October 13, 2012
All Great Catastrophes seem impossible until the day they become reality. If people took them seriously, they would act to avoid them.
Did Caesar think his friend Brutus would join others one lovely day in Rome to cut him up? Did Romans think the Empire could finally fall? Did the Greatest Empire the world had seen think a small nation of upstart peasants with no army could defeat the mighty Red Coats? Not until the day it happened at York Town and the world turned upside down.
Did Americans believe the people who were screaming that Pearl Harbor was wide open to attack by Japanese carriers after FDR forced the Navy to move from San Diego to Pearl? Not until that fateful Sunday morning. Did the U.S. believe a small peasant nation could defeat the Greatest Empire the world had ever seen and lead its Embassy staff to flee in panic in helicopters from the roof?
I believe there was only one person who believed a catastrophic attack on the World Trade Center was going to happen. That one guy believed it would happen because of the first attack on the Center years earlier. But he went there that day anyhow and got killed.
A sister-in-law of one of my daughters was a bond saleswoman in the small, nearby building that imploded. She knew it was possible because she was there in the first attack. As soon as she heard a crash, looked out and saw the smoke from one of the Towers high above her, she grabbed her purse, ran downstairs and got a cab home in Manhattan. She was saved by believing it could and was happening.
The Great Depression One was impossible to almost everyone. Ditto for Depression Two. Greenspan and Bernanke said any great financial crisis was impossible in the modern world, so they let it happen in spite of the yelling and screaming of me and a lot of other analysts.
This morning I spent about a half hour watching a brilliant discussion by Steve Leason of CNBC, Sens. Bowles and Simpson and CEO Blankfein of Goldman-Sachs about this Great Crisis.
The Goldman-Sachs CEO put the catastrophic danger of the soaring U.S. debts very nicely. He said that the U.S. is now dependent for half of its annual budget on borrowing, half from Americans and half from foreigners.
He said right now they are lending freely, but they are not stupid and know there is great risk in buying U.S. long Treasuries at 1.7% for 10 years when the government is sinking into debt faster and faster, with the power to inflate and send their bond values crashing.
He said it all looks great until one day, all of a sudden with no warning, the music stops and the bond market comes crashing down.
Did you believe the Soviet System would implode one day and the Wall would be torn down by the people in the streets?
Did you believe Lehman would implode over one weekend, thus imploding the whole top of the U.S. financial system in a few days after that?
Now the same Bozos tell us the Implosion of the U.S. is impossible. It is, until the day it happens.
Jack D. Douglas is a retired professor of sociology from the University of California at San Diego. He has published widely on all major aspects of human beings, most notably The Myth of the Welfare State.