"My Mom lives in Savage, and her neighbor was robbed at gunpoint in her driveway on Thanksgiving!"
That piece of news led to the inevitable question: What in Monkey Balls is happening to our country?
I'd been chewing over that particular question since the break-in. Why had it happened? How had an "affluent" suburb like mine suddenly become an area with a dramatic increase in crime rate? Why had suburbanites around the country noticed that their crime rates in general had gone up, leaving them wondering if they'd moved to the right neighborhood after all?
I dug into it. I read all that I could. Strangely enough, by this weekend I'd reached a conclusion:
It's the economy folks.
The party of the late nineties and early 2000's is over. It's time to pay the check. Unfortunately, nobody seems to be willing to reach for the bill.
I'M NOT AN ECONOMIST, BUT AT LEAST I DON'T PLAY ONE ON TV
Bear in mind that I'm not an economist. I'm not politically active (mostly because the entire process reeks of re-arranging deck chairs on the Titanic), and I'm not a business person. I'm just a citizen with a brain, two eyes, and a gob. A really big gob.
My conclusions were based entirely on asking some basic questions ("Why do people steal? What drives a person to commit a crime? Why now? What is different today than even two years ago?") and digging around the InterWeb.
Is that the right way to address these questions? Of course not. I should speak with economists, and experts, and all manner of others who wouldn't give me the time of day. In their absence, however, I've read my resources and reached my conclusions.
THE PROBLEMS, SUCH AS THEY ARE
So, what's wrong with our country today that makes crimes more common?
There are five major problems:
- Underreported Unemployment
- Underreported Inflation
- Wage Stagnation
- Fuel Price Increase
- Dollar Devaluation
1. Underreported Unemployment:
Hey, if they stop asking for money after six months, that means they have to have a job now, right?
That's nonsense, of course. It means you have "discouraged workers" trying to find a job. Not reporting it doesn't mean they're not there; it just means you're not doing your job.
Believe it or not, you don't have Bush to blame for monkeying with the unemployment figures; That honor belongs to the Clintons. Sadly, no one in government feels the need to fix this problem yet.
Given that, it's logical to conclude that there are more people out of work than is commonly acknowledged.
2. Underreported Inflation:
Thanks to both Bush (in this case G.H.W. Bush) and the Clintons, the key method of tracking inflation figures (the Consumer Price Index) is totally hosed.
See, the theory behind the CP-I is this: The government tracks a "basket of goods" that the average consumer would buy, and reports the difference in their prices over a period of time. As the price goes up, the difference is reported as inflation.
Common sense, right?
Well, it was until Bush, Sr and Alan Greenspan essentially said "That costs how much? Well, change the items in the basket so we can lower the price!"
Ironically enough, Bush, Sr couldn't get the change approved. It took -- you guessed it -- the Clintons to make that happen.
The effect is obvious: You're literally not comparing apples to apples any longer. You're comparing apples to freaking Pop-Tarts.
Thanks to the folks over at Shadow Government Statistics, we can actually get a more realistic understanding of inflation. The news is depressing: Even before fuel prices spiked, inflation in real terms had gone up between 12% and 20% from 2000 to 2007.
Now, in the interest of fair reporting, I should point out that the 20% figure was encountered via a report on National Public Radio, and I can't for the life of me find a link to that story. Fortunately, the 12% figure can be found here.
Thing is, even that level of inflation isn't insignificant when you consider...
3. Wage Stagnation:
Wages haven't kept up with the economy, folks. (Unless, of course, you're a CEO making on average five hundred times the wages of the average worker.) Even with raises, the real income of the "average American family" (Do you know one? Honestly?) is down almost five percent.
But wait! There's more!
4. Fuel Price Increase:
This is the big one, and it's going to get a lot worse before (or, frankly, if) it gets better.
Our civilization's lifeblood is oil. As scary as it sounds, we're starting to reach that oft-mentioned regime of "Peak Oil", where demand outstrips supply. Though I don't agree with the doom-and-gloomers who think that society will disintegrate into a Beyond Thunderdome-like mess, I do think it's going to change our society forever.
The immediate impact is this: Everything is going to get a lot more expensive. A whole lot more.
Think about it; you're hungry for lunch. Well, that food has to be grown using oil-based equipment. Then it has to be shipped via train or truck to a central area, and finally trucked to your store, where you drive to buy the product.
Lots of oil there, just for a meal.
It's not just food. Medicine, technology, energy production, you name it, oil is in it.
Bottom line: Oil prices go up, the price of everything goes up. Sucks, but there it is.
But hey! You can always get a loan, right?
5. Dollar Devaluation:
Thanks to people who actually believed the Rich Dad, Poor Dad nonsense, the entire country is mired in a real estate mess. Low interest rates led to home refinancing because -- hey! -- who needs long-term equity when you can buy useless shit like a Harley? Even better, trade in that affordable home for a McMansion and live like the king that you are!
Unfortunately, when the interest rates went up, people couldn't pay for the Mansions. This lead to defaults, which lead to the mess we're in.
Here's where it gets really ugly: The Fed, under pressure from the economy, keeps interest rates down to try to keep the mortgage crisis under control. That allows people (and businesses...lots and lots of businesses) to borrow money more easily. But now we have some much money on the market that it's devalued our currency to the point that the Canadian Dollar is stronger.
What does this mean for us?
If this feels like a quadruple punch (high inflation, wage stagnation, fuel price increases, and currency devaluation) that's because it is.
OH, THE FEELING OF BEING SCREWED
So our economy looks to be entering a recession. Big whoop. We even had a mini-recession back in 2001. What makes this so different?
Simple: Our recovery from that recession was primarily paid for by people using their houses as freaking ATMs. They cashed out their equity to buy toys they didn't need, bought themselves big fancy houses, and generally lived it up.
Now the bill is due, and they don't have the cash to pay.
Think I'm kidding? Foreclosure rates are at historic highs. Bankruptcies are up 60% over last year. People are welching on their debts, and the entire country is suffering for it.
Guess what happens when people can't pay their bills, are losing their homes, and can't make ends meet?
That's right, folks. You get crime.
IS THERE A WAY OUT?
I don't know if we can dig our way out of this mess. Citigroup just had to be bailed out by Abu Dahbi, to the tune of $7.5 Billion. The cause of their woes? The mortgage mess, which helped fuel our economy from 2001 through 2006.
Put more simply, it looks to me like our economy has been living on borrowed time, and the sands in the hourglass are nearly gone.
How can we fix this? What steps can we take to make sure it doesn't happen again?
I can't speak for this country. If I were, say, the Unquestioned Leader of the United States of Flanders (Our motto: "It's an okely-dokely day-orino!"), I'd probably start by facing the core problem:
We need to re-vamp the Real Estate market.
The Real Estate industry has been run into the ground by money-hungry party animals with questionable backgrounds and even worse business practices. It's time to fix that.
- Make the requirements to enter the Real Estate industry tougher:
Strict? Maybe. But just upping the requirements to become a Real Estate Agent would elliminate the "Woo-hoo!" party-types from the field. (Lord knows, we saw waaaaay too many of them -- both professionally and socially -- between 2000 and 2005).
Make the Realtors more professional, and you'll have a better business all around.
I'm not talking about all realtors here, of course. I know a couple of good ones. But for those two that I know, I've met so many shady characters that I've found myself longing for a used car lot so I can get a taste of real integrity.
That's not merely wrong, it's shameful.
- Question the way land is valued:
"It's the land!" is usually the reply.
"My ass," is always my answer.
Yes, some land is more valuable due to its location. I get that. But not that much more valuable!
At what point did the American consumer become a bobble-headed toady? Seriously?
Even so, the Silicon Valley example makes a tiny bit of sense. It's an affluent area. People can afford that ridiculous price (even though they should exercise some common freaking sense and say "No!") No, what I'm curious about is the completely unrealistic upward pressure on home prices.
Allow me a personal annecdote: Back in 1997, right after the Red River Flood hit Grand Forks, ND, SpousalGoddess and I were looking to buy a home in the city. I'd graduated, she had a good state job, and together we made a whopping $55,000.00 / year. With our credit improving with each month, and our eyes on a nice home for our kids, we went shopping...
...only to find that the average home in Grand Forks, ND -- after a flood that wiped out the center of the city, mind you -- ran over $175,000.00.
Who in Grand Forks could afford homes like that? Sure, there was a hospital there, so there was some medical staffers. The University had jobs, but they paid crap. Yeah, there were the lawyers to support all three organizations, but beyond that, who in that third world economy could afford those homes?
Worse, not ten years earlier, these same homes were available for roughly $65,000.00. I know because my father dragged Raven and I around house hunting with him.
Now, explain to me in a way that doesn't sound like some Realtor saying "I can ask sixty percent more for this house because I'd like to go to Cancun for a few weeks!" why the value increased that much?
We couldn't buy there, of course. Instead, we moved to the "more expensive" Minneapolis area, and ended up buying a home in an expensive suburb for less money.
There's zero logic there. Instead, the entire industry strikes me as a scam hidden behind a red blazer and a too-wide smile. Sadly, it now seems like our economy has been forced to agree.
WRAPPING IT UP
Like I said, I'm not an economist. I'm just a guy with a brain, some opinions, and a pretty good instinct. The bottom line -- to me, anyway -- is that our country was taken to the cleaners by an unethical industry, and we're all suffering because of it.
Of course, we can't expect these things to change themselves. If you want the change, demand it. No matter how you might feel today, this is a free country. Speak your mind. Make a difference. Believe me, your kids will thank you for it.