The Real Estate bubble is what the Movies call a 'MacGuffin.' In a movie, the MacGuffin is the object which drives the plot. It could be any old thing from a briefcase to a sled, but whatever it is, it's meaningless. It could just as easily be a jewel or a doll. The Real Estate bubble is the MacGuffin of this recession. The cause of the recession could have as easily been another tech bubble, or the auto industry, or rising hospital costs or hundreds of other problems. It is simply the device from which we can perceive the cause. As we enter year 3 of this recession, and see that every attempt to stop it thus far has failed, it’s probably time to admit - this is not about Real Estate, it's about jobs. In the last decade, less jobs were created in America than at any point since the 1930’s. The irony remains that hundreds of millions of jobs were created by Americans, only not in America.
In the 2000’s, the temptation to see globalization as an answer to our problems was all too great. Like most things, it seemed like a great idea at the time - including to me. American companies could buy parts cheaply from around the world and bring them to America for their workers to assemble. But if companies can buy parts at a cheaper rate from abroad, what’s to stop them from buying the entire product at a cheaper rate from abroad? The American assembly lines are gone, the workers no longer work, and all the part suppliers have lost their customers.
Corporations know no nationality, they know only bottom line profits. Good corporate profits are good for Wall Street. Together, they use their money to influence lawmakers through lobbies, and public opinion through propaganda masquerading as news.
Most people, politicians included, are too worried about losing their jobs to check sources. Out of desperation, both will believe anything they’re told. And when they’re told that regulating corporate practices is the same as ‘socialism’, who will stop them from believing it?
The multi-nationals have always said that they need to move their factories out of the USA in order to remain competitive worldwide. But when the United States is still the largest market in the world by a factor of two, we have to ask for whom these companies are remaining competitive?
The irony of our situation is that the same globalization which brought ten years of worldwide prosperity can murder prosperity more viciously than any economic force seen since the Great Depression.
Until three years ago, the fundamental model for globalization was this: multinational corporations built products for Americans to consume - made by East Asia. But if Americans were fired from the jobs which enabled them to consume, how do corporations expect for Americans to consume their products? For a time, the answer was to borrow on credit. But everyone, person and country alike, must eventually pay their debts.
Even when America’s national debt is nearly $15 trillion, it can be paid off - provided that Americans have incomes with which they can pay taxes. What cannot be paid off is people’s personal debts, and few Americans, even the ones who have jobs, have enough income to pay those.