Sorry about the foul language, but my internet connection burped and lost the post I spent a half hour writing. Let me try and recreate it.
Long ago in a galaxy far away called Texas I worked out at a real gym – no chrome, classes, music, spandex, or women. Correct that. There were women, a few, and you would not want to mess with them.
This was a body building gym of the old school – dumbbells, barbells, plates, racks, ace bandages, and lots of sweat. I was still under forty then, and still remember the day I managed to squat 400 lbs. Man, did my legs wobble on the way back up, but I somehow managed 3 reps.
The real gym rats, though, squatted 400 pounds every week. They benched over 300 pounds without breathing hard. Their arms had comic book sized biceps and you really could scrub laundry on their washboard abs.
And they juiced. Took steroids I mean. We all knew the juice heads because they had outlandish muscles and intense acne and a frenzied look that told everyone to stand back. We also knew when they stopped doing juice. Their skin cleared up and they sort of deflated.
Why tell you this? Because I think our economy has been on steroids for the last twenty years. Pumped up on the drug of phony money, derivatives and credit default swaps and sub prime mortgages that looked like money the way steroid look like hormones, the economy grew big fast. And with it the wealth of those who sold and used the fake stuff.
Like someone abusing steroids, we thought we were actually growing that fast and that we would only get bigger. The hard work of lifting seemed suddenly easy. Injuries healed quickly (it seemed) and we felt energized. Our sense of power grew, too, and it appeared that no one was as strong we were. There was a swagger in our step and a menace in our voice. Woe to anyone who stood in our way.
But like the actual drug, you have to take it to stay big. If you take less you shrink, and if you stop altogether you collapse. Which we did. The economy collapsed, or very nearly did. When the money stopped, we stopped and the country was paralyzed for a while. We came close to cardiac arrest.
What saved us from death were steroids, more cheap money – the bailouts and stimulus. Yes, the same thing that hurt us was needed to save us. Just as a doctor slowly reduces steroids to avoid the dangers of withdrawal, so the government had to step in and do the same. Like an addict, we need someone else to wean us from overuse and help us back to normalcy.
All the fulminating from the right about deficits and debt ring hollow to me when I see how many phony trillions were pumped into the economy and then how much damage that did and how sick we are because of that financial steroid binge. Yes we will have the pay that piper too, but the price will be far smaller than what would have happened had we not saved the banks and pumped up the states and (gods willing) reformed health care. (Talk about a steroid fueled psychosis! But this post is about the economy so I’ll leave it be.)
That those who legalized the drug of phony money are now wagging a scolding finger at government is rankest hypocrisy. They threw open the economic pharmacy with wholesale bank and investment deregulation, essentially letting the industry cook its books into the steroidal brew that has now weakened us more than strengthened us.
I do have a note of consolation. As any juice head learns, phony muscles are just that. The big bicep numbers of the market from 2006 and 2007 were phony. It was a delusional bubble. We need to let go of the juice head dreams of Dows at 12000 and 14000, of fabulous wealth and endless luxury, and set our sights of real strength like, say… respect, honor, integrity, decency, community. The sort of thing our parents and grandparents told us mattered.