How bad can the economy get?

I’ve been playing through scenarios in my head to build an image of just how bad the economy could get in America.  Imagine this…

40-50% unemployment.  1 in every 2 Americans eligible working Americans without a job.  The “great” depression had a national unemployment rate of just over 20%.  This could result in closed schools becoming shelters as foreclosures skyrocket to 60-70% while the government continues to protect the banks by pumping more money into them.  This would be done so those who still have money without working can keep it.  But they won’t spend it.  There won’t be job creation and there won’t be any “re-distribution of wealth” in the private sector.

Once it is agreed there won’t be any continued redistribution of money the anti-socialists will cheer – hooray!  Capitalism has won!  America is a class system.  The divide that we see between the haves and have-nots today will pale in comparison as those who have wealth begin to protect themselves in fortress style residences.  The personal and private security industries will flourish.  Guns could be everywhere.

Education begins to take place inside of shelters and communal living facilities while schools sit empty as shaky municipal governments struggle to pay the increasing tax burden created to support the banks.  The rallying cry of politicians will continue to be “save the banks” to protect what little money is left in the hands of a few.

People will walk, not drive, passed their old houses which will sit empty and unkempt.  Infrastructure crumbles.  Third world conditions will truly exist literally in our back yards.  Medical care would become impossible to find and deteriorating sanitation conditions results in a 8-14% casualty rate with the youngest children dying the fastest.  Whether you live or die would be determined by nepotism (those born into the wealthy families will survive).

This is the current path America is on because we’ve decided against natural capitalism.  Banks are a business and many have already failed. This is what everyone is forgetting.  The super banks have already failed.  If they had not, we would not be continuing their operations with tax payer dollars.  This is so a certain segment of our population has a “safe haven” for their money.

How can you tell which side of this fallout you would be on?  Easy.  If you could currently take out all of your money from the bank and begin living by cashing your paycheck somewhere (other than a bank) and pay your bills with cash – you’re screwed.  It’s only those with vast wealth (100’s of thousands) and capital assets that will keep their homes, fortify them, and live in the top class.

In other words, this could be the beginning of the end for the middle class.  In this scenario there would be wealthy and poor and the transition would not be smooth.  There would be a rampant increase in crime, black market activity and underworld riches.  Education would be a privilege.  The majority of children would learn only what their parents can teach them.

How do we avoid this?  That’s easy too.  Stop the bailouts.  Let industries and businesses naturally fail as they should.  There is a worse thing than letting banks fail in a down economy.  It’s not letting them.

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Grandma Johnson
15 years ago

I am very afraid that your prediction will come true. I am so sick of these bail outs – have been from the time I heard about the first one – and – they continue Now, there is a budget that is unbelievable. Let’s hope that congress does not pass it and put us more in the hole, so to speak. If I fail to pay my power bill – my power would be cut off – no government bail out. Why not let the big companies and big banks, etc. suffer the same consequences? Perhaps I am dense, but I just don’t get it.

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