowers and that money has been spent or transferred to others. Those loans will default and the money is not coming back. Therefore the wealthy lending class has lost much of their wealth. The Obama plan so far has been to make pretend that the money is not yet lost. If we could all just clap our hands and wish Tinkerbelle would come back to life, then Tinkerbelle will come back to life. And that might work, if people really are stupid, if they are able to ignore the fact that they are out of work and keep spending in an unsustainable way. If they can only ignore that their house and stocks have fallen in value by half. This of course is ridiculous. The Obama plan is on its last legs.
This wonderful video shows an interview of Brad Sherman, Democrat from California, telling the CNBC hosts that the emperor has no clothes. The Zeitgeist is prominantly on display. The CNBC hosts represent the old way of thinking; that the system must be propped up at all cost to avoid an apocalypse. This populist uprising will lead to the end of capitalism as we know it, they say. Sherman doesn't buy it. A system where capitalists can make outrageous profits but need the tax payer to remove all the downside risk is not capitalism at all.