It's the economy, stupid.

The Department of Labor employment figures that economists were waiting for came out this AM. The economy added only a puny 18,000 jobs in December. Government hiring accounted for 31,000, while private industry CUT 13,000! The odds have increased beyond the previous 50/50 that the US is now headed for a recession.

Given the level of consumer indebtedness, this will have repercussions resounding through the global financial system and the world economy, because these debts have been securitized and spread widely. In addition to mortgages, auto loans, home equity loans, and credit card debt are in jeopardy as unemployment increases, consumer confidence decreases, and the ability to service existing debts declines, leading to increasing defaults.

What to do? It doesn't make economic sense to raise taxes or cut spending, taking money out of the system in the face of a plunging economy, and the Fed can't cut interest rates too much without tanking the dollar and causing a run on the currency, given existing circumstances. Just about anything the government or Fed does in one direction will provoke a reaction from another direction that will cancel it. In technical jargon, this is known as sailing between Scylla and Charybdis (an allusion to Homer's Odyssey) aka being stuck between a rock and hard place.

Thanks to the idiotic policies of the Bush Administration and the Federal Reserve under Greenspan and Bernanke, we're freakin' doomed if this situation metastasizes as it portends to.

The incoming administration will have few choices because there are now no good options left. The vaunted "free market" is now poised to correct the excesses that have been building over the past seven years of ideology trumping reality.

There are only three choices:

1. Let the markets do their work of correcting the excesses and muddle through, trying to avoid popular demands to institute programs that will only exacerbate the deteriorating situation or prolong it.

2. Extend war in order to mask economic pain as "necessary sacrifice." It was WWII that pulled the US out of the Great Depression.

3. Overhaul the entire system. This is very difficult without an overwhelming popular mandate to overcome vested interests.

So far, I haven't heard any of the Democratic candidates or politicians acknowledge the developing catastrophe resulting from enormous debt, a falling dollar, an insolvent financial system, insane monetary and fiscal policies, an energy policy based on a declining resource, and most importantly, the cataclysmic consequences of climate change coupled with overconsumption of the Earth's resources through overpopulation, the ridiculous ideology of unlimited growth based on greed, and waste. This crisis is unlike any previous ones in that the global situation has changed totally, and new solutions will be required .

This portends  to result not only in a domestic debacle but also international instability, which will favor the spread of discontent and foster the growth of terrorism. It will also pit state against state in the rush for resources. The present "immigration" issue is really the start of global mass migrations resulting from environmental and economic dislocations.

To deal with depression the government can institute controls and rationing, inflate the currency, or create government programs to increase employment artificially. In extremis, the government can even nationalize vital industries and utilities, None of these alone or in combination has ever proved effective in overcoming a depression without the painful wringing out of systemic excess. The patient must now take the medicine and let the disease run its course. At the same time, the causes must be examined and steps taken to insure that it doesn't happen again.

Overpopulation is synonymous with overconsumption. Given the assumption of unlimited growth, when a population becomes sufficiently large with respect to available resources, then a stage of overpopulation = overconsumption ensues. The solutions are either to reduce population through family planning or reduce consumption through technological innovation, conservation, curtailment through price increases, rationing, etc., or else both.

When the situation becomes unsustainable, as is now happening, an overhaul of the global socio-economic system is required, or else a drastic reduction of the population through natural and unnatural means. Natural means include famine, pestilence, and other natural catastrophes resulting from climate change. Unnatural means are principally wars. Sometimes these factors overlap. For example, climate change will result in migrations. "Immigration" is a contemporary example of this occurring as we speak.  Historically, mass migrations have resulted in wars over turf and resources. Geopolitically, the conflict in Iraq is principally over control of the region's energy resources.

Unless you are sitting on a pile of gold or own an oil well (and have a mountain-top fortress to protect it), the developing situation looks dire indeed. Barring a miracle, that is.

So pick you miracle-worker and work hard for him or her as the next president. It will also be vital to have a supportive legislature and judiciary in the coming hard times, so don't neglect other national, state and local offices either.

It's time to work for the best and also prepare for the worst.

The challenge that America faces, and the Democratic Party also, is being caught between the rock of a declining economy and falling dollar, and the hard place of the effects of climate change.

The US is about to experience an economic pullback of historic proportions that is going to result in a populist revolt against the conditions that the public perceives as causing it. This is going to involve immigration, trade, offshoring, environmental protections and a number of other things that have little to do with the actual causes.

Democrats are going to have to resist pressures toward isolationism, protectionism, reducing the price of energy gas, and weakening environmental protections. There will also be a strong counter-push from financial interests for a tax-payer bailout, while leaving the barn doors open to more shenanigans.

Basically, the incoming US administration will have three choices:

  1. Take the medicine the markets prescribe to correct the accumulated excesses, which will involve a horrendous amount of pain pretty much across the board and around the world. This would be a very unpopular choice and amount to being perceived as doing nothing. It is not viable politically.

  2. Go to war and mask the pain as necessary sacrifice. This will be the choice of a Republican administration.

  3. Overhaul the system. This is very difficult in the face of vested interests,  but it is required. A key element in achieving is getting the money out of politics through campaign finance reform and outlawing the legalized bribery called "lobbying."

So far all the candidates of both parties are talking about fixing symptoms not dealing with real causes and, therefore, they are all proposing merely tinkering with the system instead of overhauling it.

A complete overhaul has become necessary for several reasons:

  1. Overpopulation = overconsumption of scarce resources. The resulting unsustainable pressure on Earth's resources is due to the prevailing ideology of unlimited growth coupled with globalization. See What's your consumption factor?

  2. Climate change resulting from global warming due to human causes.

  3. Neoliberal economics, which requires neocolonialism.

  4. Collapse of the existing financial system and global monetary architecture based on fiat currency (US dollar as reserve currency).

Overhauling a system is a huge undertaking. With a Republican administration, extended war is just about guaranteed instead. If it's a Democratic Administration, what's needed is someone who can successfully confront powerful vested interests that will do all they can to preserve their wealth and influence at the expense of the little people by socializing as much of the coming debacle as they can.