Great Depression II?Peter Schiff echoes the thoughts of Henry Hazlitt and others in a theme I have explored before in this blog--that the incoming Obama administration, most economic pundits, the media, and most politicians have learned precisely the wrong lesson from the history of the Great Depression and are poised to repeat it.
In an article at the financial analysis website Seeking Alpha titled Not Your Grandfather's Great Depression, Schiff calmly and rationally details how we are currently following the same path that was followed in the run-up to the Depression, and with the same flawed logic and ideology backing it up. He then takes it one step further with this sobering thought, contrasting the past Depression with the one that looms ahead:
A major difference however, is that the structure of the U.S economy today is far weaker than it was in the fall of 1929. Years of reckless consumer borrowing and spending, and enormous trade and budget deficits have resulted in a hollowed out industrial base and an unmanageable mountain of debt owed to foreign creditors. Instead of the support of a strong currency backed by gold, the public now must deal with a modern Fed free to print as much money as politicians want. So rather than getting the benefits of falling consumer prices (as happened during the Depression), consumers today will contend with much higher consumer prices, even as the economy contracts.Be sure to read the whole article, send it to friends or your friendly neighborhood Congressman. It's short, clear and to-the-point, and should scare any regulation-lovers away from this disastrous course of action. If they're even remotely rational and honest, that is.
With Barack Obama now waiting in the wings to conjure a newer New Deal, far larger than even FDR could have imagined, and at a time when we cannot even afford the old one, this will not be your grandfather's Depression. It may be much worse. [bold added]
Civil War II?If a repeat of the Great Depression -- and in the tradition of movie sequels, the second is always worse than the first -- isn't bad enough, there's now a Russian academic/former KGB agent who is predicting the downfall and breakup of the U.S. in 2010. Citing super-secret information only he is privy to, he has apparently been predicting the June 2010 collapse of America since 1998. The Russian state-run media has jumped on the story recently, playing off the recent rise of virulent anti-Americanism there.
This professor, Igor Panarin, claims that
economic, financial and demographic trends will provoke a political and social crisis in the U.S. When the going gets tough, he says, wealthier states will withhold funds from the federal government and effectively secede from the union. Social unrest up to and including a civil war will follow. The U.S. will then split along ethnic lines, and foreign powers will move in.I'm not aware of any strong ethnic divides that follow any sort of clean geographic lines as in the map below. He says that the West will become "The Californian Republic" and become part of China "or under Chinese influence" (hedging his bets with the "influence" idea). The South will be grouped with Texas and fall under Mexico's alluring spell. Canada will scoop up all of the upper Midwest, and the Northeast will be all that's left of America, perhaps even lobbying to join the EU.
Of course, I can't neglect to mention that Russia will get Alaska back.
"It would be reasonable for Russia to lay claim to Alaska; it was part of the Russian Empire for a long time." A framed satellite image of the Bering Strait that separates Alaska from Russia like a thread hangs from his office wall. "It's not there for no reason," [Panarin] says with a sly grin.As justification for his theories, he says that people thought those who predicted the demise of the Soviet Union were crazy. By this logic, I suppose we shouldn't assume the apocalyptic "nuclear baby" predictions of religious wackos are invalid just because they seem crazy.
Looking at this seriously for a moment, could something like this actually happen? I suppose it's not impossible. Panarin says that "mass immigration, economic decline, and moral degradation will trigger a civil war next fall and the collapse of the dollar." We have had a civil war before, and there's nothing magical that would make another one impossible. The economy does appear to be on the verge of collapse. There certainly is severe moral degradation in the country, though I'm positive that Panarin misunderstands what direction it's heading in. My guess is that he'd be surprised to hear that the degradation is from an implicit rational self-interest (the American sense of life) to the altruist/collectivist ideal of the Soviets.
But the "mass immigration" and the splitting along ethnic lines idea just doesn't cut it. Does he mean "ethnic Canadians"? (hunh?) Have Chinese immigrants secretly been working to take over all territory west of the Rockies?
Unlike the history of the Soviet Union and the Russian Empire before it, the U.S. was not formed by conquering and absorbing ethnically isolated territories that stayed mostly "pure" while nurturing centuries of bitterness at being a highway of conquest for competing empires. We have nothing like the Balkan states to split off and go back to their pre-U.S. "native" forms.
I'm certainly not one to shy away from dire predictions, but this former-KGB officer sounds more like a Russian propagandist than a legitimate analyst.