new economy

Japan is the leading-edge of the crumbling model of advanced neoliberal capitalism: that consumerist excess creates wealth, prosperity and happiness. What consumerist excess actually creates is alienation, social atomization, narcissism, and a profound contradiction at the heart of the consumerist-dependent model of "growth": the narcissism that powers consumerist lust and identity is at odds with the demands of the workplace that generates the income needed to consume... The younger generation of workers raised in a consumerist "paradise" are facing an economic stagnation that reduces opportunities to earn the high income needed to fulfill the consumerist demands for status symbols. Given the hopelessness of earning enough to afford the consumerist lifestyle, they have abandoned traditional status symbols such as luxury autos and taken up fashion and media as expressions of consumerism. But the narcissism bred by consumerism has nurtured a kind of emotional isolation and immaturity, what might be called permanent adolescence, which leaves many young people without the tools needed to handle criticism, collaboration and the pressures of the workplace. Narcissism is the result of the consumerist society's relentless focus on the essential project of consumerism, which is "the only self that is real is the self that is purchased and projected.".. The ultimate contradiction in this debt-consumption version of capitalism is this: how can an economy have "endless expansion and growth" when pay and opportunities for secure, high-paying jobs are both relentlessly declining? It cannot. Financialization, consumerist narcissism and the end of growth are inextricably linked.

What few seem willing to acknowledge is the solipsistic, narcissistic nature of this reliance on public display of consumerist fantasy for self-identity. All consumerist fashion is based on superficiality and self-indulgence, of course; but if we look at the energy, money and attention "invested" in fashion lifestyles in Japan, we might conclude it is strong evidence that there is plenty of "money and time to burn" in Japan. While that is certainly true, this reliance on consumerist excess for self-identity and pastime is also evidence of a deeply troubled economy and society. Young people have money and time to burn on outlandish costumes because few earn enough to have their own families or flats. They work part-time for low wages and live at home or in tiny one-room apartments. Few own cars because they 1) don't earn enough to support a car and 2) they're uninterested in acquiring status symbols or prestige signifiers. This is not just a generational shift: it reflects a realistic understanding that opportunities for secure, high-paying employment have diminished over the past 20 years. There are plenty of low-level jobs, but few with the guarantees that their parents took for granted.

We can summarize the breeding ground of new-type depression: very demanding work that is beyond the capacity of people with poor social and communication skills and those who fear being left behind or failing. Fearing failure, they wilt under criticism that seems unfair and irresponsible given that they're doing their best. Facing an apparently no-win situation at work, they quit or take an extended leave of absence. This doesn't solve the depression or its causes, unfortunately. What seems to help is counseling that raises the emotional maturity of the person with NTD so they can better handle criticism, and counseling the senior supervisors to become better communicators with younger workers. Placing workers with low communication skills in jobs where they can work independently and productively also helps. The demands on enterprises and employees alike are rising as the "New Economy" of pervasive insecurity and constant adaptation become the norm. The take-away from Japan's new-style depression is that we need to understand not all workers are cut out for the high-social-skill "New Economy," though in the right positions they are admirably productive. That will take a new level of management skills in Corporate Japan, America and Europe as definancialization and deleveraging unravel the global economy.

Earlier this week, former U.S. president Bill Clinton gave the keynote address to the Democractic National Convention in an effort to lend some of his popularity to Barack Obama.  With the unemployment rate still stubbornly high at 8.1%, Obama has lost many of the enthused voters who put him into the Oval Office in 2008.  Clinton was tapped to deliver the speech not only because of his image of a wonkish pragmatist but because of his presiding over the booming economy of the late 1990s.  Like a prized mule, Clinton was dragged out to give Democrats someone to point to and say that his policies were the hallmark of smart governance.  Today, Clinton still takes credit for Greenspan’s manipulated boom.  His supporters on the left love nothing more than to point at his presidency as vindication of the backwards theory that higher taxes equal more growth.  Clinton wasn’t a policy wonk; he was a politician who dipped into the Social Security trust fund to give an appearance of balancing the budget while the national debt still climbed higher. Through all of his financial scandals, womanizing, aggressive foreign policy approaches, and possible cover ups, it is actually fitting that Clinton is still looked to by the political establishment as someone worthy of respect.  He is representative of F.A. Hayek’s timeless lesson: in government the worst rise to the top and state power corrupts.

Over the weekend it was announced that California’s large $9 billion budget deficit was no longer $9 billion but $16 billion.  Whoops.

Better stock up on the Depends now. 

Here is $107 billion of OTHER debt; guaranteed debt that does not appear to be included anywhere in the official Greek sovereign debt figures. Contingent liabilities that are not counted any longer perhaps as the accepted manner of doing business now in Europe. Most of these issuances are governed under British law with “Default” clauses and “Negative Covenant” clauses. Greece defaults on €105 billion Euros and adds new debt, the IMF/EU loans, of 130 billion Euros and we are told that Greece is better off today than yesterday. What drivel! With the addition of the new IMF/EU loans of $172 billion and the revelation of the guaranteed debt at $107 billion Greece now has $279 billion of new and hidden debts.  All of the meandering, all of the charades, all of the red nail polish applied will, in the end I forecast, not be able to hide the reality that the barking dog is a greasy Pig.

The $10 trillion global black market is now the world’s second largest and fastest growing economy.

The economy has become and will continue to be more volatile and less robust for the foreseeable future as wealth is concentrated in the wealthiest segment of the country. This concentration is a direct result of the Fed's boom and bust monetary policy that steers capital into the financial markets instead into more productive uses. We are running on fumes as the top tier gambles. Instead of wealth being distributed widely throughout the economy as capitalism has done historically, we are now becoming an economy of winners and losers.

For the first time since March, the stock market actually showed a little reaction to reality based information. As it turns out, even removing any hint of stimulus will cause the market to retreat. We already expected the cash for clunkers program was largely a gimmick with auto sales dropping like a stone in the last reading. Home sales are being artificially juiced by the $8,000 tax credit and the Federal Reserve keeping 30 year mortgages near historical lows. You can expect that if the Fed and the tax credit were removed we would see a similar reaction as the cash for clunkers program in the housing market. It is amazing that so much energy and focus is being put on bailouts, gimmicks, and transient market forces all the while ignoring one major component. Jobs.