From Somewhere in Middle America

I received an email a few days ago and it really resonated with me.  I thought others might feel the same way and I asked the author, who preferred to remain anonymous, if I could reprint it here. Thankfully, she said yes.

I just wanted to let you know that I discovered your "Financial Armageddon" blog a few months ago and I'm a loyal reader.  Your book is even on my Christmas wish list!

I'm a housewife and I know nothing of economics outside of two college courses and being able to balance my checkbook. I don't know the ins and outs of things, but I do know that something's essentially rotten in our system. Middle America has been saying for quite some time that things are not going well. People like me see jobs disappearing left and right (not just in the manufacturing sector, but also in the professional and technical fields), and we see rising costs, declining wages, and a rapid de facto disappearance of the availability of health insurance, among other things.

Yet (until really recently), Wall Street, the leading economic indicators, and the DOL employment statistics say everything is peachy keen! I believe Bush and the other Republicans are finally starting to move to from their position of "Middle America is too stupid to know when times are good" to "It's the economy, stupid!" However, I think it's a case of "too little, too late", added to a sense that nothing is ever going to fundamentally change until the right people start to suffer.

I've never been anything more than an economic conservative until very recently. I now see that there is a rapidly growing disconnect between the fortunes of the average American and (for lack of a better phrase) the ruling classes. When things start going sour for average Americans, it's just too easy for the ruling classes to manipulate the system to insulate themselves from hardships. I'm very pessimistic because I don't see a practical way out of this mess if things keep going the same way. The more the system gets manipulated, the more us average Americans suffer.

Best wishes in getting your message across to more people. I hope you get as wide an audience as possible.

Take care, from your loyal reader.

P.S. My take on the housing market collapse is, people were starting to suffer economically some time ago, and interest rates were lowered enough to allow more people to buy homes, which started a roaring housing market, which hoodwinked Americans into believing for a long time to think that things were going great with the economy :-)

Comments

[Sackerson]

I think your correspondent is right. I feel there are growing social and economic divisions. The markets are not a proper measure of the happiness of mankind.

[Retired British Fund Manager]

Your lady from Middle America is spot on. Her sixth sense is well grounded. The system is rotten and it is almost as bad in Britain.
I am a retired U.K. fund manager and if I had gone to sleep when starting in finance in 1960 and woken up today I would not have believed what I now saw about me.
In those days it was illegal for a company to buy its own shares, strong company balance sheets with lots of cash were seen as a good thing, debts were incurred when necessary, not voluntarily and accounts were honest. Stability was prized. Banks did not set about to circumvent the rules. Even politiicians only lied about 15% of the time.
It is all gone and much of what is talked about on Financial Armageddon will surely come to pass. It may develop in Britain too. Indeed it has already started with the recent run on our Northern Rock mortgage company.The much despised continental countries may not suffer the same financial (as distinct from economic) troubles as the U.S./G.B. because they have been better regulated and are not so gorged on debt.
Americans may soon discover something with which older Brits are all too familair. A weak currency reaches a certain point when something snaps and it can spiral down, almost out of control. Then interest rates have to be raised, and dramatically, to save the currency. Domestic considerations go out of the window. America has been so almighty for so long, until recently, that it's leaders have little idea what might be coming although the public, as evidenced by the lady poster from Middle America, has a sixth sense. If the dollar collapses the effects will be horrendous. We Brits have learned the hard way starting with the Suez Crisis in 1956 yet we may have to learn it again because our recent politicians and bankers have been so negligent. For America it would be the financial equivalent of September 11th.

[Auggie]

If a housewife from Middle America, gets it, the end cannot be too far off for the rest of us.... You are hearing the canary in the coal mine.

[ChickensComeHometoRoost]

Middle America is absolutely right. Department of Labor statistics--why would anyone believe figures that are always restated down the road? The present financial markets are like a Circus Carnie--come one, come all, step right up and win a prize! Truth is, no one is getting out of here okay. If you can't pay your mortgage, are you going to pay your credit card? Subprime is a credit score--you mean a private company using its own "proprietary" methods to judge credit worthiness? Just like S&P and Moody's with CDO bonds? Does it make any sense that bond rating agencies and credit score bureaus are not government regulated, put your car's exhaust emissions' are? I am really sorry to say that the Powers have created a system where the Masses fund the casino with their slave-wages and then get stuck with the check at the end of the night. Financial Armageddon--there is no more appropriate name for the pending doom about to transpire.