The last couple of years can be described succinctly by the tired expression, "Watching a train wreck in slow motion." Many people, including those bloggers listed on the side panel, saw the inevitability of the current crisis long before it began to hit mainstream news. To some extent, as daunting as it may seem, the real crisis hasn't even found its way to mainstream media yet. Perhaps that is one reason for the lack of outrage displayed by the American people over what has been going on. The first signs of outrage I witnessed personally occurred yesterday outside the AIG office in downtown Los Angeles. There was a significant (maybe 100 or so) showing of demonstrators. The numbers themselves were not staggering, but what caught my attention was the support shown to the demonstrators by those passing by. Every single car began honking their horns in support.
Have the American people had enough?
Prior to the crisis, way back during the boom days of say 2005, when you asked an economist if they were worried about the housing market, they would point out what a small portion of GDP housing constituted. When the first two Bear Stearns hedge funds blew up due to losses on subprime CDOs, they would tell you not to worry because subprime mortgages constituted a small fraction of the mortgage business, which was already a small portion of GDP. Then when GDP started showing signs of strain, economists would show graphs of GDP if you excluded housing and point out that things were still fine.
However, one of many things the economists ignored was the social impact of kicking millions of lower income people out of their homes. Apparently, that was still not enough to awaken the sleeping giant. Now that middle and upper income families are beginning to lose their homes, is that enough?
If that were the only problem, i.e. housing, that would not be enough to rile the anger of the American people. But that is not the only problem. We have a demographic issue. Millions of baby boomers are on the verge of retiring just when their retirement saving in the form of 401(k)s and pension funds have lost large percentages of value. Many with plans of retiring shortly are being forced to work longer as a result.
Is that enough to awaken the sleeping giant?
Probably not, which is sad if you think about it.
If the only problems were the housing market and retiring seniors, that will unfortunately still not rile the anger of the American people. We are beginning to see the problems go deeper. Small businesses are suffering severely across the country. The spiraling contraction forces businesses large and small to reduce labor, which causes increasing losses on business loans, personal loans, credit cards, and mortgages, which causes banks to cut back on lending. Rinse wash and repeat.
It is fair to say that every American has now either directly experienced financial pain in the form of loss of jobs, loss of homes, loss of retirement savings or knows someone close to them who have.
Is that enough to awaken the sleeping giant?
Suffering sucks, but as sad as it seems to me, suffering does not seem to be enough to rile the anger of the American people. Perhaps we really have become like those thin-boned grossly obese excuses for humans depicted in the movie Wall-E. Is that true? I don't think this administration would like to find out.
I think the American people are on the verge of "having enough". It is one thing to suffer. When everyone suffers together, it is difficult to attribute blame and to focus anger. However, when everyone suffers except for those on Wall Street, at the Treasury, at the Fed, and in Congress who created this mess. Now we have somewhere to focus our anger.
Like the magnifying glass in the sun. As long is it jostles around randomly, it is unlikely to do much harm. However, once someone thinks to pick it up and focus that beam of sunlight, it can create an inferno.
The American people have found the magnifying glass in the rubble and have picked it up. They haven't quite figured out the damage this thing in their hands can do, but my sense is that it will not be long before the beam of sunlight begins to focus. Continued bail outs of the very institutions (both private, e.g. Wall Street, insurance companies, etc, and public, FDIC, SEC, Fed, Treasury, etc) that got us where we are, will increasingly draw the ire of the American people.
Once you have awoken the sleeping giant, it will be too late.
Granted, my perspective is that of an American. I love my country more than I can express here. I believe we will come out of this stronger than before, but we must stop the damage first. Those in many other countries around the world have already awoken. Riots and protests are picking up steam across the globe. Not to belittle their efforts, I applaud them, but just wait until the sleeping giant awakens and then you will see what the power of the American people can achieve.