Posted by Andrew |

Hey U.S., welcome to the Third World!
It's been a quick slide from economic superpower to economic basket case.
Rosa Brooks
September 18, 2008


Dear United States, Welcome to the Third World!

It's not every day that a superpower makes a bid to transform itself into a Third World nation, and we here at the World Bank and the International Monetary Fund want to be among the first to welcome you to the community of states in desperate need of international economic assistance. As you spiral into a catastrophic financial meltdown, we are delighted to respond to your Treasury Department's request that we undertake a joint stability assessment of your financial sector. In these turbulent times, we can provide services ranging from subsidized loans to expert advisors willing to perform an emergency overhaul of your entire government.

As you know, some outside intervention in your economy is overdue. Last week -- even before Wall Street's latest collapse -- 13 former finance ministers convened at the University of Virginia and agreed that you must fix your "broken financial system." Australia's Peter Costello noted that lately you've been "exporting instability" in world markets, and Yashwant Sinha, former finance minister of India, concluded, "The time has come. The U.S. should accept some monitoring by the IMF."

We hope you won't feel embarrassed as we assess the stability of your economy and suggest needed changes. Remember, many other countries have been in your shoes. We've bailed out the economies of Argentina, Brazil, Indonesia and South Korea. But whether our work is in Sudan, Bangladesh or now the United States, our experts are committed to intervening in national economies with care and sensitivity.

We thus want to acknowledge the progress you have made in your evolution from economic superpower to economic basket case. Normally, such a process might take 100 years or more. With your oscillation between free-market extremism and nationalization of private companies, however, you have successfully achieved, in a few short years, many of the key hallmarks of Third World economies.

Your policies of irresponsible government deregulation in critical sectors allowed you to rapidly develop an energy crisis, a housing crisis, a credit crisis and a financial market crisis, all at once, and accompanied (and partly caused) by impressive levels of corruption and speculation. Meanwhile, those of your political leaders charged with oversight were either napping or in bed with corporate lobbyists.

Take John McCain, your Republican presidential nominee, whose senior staff includes half a dozen prominent former lobbyists. As he recently put it, "I was chairman of the [Senate] Commerce Committee that oversights every part of the economy." No question about it: Your leaders' failure to notice the damage done by irresponsible deregulation was indeed an oversight of epic proportions.

Now you are facing the consequences. Income inequality has increased, as the rich have gotten windfalls while the middle class has seen incomes stagnate. Fewer and fewer of your citizens have access to affordable housing, healthcare or security in retirement. Even life expectancy has dropped. And when your economic woes went from chronic to acute, you responded -- like so many Third World states have -- with an extensive program of nationalizing private companies and assets. Your mortgage giants Fannie Mae and Freddie Mac are now state owned and controlled, and this week your reinsurance giant AIG was effectively nationalized, with the Federal Reserve Board seizing an 80% equity stake in the flailing company.

Some might deride this as socialism. But desperate times call for desperate measures.

Admittedly, your transition to Third World status is far from over, and it won't be painless. At first, for instance, you may find it hard to get used to the shantytowns that will replace the exurban sprawl of McMansions that helped fuel the real estate speculation bubble. But in time, such shantytowns will simply become part of the landscape. Similarly, as unemployment rates continue to rise, you will initially struggle to find a use for the expanding pool of angry, jobless young men. But you will gradually realize that you can recruit them to fight in a ceaseless round of armed conflicts, a solution that has been utilized by many other Third World states before you. Indeed, with your wars in Iraq and Afghanistan, you are off to an excellent start.

Perhaps this letter comes as a surprise to you, and you feel you're not fully ready to join the Third World. Don't let this feeling concern you. Though you may never have realized it, you've been preparing for this moment for years.

2 comments:

Bruce Kratky said...

A tad premature patting the United States on the forehead with a spade. But, there is some truth in the fear. Sadly, those hurt the most will be those who are all ready hurting. When we get to spending cuts it will be social services and medical insurance bail outs that will be pushed farther and father into the future. Many retirement expectations will not be realized.

Perhaps all of us will have to learn to live with less. Not all that bad an idea. I fear most for freedom of movement and speech. We shall see.

Sadly the author has nothing to say about what Mr. Obama has had to do with the current financial crisis. Perhaps that is because Mr. Obama has never been involved with anything where the rubber really meets the road except real estate scandals and sweet deals cut for him by corrupt Chicago politicians. It is hard to say for sure why the author seems so one sided.

I take the admonishment seriously though. I commit to doing as best I can with what the Lord gives me. I will not allow myself and my family to panic. I will help those in need when I encounter them. I will expect the best from my leaders and I will hold them to account with my actions and my vote.

I had not heard that with this sudden financial crisis the life expectancy rate has suddenly dropped. That seemed a "little over the top" from this impartial observer's perspective. That takes years and years to change. Anyway, who is counting. I hate disconnects like that tidbit of information. Why disconnect that badly? She must have been on a role. I can get that way with my word processing.

Markets are up some today as of this typing. Interesting. Perhaps the crisis was over sold. That would make me really mad. Really mad at the Bush administration and its financial people. But, the jury is still out. The last card has not yet been played. We will see if later this week a better bill gets to the House floor and is passed. That is likely to happen.

Bruce Kratky said...

Seems the markets are still on a downard spiral. Things are going global. Europe and Russia hurting in their markets and Japan will follow shortly. Worldwide slowdown is definitely happening. Seems the Bush administration did not under estimate the importance of the need for Congress to do something. So, I am not mad at them about "over selling" the situation.

Interesting article in the New York Times about the Democratic leadership in the Congress who were putting extreme pressure on the Fannie and Freddie organizations to give out bad loans. Also, how the head of the companies paid themselves bonuses based upon gross loans given rather than profitability. Government agencies JUST DON'T GET IT! Fannie and Freddie also screwed up the over all market by their behavior setting into motion some of the poor lending practices of the private firms. Dodd, Frank, and Chuck Schumer were taken to task. So, the question is then, Why put our faith in Mr. Obama and the Democrats to pull us out of the mess they orchestrated? Mr. McCain blew the whistle two years ago and Mr. Obama did nothing. Just another "mind screw" to me as the poles seem to indicate that Barnie Frank is the man to save us. Such a financial whiz he is. Oh, well. It is only the eighth inning. Still a few outs to go. I will hold fast.

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