Your Home Town

SUBHEAD: A poverty is descending on us. In places likeWhimberley, Texas, they know it better than those in other places. Image above: Bruce Springsteen and the E Street Band in front of the abandoned Coffee Cup Cafe in Pauls Valley, Oklahoma on September 17th, 1975. From (http://www.snapgalleries.com/news/bruce-springsteen). By Ilargi on 28 June 2020 on the automatic Earth - (http://theautomaticearth.blogspot.com/2010/06/june-28-2010-quiet-crisis-whispers-of.html) President Obama said during the G-20 meeting in Toronto, where he was told to take a hike by European leaders, that both he and British prime minister David Cameron:

"... are aiming at the same direction, which is long-term sustainable growth that puts people to work..."

Somewhat curious, since his Vice President, Joe Biden, said a few days ago that

"...there's no possibility to restore 8 million jobs lost in the Great Recession."

Looks a lot as if the nonsense now starts to contradict itself. Perhaps we shouldn't expect anything else. Biden then added that there is:

"...no way to regenerate $3 trillion that was lost. Not misplaced, lost."

Don’t know what the Pennsylvania Avenue spin team thinks of Biden's remarks, but they do sound just about right to me, and a lot less hollow than Obama's empty fluff. Biden made me think of Springsteen's My Hometown (see video below), which has this verse:

Now main street's whitewashed windows and vacant stores, Seems like there ain't nobody wants to come down here no more. They're closing down the textile mill across the railroad tracks. Foreman says these jobs are going boys and they ain’t coming back. To your hometown, your hometown, your hometown.

Video above: Bruce Springsteen sings "My Hometown" live in NYC. From (http://www.youtube.com/watch?v=aLSFcF8SOiw). That sounds to me like a remarkably accurate portrait of much of America in a few years time. And Britain. And the rest of Europe. The talk in the press has shifted towards debt, debt and more debt. And austerity. Whether Obama and the rest of the Keynes religion like it or not. Ambrose Evans-Pritchard writes about an RBS note to its clients that warns of money printing by Bernanke. He says:

"America is one twist shy of a debt-deflation trap."

Ambrose is right there. But he's dead wrong in his subsequent remarks:

"There is no doubt that the Fed has the tools to stop this".

Oh, believe me, Ambrose, there's plenty doubt.

"Sufficient injections of money will ultimately always reverse a deflation," said Bernanke.

Bernanke may say what he wants, but that doesn't make him right. We are in the beginning phase of a debt deflation. And if you want to talk about ultimately, then I’ll give you this one: ultimately debt cannot be repaid with more debt. Haven't the past two years of failing policies taught these people anything? The Fed balance sheet stands at record highs, and bloating it even more will solve the problems? What is it with these folks? It's not as if Ambrose doesn't have the data:

"The ECRI leading indicator produced by the Economic Cycle Research Institute plummeted yet again last week to -6.9, pointing to contraction in the US by the end of the year. It is dropping faster that at any time in the post-War era." The latest data from the CPB Netherlands Bureau shows that world trade slid 1.7% in May, with the biggest fall in Asia. The Baltic Dry Index measuring freight rates on bulk goods has dropped 40% in a month."

No, the debt deflation must and will run its course, and Bernanke is devastatingly powerless to do anything about it. Not that he will ever admit it, even if he knew. But it's like having your local weatherman believe he controls the climate. $2,5 trillion hasn't done the trick, and neither will $5 trillion. Money velocity is way down and so is M3 broad money supply. How would Bernanke turn that around? The money simply isn't going anywhere. Except into a deep dark void. It's disappearing faster than Bernanke can print. Once the deflation has run its ugly course, and it will be horrendous, printing presses may cause inflation, and given the level of ass-clowniness among economists it's highly likely that they’ll pick such a course. They've never seen a crisis they couldn't make worse. But I’ll bet you ten to one that by then Bernanke won't be in office anymore.

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Recession in Whimberly Texas Video above: Automatic Earth Tribute by Captain Sheeple. From (http://www.youtube.com/watch?v=v-geWu-E9ys). By Richard Parker on 28 June 2010 in The Automatic Earth - I’m going to post an article I happenstanced upon today sort of like an extra intro. I don't often do that, but this piece by Texan journalist Richard Parker struck a special chord. And since it brought Joe Bageant to mind, and Joe just posted a new piece, I’ll close today’s TAE with that. The grass in the pasture stands tall. Throughout the spring, bluebonnets, Indian paint brushes and black-eyed Susans waved from the roadside. The Blanco River runs clear and full now, and the tourists return to the town square. A wet winter and cold spring have broken the grip of a two-year drought in Texas. But this plenty camouflages a drought of another sort: the economic one. Texas was slow to be swept up by the Great Recession. But now its pain has come home to big cities and small towns, as the lagging effects of the recession batter the ranchers, storekeepers and families who all withstood — until now. While Washington's fury is directed toward the Gulf oil gusher, it has largely lost sight of the recession. Yet Congress continues to weigh financial reform, and it would do well to remember the human cost of the Great Recession, triggered by the titans of Wall Street but borne heavily by everyday people. Since the crisis began and through the first quarter of this year, more than $2 trillion in mutual funds have been wiped out, 4.5 million homes have gone into foreclosure and 6.8 million jobs have been lost. With its art, eclectic character and natural beauty ours is one of the best little towns in the nation to visit; it says so right in the pages of The New York Times and Travel Holiday Magazine. But for those of us who live here, a quiet crisis whispers of impending poverty. A merchant confides he can't take another year like the last two. A Mexican stonemason tells me that a single project tided his family through winter. A Realtor relays that all over town, people who never took a mortgage they couldn't afford are looking to give up, sell out and move on. The alternative is tallied and cataloged at the stately 102-year old, brick-and-limestone county courthouse over in San Marcos. Jack Hays, for whom this county was named, was a living legend for his exploits as a Texas Ranger, namely for fighting the Comanche. Today, people are losing their homes not to raiding parties but to banks. There were 157 up for auction in April alone. For 15 withering months there have been 100 or more, according to the San Marcos Daily Record. It cites George Roddy, whose company dutifully counts all of them: "This foreclosure storm is far from over." The list carries the names of familiar ranches, springs and creeks. Yet the tale of Hays County is, sadly, more emblematic than unique in the vast landscape that stretches westward beyond the Hudson and the Potomac. Up in Austin, $6.5 billion in real estate value has been wiped out as if by a tornado. The resultant cuts in money for teachers, cops and services in the city are likely just around the corner. In Austin and elsewhere, the conservative cultural boosterism of Texas initially downplayed the recession. Heir to George W. Bush's original political office and many of his finest traditions, Republican Gov. Rick Perry quipped of the recession in 2009, "We're in one?" It was his so-far-overlooked Katrina moment as time proved that bravado as prematurely false as that of his predecessor. "Texas has been hit much harder by the 2008-09 recession than previous ones," according to the Federal Reserve Bank of Dallas. Starting with a 6.1 percent unemployment rate at the beginning of the crisis, the job market fell throughout last year to end 2009 at an 8.2 percent unemployment rate. This year, manufacturing orders picked up, but the job creation rate stood stubbornly at zero in the first quarter. Today in Texas, one in five people struggle to feed themselves and one in five children live in poverty, according to the Center for Public Policy Priorities in Austin, founded by Benedictine nuns. Perhaps Perry's economic prowess will trail him out of the state like a coyote when he seeks the presidency. However, this is not a Texas story but an American one, told in fiscal crises that stretch from California to Illinois, from Alabama to New York. It is in Washington where the Great Recession will be justly dealt with — or not. Realistically, after all, Congress and the regulators have assiduously polished their reputations as hand-maidens of the banks at least since the repeal of Glass-Steagall in 1999. It doesn't take an expert to understand that much of the legislation in Congress is mere cover for the politicians and the big banks. It isn't designed to redress the latest crisis or stop the next one. It puts matters in the hands of regulators who consistently failed, to, well, regulate. Regardless of party, the politicians will let the big banks go on gambling with other people's money. The only real solution is to reinstate Glass-Steagall and break up the big banks. Only one senator, Democrat Ted Kaufman of Delaware, railed for that and against something dressed up in the Orwellian costume of "reform." Back here in Texas, when European settlers first came to the Hill Country they pushed ever deeper, establishing ranches, farms and homesteads because those early wet years made the land lush, green and inviting. When the Comanche came they scared some settlers. But when the droughts came, revealing a harsh, arid landscape clinging to hard-scrabble rock, it forced the hands of far more. I have taken what I have left and squirreled it away in a small Hill Country bank. But I, too, have to face the inevitable: I ask my 16-year old, Olivia, what she thinks about selling our little place high in the oaks and cedars over the Blanco. She looks at her sister, Isabel, and reflects, then replies: "We've made a lot of good memories here." I nod. So we have. So I will wait until, or unless, this drought forces my hand, too. .