Great Depression II and/or Civil War II?

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.

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]
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.

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.


Anonymous said...

I think his predictions would be popular with many conservatives who constantly argue that the "liberals" and the Hispanics are destroying America. But I agree with your last point, the guy sounds like he deliberately trying to create fear and unrest with his predictions. I'd bet that his predictions are based more on hope than anything else.

Kevin Clark

Elisheva Hannah Levin said...

Hmmm. It appears Panarin knows very little about the Lone Star State. If we were to have a new Republic of Texas, even with other southern/southwestern states joining in, it would be very unlikely to be under the influence of anybody except Texans.

C. August said...

I thought the same thing, Elisheva. Texas is truly a "whole 'nuther world." I think they'd take issue with being lumped in with other states.

Lynne said...

Where shall I move, even if I could sell my house by then?

C. August said...

Good question, LB. I suppose it depends on which new imperialist superpower--like Canada or Mexico--you'd like to have a totalitarian influence over your life.

Gus Van Horn is moving from The Texas Republic to Atlantic America, which sounds like a good move. That's assuming that the Northeast will be the most like the freer America of old, but that's anything but clear. I suppose if the Texas Republic can keep from becoming a theocracy, its independent streak might make it freer than the collectivists up here in Atlantic America.

But it's nice to see that there will be so many options. It will be like living in Europe! Maybe we really can adopt something like the Amero currency!

Burgess Laughlin said...

Here is an irony: The Russian's predictions apply more to Russia than to the USA.

It is Russia that may disintegrate, with large sections in the far west (under European influence), south (under Muslim influence), and southeast (under Chinese and/or Muslim influence), breaking away. Further, with a large number of non-Slav immigrants working in various parts of Russia, civil war and/or pograms could easily erupt.

Perhaps the Russian predictor was projecting?

C. August said...

That's an interesting thought... that Russia is closer to breaking apart.

I'd say that the biggest impediment to that is the dictatorial designs Putin seems to have. Russia seems closer to devolving into a "modern" dictatorship first. Perhaps then, after it fails even faster than the Soviets did--missing the key ideological component, and instead just being a nationalistic police state--it will limp back towards freedom.

Of course, it's doomed to keep failing in new and old ways if there is no philosophical revolution first. And the way things look, if the US is struggling mightily on the precipice of reason vs. unreason, the Russian prospects are hopeless.

Michael Labeit said...

Too much Smirnoff....