The headlines over the last few days have come out of history’s back pocket – or Nemesis’s. What could be more symbolic, after the senate votes to re-appoint one of the main architects of the disaster, Ben Bernanke, than the fraying of his patch and glue rescue work? The problem facing the elite in 2008 was much like the problem that faced the foreign policy elite in 2002: a numbers problem. In 2002, it became evident that the U.S. was never going to be willing to field enough soldiers in Iraq to truly occupy the country. Thus, no matter if you agreed with the invasion or thought it was simply dirty and immoral – I chose the latter position – the chances that it would be a success were stunningly low. This truth was uttered by one of the unlikely messangers of Nemesis, General Shinseki, who was no genius, but simply the accountant of death and destruction – a military specialty – toting up sums. However, when it turned out that the second coming of Hitler rolled over like a rotten mush mellon, the venues of conventional wisdom were triumphant – the naysayers of our great liberation were proven o so wrong! Well, a fiasco eight years later, of course, the naysayers can count up the dead, the wounded, the money and the exiles and well ask: was this much effort worth putting in place the coven of warlords that presently rule Iraq? The answer of course is no. And the answer comes with a codicil: the opportunity space – let’s call it – for pursuing the fall of Saddam Hussein was never opened up in the run up to the war. Nobody talked of recognizing Iran, or supplying Northern Iraq, that happy little autonomous place with the smuggler lords on top of it, with money to make the place bloom a little.
The opportunity space that opened up in October, 2008 with the fall of Lehman was similarly about the systematic cause of the failure of Reagonism. You’d have to be an economist not to see it: the rising level of exploitation, as the Marxist would say, or the stagnating median income and rising long term unemployment killed the flip this golden goose economy.
And the numbers were, similarly, all about inequality and its cost, in the end. When the wealthy can get wealthy by piling up trillions of dollars of securitized instruments and playing the ontological spread between the nominal and the real, they will do it. Unsurprisingly, there goes the capital that is supposedly being ‘efficiently’ allotted to those enterprises that actually, like, produce a good or service. The Patchwork kids then went on their tangent. And they produced a great illusion – which, they were happy to see, bore fruit in the stock runup of 2009.
That illusion may be coming apart. Just as the first few weeks after the Iraq invasion it was all, Mission Accomplished, so, too, it has been with the refusal to address the deep systematic problems with the way the economy has been restructured in the Reagan era. Viz that inequality. So, recently, the NYT posted a thumbsucker about the astonishing fact that 10 percent of American homeowners own houses that are significantly underwater, and when today the news slips out that the Mediterranean countries are either going to have to be bailed out by the EU or we are all gonna die, we can get a better look at those Fed-TARP patches. Apparently need patches. Someday, we will look back on the 17th century search for the philosopher’s stone as a model of lucidity compared to the refusal of the elite to understand the situation we are in.
So, here’s a kicky coupla grafs from the jinglemail article:
New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying.
In a situation without precedent in the modern era, millions of Americans are in this bleak position. Whether, or how, to help them is one of the biggest questions the Obama administration confronts as it seeks a housing policy that would contribute to the economic recovery.
“We haven’t yet found a way of dealing with this that would, we think, be practical on a large scale,” the assistantTreasury secretary for financial stability, Herbert M. Allison Jr., said in a recent briefing.
The number of Americans who owed more than their homes were worth was virtually nil when the real estate collapse began in mid-2006, but by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance.
They are stretched, aggrieved and restless. With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages
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