What Could Happen: The Collapse of Big Cities, Big Governments and Subsidies

First of all, I really believe that we have another FDR on our hands.  Obama is a superb orator.  With those teleprompters at hand, he is an absolute master.  He has a deep, resonant voice, is extremely intelligent, and can read those speeches with total ease and composure.  His speech Tuesday night was masterful in its delivery and composition. Exactly like all the great orators in the past, who said nothing with great aplomb.  Obama told America and the world that he was going to cut the deficit in half, all the while proposing more and more spending and bureaucracy.  In his campaign speeches, he said that he was going to not allow earmarks, but the spending bill before him has 8600 earmarks in it.  His speech was an incredible exposition of pure BS.  The Republican rebuttal was so pitiful as to be embarrassing.  Bobby Jindal may be smart, but he isn’t an attractive man, is a terrible speaker, and even with coaching, he would never be able to compete with Obama’s oratory.  If he is going to be the ‘up and coming’ Republican man, I’m re-registering independent.  Sarah’s my gal.

I am not trying to be an alarmist, but I am worried about a lot of things.  I just have to imagine what the chain reaction of the current downhill slide of the world’s economies can bring.  Here’s what I imagine can happen in years to come:

Pensions will go bankrupt or be a shadow of what they were before, causing millions of retirees to be broke and maybe even hungry, with no recourse.  Stocks and gold will probably cross at about 3,000.  Robberies of banks and citizens will increase many fold, and make the streets of big cities dangerous.  The danger will cause movie theatres, night clubs and restaurants to do poor business because of citizen fears of venturing out at night.  Cars not in garages or in some way protected, will be subject to theft, break ins or stolen tires and parts, especially in big cities.

With the populace unable to pay millions of mortgages, arson and fires of foreclosed or about to be foreclosed homes will be rampant.  Many of the elderly may resort to arson, in an attempt to become solvent enough to rent an apartment till they die.  Fire and police departments, especially in big cities, will be run ragged.  Insurance companies may refuse to renew in large cities or in certain neighborhoods, as they have done in Florida and New Orleans already, due to the hurricane damage possibilities.  Remember; an insurance company will never insure unless there is little chance of having to pay.

Mexican illegals will continue to go back home, since they will be unable to find work here.  Broke Americans, rather than starving, will gladly do any sort of work in fields or other places, to eat and stay alive.  Unions will find their memberships declining drastically, and many will simply cease to exist.  Travel and tourism will decline to the extent that many attractions, cruise lines, and amusement parks may become bankrupt or cease to exist.  Citizens will arm themselves and not hesitate to shoot robbers breaking into their homes.

Many will grow their own vegetables in home gardens, to save valuable dollars.  Oil consumption will stay low, and maybe even go lower, due to the lack of travel.  Church attendance and offerings will decline, due to the poverty of memberships.  Service club membership, such as Kiwanis, Lions, and Rotary will decline, and many individual clubs will cease to exist.  Travel agents will close their doors by the thousands, as will restaurants, clothing stores, auto dealerships, and chain stores of many things, because of their requiring a percentage of the operator’s gross.  Why pay 7% or 10% of a store’s gross, just to be able to use the parent company’s name?

The big cities, with their large numbers of out of work minorities, will become extremely dangerous places to live, and there will be an exodus to safer, small towns, by those who are able, even if it means selling a big city home at a sacrifice price, just to be safe.  The infrastructure and utility providers in big cities may become insolvent or fraught with vandalism.  Out of work minorities won’t be able to pay utility bills.  Without electricity, gas, or water, even for a short time, life can be extremely difficult, and especially in a high-rise building or multi-storey apartment.

Government size will grow, and grow, and grow.  More and more departments will be formed and bureaucrats hired, in a feeble attempt to ‘fix’ the depression.  It’s doubtful that most will realize that it was government that got us here, and the majority will wrongly think that more government will fix things, rather than make them worse.

How did government get us here?  It didn’t start with George Bush, LBJ, Jimmy Carter, or even Ronnie Reagan.  Lovable Ronnie did his best, but while doing his job, he quadrupled the national debt.  The trouble began with Woodrow Wilson, when he got us into World War One.  It was about over, when Wilson and Colonel House decided to get America involved.  But it was FDR who really started the road to ruin.  I’ve been over this with you readers many times, but when a government begins to subsidize anything, be it farmers, old people, poor people, cold people, minority people, sick people, or any people, business, or other entity, the end is in sight.  The subsidies, no matter how innocent they may seem to be at the beginning, will grow like a cancer, till the entire economy and national life style is destroyed.  Governmental subsidies and handouts, are indeed like a cancer, eating and spreading out of control, and most especially at the federal level.  Once a citizen gets a check from D.C., they are 100% going to depend on their continuance.  Public housing residents are several generations old now, and each subsequent generation is more worthless than the previous.  Public housing occupants believe it is their actual right to have free housing.  All recipients of subsidies and handouts actually come not only to depend on them, but begin to believe they have an unconditional right to them.  The first public housing, Social Security, and various other handouts, are now over seventy years old, and have grown like weeds in springtime.

As each year has passed, more and more handouts and bureaucracies who hand them out have been formed and populated.  Each succeeding handout, such as food stamps, Medicare, and Medicaid, brings more and more on the dole, and more and more think it is their right to have it. Each handout and subsidy destroys a part of our free economy, substituting the marketplace, which is self-regulating, and gives highest quality and lowest prices, with wasteful, expensive, totalitarian bureaucracy.  Obviously, the national debt has grown like Topsy, because there are never enough taxes collected to pay for the handouts.  Taxes have grown thousands of percentages since FDR, and taxes are levied on every single thing a human uses, consumes, produces, or buys, thereby destroying freedom and the marketplace.

Candidates for public office, realizing that they can’t get elected unless they promise more handouts and largess from the public treasury, always do as they promised.  Now, as we are in another deep depression, the spending and handouts will grow more and more, as will the government.  Donald Trump, this morning on Fox News said, “It’s 1929 all over again.” Panic and paranoia will grow, and millions more will buy guns and ammunition to protect themselves.  They should, because I believe that in the big cities, riots will break out, with much physical damage and loss of life.  The jobless, hungry, and homeless, will multiply in big cities, and riots will be the logical result.

With currencies failing around the world, it will become obvious to more and more people, that saving in them is futile, and sure road to bankruptcy.  More and more shysters will be discovered who had been running Ponzi schemes, defrauding millions of people out of billions of dollars.  (Gold and silver require no trust of anyone or anything.) Former wealthy people and families will discover that their former wealth in dollars, has bought less and less, to a point where annuities, and whole life policies will become virtually worthless, as all tangible prices go sky high in currencies, as has always happened with hyper-inflation throughout history.

Government will also become paranoid and attempt to legislate away the Second Amendment under the ruse that it is to ‘protect people,’ or other nonsense.  In reality, millions of guns in the hands of the citizenry will protect them from crooks, robbers, and rapists, but also from government, if it all comes down to that, and it might.  Will American soldiers shoot their own citizens, if ordered to do so by government, under some sort of phony charge?  If a citizen writes or talks against government actions and policies, will they be prosecuted?  Will it be seditious to speak one’s opinion?

Here’s today’s quote from Atlas Shrugged, page 995, and everyone PLEASE buy, read, and pass this book on to your kids.  “The wads of worthless paper money were growing heavier in the pockets of the nation, but there was less and less for that money to buy.  In September, a bushel of wheat had cost eleven dollars; it had cost thirty dollars in November; it had cost one hundred in December; and it was now approaching two hundred, while the printing presses of the government treasury were running a race with starvation, and losing.

“When the workers of a factory beat up their foreman and wrecked the machinery in a fit of despair, no action could be taken against them.  Arrests were futile, the jails were full, the arresting officers winked at their prisoners and let them escape on their way to prison.  Men were going through the motions of the moment, with no thought of the moment to follow.  No action could be taken when mobs of starving people attacked warehouses on the outskirts of the cities.”  Whet your imagination?  I hope so.  If you’ve ever read a book that seemed to come true, this is it.

As a grotesque finale of FDR’s feeble attempts to get America out of the great depression, contrary to his campaign promises, he virtually forced Japan to bomb Pearl Harbor, and we were in a World War, which of course got us out of the depression.  Will a ‘false flag’ attack or some other specious happening, eventually get America into WW III?  We seem to be following FDR in most other ways.  Protect yourself, and buy and read Atlas Shrugged.

Don Stott

February 27, 2009

The Daily Reckoning