The 2008 Crash was caused by collapse of mortgage-backed securities. Loans were given to non-credit worthy borrowers until the system collapsed. What is happening today that may cause a greater multi-level crash?
Several trends are coming together that may create a perfect storm and a long decline.
- The Pandemic is collapsing small businesses and wages. A significant segment of the economy that once supported jobs and living-wages is gone. Even if the economy comes back in 2022-23, many small business will not. Business’s owner equity will be wiped out, commercial real estate values will fall. Access to unique, essential, or cultural things will be lost. Even before the pandemic, Ashland, Oregon lost its music store, outdoor recreation store, and yes our costume store. Now with the pandemic, our hospitality economy, and once great Shakespeare Festival is in question. You don’t appreciate a local business until it’s gone.
- New online minimum-wage warehouse jobs do not replace lost living-wage jobs. Amazon has recently added 430,000 mostly distribution jobs, but these are not living-wage jobs. This is just a dent in the face of almost 1 million jobless claims each month.
- Mortgage and rent as a percent of income is skyrocketing. As wages drop, rent and mortgage payments are becoming untenable for millions of families. This is similar to the cause of the 2008 mortgage-backed security crash. Enough families could not pay the mortgages they were given, and the system collapsed. Tens of millions of Americans face eviction. Where will they go? How much will it cost to feed and house 20 million Americans?
- Signaling a coming market bubble collapse, historic earnings per share and stock prices have diverged significantly. The stock market has been pumped up by the Federal Reserve printing trillions of dollars, and corporate tax cuts used for stock buybacks instead of infrastructure investment or higher wages.
- Inequity continues to grow. While tens of millions lose their jobs, billionaires have made trillions of unearned income. The ultra-wealthy will pickup assets for pennies on the dollar when times get tough. But, a billionaire wants a 10,000 acre ranch, not a home in suburbia.
- Rugged individualism, buying a gun, and hunkering down does not create jobs, nor generate income. It drains savings and divides communities.
- Population growth is irreversibly eroding the economy. There is less to go around per person every year. Support systems are collapsing: ecosystems, biodiversity, topsoil, forests, oceans, rivers, and climate change. These problems will eventually reverse economic growth over the long-term. Reminder, human population expansion is the foundation of civilization.
- Government issued fiat money is beginning to flow to cryptocurrencies which are more difficult to tax. I know, I developed a cryptocurrencies capital gains tax calculation platform but found that almost none of the millions of people buying Bitcoin wanted to pay their taxes. Bitcoin his an all time high this week. Why would a system of money that is designed protect personal sovereignty, and to hedge against fiat money devaluation be trending?
- As long as government is an arm of corporations and the wealthy, reforms needed to benefit the people and protect the environment will never happen. Citizens United was the straw that broke camel’s back by giving corporations personhood and access to unlimited campaign contributions from the wealthy.
- Social media is making nations ungovernable. People turn up their echo chamber volume so loud, that they cannot think. This is a circular reference. Because the government cannot govern, it cannot reign in fake news and lying politicians. Church was separated from the State to prevent faith from replacing reason. Mark my words: The day will come when a functional version of Trump arrises and we may have the first American dictator, and the end of the Republic. In 2020, A faction of Republicans showed that power is more important to them than Democracy. The greatest threat of a future Trump is not dictatorship, but disorder.
- Governments are broke. There is no way they can pay back the debt they have now incurred. They will never have the political will to tax wealth itself, the wealthy’s income, and externalized costs like pollution or deforestation. When future aid is needed, it may not arrive. Governments cannot govern without money.
- Like nobility of the past, feudalism of the billionaires may be our future. Can you imagine our government taxing away 70 percent of Bill Gates’s wealth? We must, but we lack the political will. Governments and banks are designed protect the wealth, and to keep the rest pacified. We must heavily tax wealth and end sources of unearned income, like the stock market, to prevent future nobility.
- Pandemics have risen their ugly head as we increasingly crowd together in ever larger populations. What if the next pandemic is 30 percent fatal like SARS or MERS is? If Covid-19 was, by now we would have 3 millions American deaths and rural American’s would finally being wearing masks. What if Covid-19 mutates and the vaccine is no longer effective?
- Our noble leadership lacks enough skills to cope with a multi-dimensional contrarian crises. We almost need super-druids to get us out of the jam our forefathers put us into. The solutions required are not hard but they are unimaginable by civilized society. The brewing storm is: economic, environmental, demographic, empathic, historic, and much more. Everything we view as inevitable historic progress has been a colossal mistake. Columbus’s invasion of the American’s prevented 500 indigenous tribes from protecting the continent’s ecosystems. Julius Caesar’s conquest of Gaul (France) 58-56 B.C. prevented independent European tribes from developing independently. Gunpowder, enough said. We are taught that infinite growth, large static populations, wealth, and hierarchy must continue at any cost. We ignore that civilization is fatal to Earth. We cannot think our way out of a problem using the same belief system that created it.
We are facing a web of interconnected challenges that began many generations ago. Unlike the 2008 crash, recoveries from more complex future downturns may no longer return to prior levels. We may also see a long-term rocky descent.
To find solutions to this potential unraveling, read articles in the Solutions menu above. One more thing, share Culturequake.com with your friends.
Share these ideas person-to-person. Don’t just read these essays, post links on your social media to essays that resonate with you. Our speech is not free if dissenting messages are hidden by search engines, and mainstream media. You found these ideas, now share them with others!
[Image] http://www.urbanghostsmedia.com. Detroit.