President Reagan had an idea about how the world should run. He deregulated Big Business. That is, he removed the restrictions put in place that kept companies from cheating. He removed, primarily economic oversight. He said that it was unAmerican that in this capitalist society that such oversight, such restrictions should exist. To him, these concepts flew in the face of that illusive, figmentary idea we like to call freedom. He wanted Big Business to have the freedom to do what it will and believed that in doing so, said companies would check themselves. They would check themselves because it was in their best economic interest to do so.
Yet, what he didn't realize is that what was in the best interest of Corporate America could be unknown to Corporate America itself! That Big Business could be akin to a compulsive gambler who as they fall further and further into the hole panic and begin making riskier and riskier bets, thus then subject themselves to even more debt at an ever increasing rate relative to the riskiness of the debt.
Second, he either did not realize or did not care that Corporate America would not run lockstep with Small Town America. In periods of financial instability, those with the least wiggle room to begin with will be the first to feel its impact. Those people are inevitably the poor, then the middle class, then the rich. The soul of America is hollowed out from the inside and when the outermost shell comprised of Corporate America (those with the most wiggle room) crumbles, we find that there is nothing left to this country at all.
For the last seven years, and certainly before that, minus the Internet boom of the 1990's (of which no one person can claim credit), a war has been raged on the poor and middle classes of this nation. In the past two years, such war has bore fruit. The housing bubble burst. The mortgage market fell into crisis. Lending has tightened, further alienating millions of this nation's people. The soul continues to erode. And erode it does to this day.
Now large corporations are falling. AIG is the next among them, but likely not the last. Lehman is done. Merrill Lynch is done. Bank of America bought out the latter. Watch them next. If they fold up, the market will slide into free-fall. One that interest rate cuts will not stave. One that inflation will not absorb.
Reaganomics worked to a "t". Market deregulation, finished under W. Bush, and book-cooking and ethics violations ignored by a Republican controlled Congress who, like Reagan, believed that the market would sort itself out, have both succeeded too. And Big Business didn't know when to cut it's losses. It dug deeper and deeper. And we're not finished yet. As the noose slowly tightens around the necks of Corporate America and the wiggle room disappears, this nation's economic infrastructure will hang itself on the fruit born from its greed. And all that will be left is nothingness, because the economic soul of America, antecedent from the poorest of the poor to the richest of the rich, will be finished.
Reagan thought that he could make the rich richer, make himself and his friends richer and richer, off the work of the poor. However, there came a point where their greed defeated the poor and soon will come a point where it defeats the middle class too. The rich are the last to fall, the ones who will go down with the ship. Reagan's error was that he believed that the market would know when it's squeezed enough from the poor, when to stop before crushing it completely. But it didn't. And now we may be too far gone.
Much can be said of a man who set Big Business on the poor and middle class like a vampire bat on cattle. Or of his Junior partner George W. Bush. But in the end it won't matter. We will all have to live with the results. This next decade may be difficult indeed.
If the market crashes as aforementioned one of two situations will play out. The crash could affect all markets equally as a percent of each index's national or international value. Then at least, the US, although hit hard, will not lose its place as the last remaining superpower (or at least what entrails remain of such a title). However, this is unlikely to occur. Most of the market trouble comes from the US, therefore it seems most likely that it will be hit if not the hardest, then at least close to the hardest. It would be the hardest hit of the first world nations.
In this case, a matter of degree will make all the difference. The US may take a a body shot, forceful, but recoverable from. Or it may KO. In which case another major problem arises for the future of this nation. China. Logically, the nation with the greatest % national growth now, if close to equal to that of America in economic power, were to, as it is, presumably be hit hard by a US market crash, then that nation, China, will be likely to get back on its feet first. It will begin to recover first. It will recover first. And it will be the biggest world power, if not the only world power, of the next century, even if only by the market's crippling or elimination of the US as a superpower.
Stemming from this potential eventuality lies another problem. The United States has spent much of the last 15-20 years in a position of consumerism as it pertains to the Chinese economy. Therefore, it poses no great leap to think that China would want to continue that relationship, but in a more lopsided arrangement. The end result would be the United States, an imperialized colony of China. Spheres of influence, a Western tactic used against China during the 19th Century, they will make a return but with opposite roles. Western society will be the forced consumers of Chinese goods.
We can take it a step further even. US citizens begin to see the writing on the wall as China makes the US more and more its lapdog. US industry chugs back into motion to free us from the confines of imperialism. China invades and ceases control of the US government. The invasion may not even be physical. Perhaps the heads of corporations, desperate not to lose their positions in a new and frightening world, strike a deal with China, they lobby, then win political power.
One way or another. This scenario does not bode well for those of us who, even if we don't enjoy where we are now, will certainly crave that very same status, when the rug is pulled out of under our feet.
The world market is faltering and whether or not it will fall can not be said yet. Years from now historians will remark that we should have seen the writing on the wall as they do then. That it was obvious. Only two questions remain. What language will those historians be speaking. And who will they think was the good guy.
http://unwilling-dystopia.blogspot.com/2008/09/reagan-and-fruit-his-policies-now-bear.html
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