Remember "Social Unrest" or The Parties Are Over

It was about a year ago I wrote a blog on social unrest. In it I suggested that it was the phenomena that most scared the ruling class no matter where. Present day Greece is a good example of what happens when the CREDIT SPIGOT feeding the “we can have it all” frenzy suddenly stops. Like most of the rest of us the Greeks were enjoying the “Big End of Century Party.” The overwhelming and highly motivating idea was the notion, that yes “we can have it all.” Bumper stickers out here proudly announce “We have It All.” Okay, and the question is, how did you get it all?

The answer is, THE PANDEMIC OF EASY CREDIT. One can argue whether it started on the top and dribbled down to the bottom or the other way around. At this point in time it hardly matters. Where would you like to start? Want to start with the government? The US debt to the Chinese alone is in the trillions. The Spanish, Portuguese debt to the Euro banks in the billions. The consumer debt in the US in the hundreds of billions with foreclosures in the millions predicted for the balance of 2010.

I must admit, that it is extremely difficult for a person like myself, who grew up during the great depression to understand how this could have happened. During those days of living just to survive it was driven into my my thick skull that if you couldn’t pay for it you just don’t have it, period. The opposite of “we got it all.”

I do remember during the nineties, when the credit market was already in full throttle friends would ask,“How much credit you carrying?” My reply was very little as I am really afraid remembering what happened way back when. I was laughed at, told that based on my income I should be carrying at least a half million in credit because money gets more expensive so the credit deal is a sure money maker.I admit I was embarrassed and often felt that I was stuck in some past dungeon of despair from which I could not seem to escape.

As the housing bubble was in the early bursting stage I could not understand the stories of people making $40,000 a year buying houses for a half a million. Of course they couldn’t pay the mortgage. Who coaxed them into it? Who was making lots of money off of these poor suckers? Bankers, hedge fund cowboys and the brand knew scam called derivatives. Bundle up all the bad loans and then peddle them to some other suckers while sucker number one loses their home and their livelihood as the economy goes into the tank. I used to think that it was just the poor sucker buying a house they could not afford in Phoenix. Oh no. It turns out now that governments were doing the same thing. Promising all kinds of goodies for some time in the future and the tough part is that future is here now and there ain’t enough money to pay for the promises.

There’s your prescription for social unrest. Those folks in Athens who thought they really had it made suddenly learn the cookie jar is empty and they now have to face something called austerity. Same as the teachers in New York. The end of YOU CAN HAVE IT ALL. Strangely enough there still is a Communist Party in Greece. What exactly it can do I don’t know. But what I am certain is they are helping to stir up the masses. After all that’s one thing they know how to do.

The problem is that the mess in Greece hits Europe hard because their banks are holding the IOU’s and if Greece defaults you know who is going to hold the bag. Yes we are included in that bag. So they had to figure out a bailout because if Greece goes bust there are a number of fresh candidates right behind them, Spain Portugal, Italy and who knows who else.

So much for the glories of the Global Economy. And don’t forget our very own State of California that also could go bust because they too can’t pay the Piper now that the parties over. Do I think we can survive it? Of course I do and we will but on much lower expectations.

Frankly I am still more concerned with the environmental catastrophe that is unfolding as that cannot be solved by shuffling numbers and there are no derivatives that can do anything about the oil spill in the Gulf or the coming water shortage. Okay I’ll get on the environment soon I promise.