Based on this title, you may suspect the story is about a member of the free shit army who depends on the largess of taxpayers and our government stewards who feel they must continue to hand out free shit to people who are not working. But there is another kind of dependence that many people may not recognize.
On September 14th, 2008, as Lehmann was frantically trying to avoid bankruptcy, Hurricane Ike had moved inland across the US, bringing heavy rain and 70 mph winds to our home in Ohio. How ironic that the hurricane ripped across the nation as Lehmann was imploding? The power went out for a week. That night we lit candles, got out the Coleman stove and heated up canned food for dinner. The kids loved it, scurrying all around the house setting up candles, feeling like we were living primitively.
For the first time in my life, I got just a taste of a natural disaster. Our water came from a well, so our house was dry. Life got more and more primitive. The kids loved it for a while. Then some friends from another town that had their power back on invited us over for dinner and showers. We were lucky that the nearby town was across the state line was up and running within two days. Soon life was back to normal, but I realized how dependent I was on our system. And when our system was broken, our lives were radically affected.
What if, instead of that hurricane, the Lehmann collapse and a lack of TARP would have “cut the liquidity power” to the world financial system? A fictional, “what if” retelling of that week provides me with a bit of perspective.
I awoke on Sunday September 14th 2008 to stormy skies, expecting just another routine fall rainstorm. But, it was a rough one. On Monday morning, after it blew over, strange things began to happen. The banks did not open, all having “Holiday” signs in their windows. The ATM machines were out of order also. Hmmm… that is odd. Is this a holiday? Guess it can wait until tomorrow. That day at work seemed normal enough. The news had no stories about the banks being closed. So as I stopped by Walmart that afternoon after work, I saw “cash only” signs on their door. Good thing $40 was hiding in my wallet. So I picked up some cheese, milk, a box of Fruit Loops, and some special things for dinner. When I went to checkout, a lady unloading a huge cart filled with pizzas, ding-dongs, and two cases of Pepsi, yelled at the apologetic cashier, “Waachoo mean ya’ll isn’t takin no SNAP cards?”
“Ma’am, this is just a computer problem, I’m sure things will be back to normal tomorrow.” said the cashier.
The lady continued, “No! this is bullshit! My card always works!
The manager hurried over, followed by store security, and spoke to her in a low voice, the guard with his hand on his pistol, blocking her exit from the aisle with the cart. She mumbled more profanities and walked out, leaving the half empty cart.
I checked out and left, thinking I’d never seen and armed guard at Wal-Mart. A group of a dozen or so angry people congregated just outside the door, ranting at one another, including Pepsi Lady.
As I drove back home, out of town, I noticed fewer cars on the street than normal and lots of the town’s many restaurants closed. NPR radio mentioned that the stock markets had closed for the day…something about circuit breakers. At home, my wife and I turned on CNN to see what was going on. No news except the weather, baseball playoffs, and the latest Justin Bieber concert stampede. Gosh he’s a cute kid, but all those 5 year old girls singing along just doesn’t seem right.
After dinner, my wife said, “Honey, let’s go back into town and do our grocery shopping for the week. I mentioned that I was nearly out of cash and they were not taking cards. She went to the bedroom, opened her top dresser drawer and pulled a crisp Benjamin from beneath her underwear.
“What else you got in there?” I asked.
“You stay out of my drawers!” she replied.
“What? after I cooked you a nice dinner?” I replied incredulously. She rolled her eyes and said “Let’s go to Wal-Mart, Romeo.”
Back at the store, there was an even bigger crowd at the front door. We drove back to the tire center and entered there, snagged a loose cart and made our way over to the food aisle. The store was unusually vacant of customers. But our big shock came in the food aisles. Half the shelves were empty. Other shelves were a mess. All the beer was gone. Several people were headed up front with carts full of only frozen foods.
What’s going on?” I asked my wife. “There weren’t any snow warnings were there?
“No... this is September,” she reminded me. “Weird! Something’s going on.”
We picked through the leftovers and found most of what we wanted and bee-lined back to the tire center to check out there. On the way home my wife said, “Let’s get some gas.” Our favorite discount station had signs everywhere that said “Cash only” and the price had jumped up to .79 per gallon for regular. We put our last twenty in the tank. The attendant, Rob, moseyed out.
“Hey Rob, what the hell is going on?” I asked.
“Beats me?” he mumbled in his Kentucky drawl. “We got a fax from upstairs first thing this morning to jack up the price and to only accept cash. The cards just aren’t working. … And what’s more,” he continued, “they cancelled the morning delivery. At this rate, I’ll be sold out by noon tomorrow.” I just shook my head, paid him, and we drove home.
We turned on the news channel again to try to learn more. “Computer glitches all across the country.” led on two channels. Officials were assuring the reporters that all would be fixed within a day or so. We just looked at one another, shrugged, then watched an episode of Jericho.
The next few days were more of the same, except gas stations and food stores were actually closed. Restaurants continued closing one by one. The Interstate north of town was strangely vacant, only local traffic drove between the exits, nothing was coming our way from Dayton to the east or Indianapolis to the west. No trucks, only a few private cars.
The big local news on Wednesday came from Walmart. Someone smashed a truck through the doors and a crowd invaded the store, stripping it bare in minutes. Police arrived and chased all they could catch, arresting a dozen or so, but hundreds more fled in all directions pushing carts loaded with goods. By evening, empty carts littered neighborhoods within a mile of the store. We read the news online because the afternoon paper did not arrive.
On Wednesday evening, the president scheduled a national speech. We sat down to watch.
In recent weeks monetary speculators have been waging an all out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy, and the American economy is by far the strongest economy in the world. Accordingly, I have directed the secretary of the treasury to take the action necessary to defend the dollar against the speculators.
Seems like I had heard these same words somewhere before. The president continued…
"The dedicated leaders of the department of the Treasury, at the FED and on Wall Street are working furiously on your behalf to counter the actions of rogue governments and speculations against our currency. We will weather this storm and have our banking system back to normal shortly. Until that time, I have temporarily asked the director of Homeland Security to deploy peace officers as needed to maintain order in our cities. The American people will not tolerate flash mobs, rioters, looters, or violence of any sort. Please stay in your homes, stay calm, and rest assured that the American people will emerge from this crisis stronger than ever. Thank you and goodnight."
My wife and I looked at each other. “How much more cash do you have stashed in that drawer?” I asked.
“That was it!” she said, looking me dead in the eye. “We have food for the week.”
“They’ve gotta have this fixed by then, I said, optimistically.
No school bus on Thursday morning, instead an email saying school was suspended temporarily and the kids’ assignments and tests would be available at the “Online Learning Environment.” I got a email from my University employer stating that our classes were suspended also, and to come in for a meeting on Monday morning.
On Friday just after midnight, I got online and was able to access records to our bank account. It showed a balance of $236.78, but had a banner across the top that said online and card services were suspended temporarily, and the bank remained closed by order of the Department of the Treasury. I also noticed that my regular bi-weekly paycheck had NOT been deposited at midnight, as was customary. Now I am getting worried. Maybe Monday's big meeting has something to do with that? Two car payments were due before the 24th and several other bills needed to be paid before the month was over, including our utility bill. And on the first of October, the whole budget cycle starts over. Suddenly an old Credence Clearwater Revival song popped into my head.
But our immediate need was greater. The kids were complaining that the fruit loops were gone and they didn’t like the stale instant oatmeal they found in the back of the pantry. My wife came in and notified me that she had been getting creative with meals, but that her creativity required “basic ingredients.” We were running out of food! Wal-Mart was closed. The Farmers market down the road was closed. The discount store was closed. Our good friends five miles north offered some tomatoes. I drove right up.
Saturday night we ate sliced tomatoes on saltine crackers for dinner. The kids were not complaining.
Sunday morning they finished off the oatmeal before we got up.
We skipped lunch.
Sunday night we ate sliced tomatoes for dinner. The kids were not complaining.
Somebody needs to do something! Just open the banks and let us get our money out! Give me my paycheck! I already earned it and it’s wrong to hold it back. What the hell is the problem? What happens now? Stores are closed, stations are out of gas, my car is down to a quarter-tank, nothing is moving on the highways, nobody has any money. Nobody will sell me what I need anyway. Word from friends in town is that you gotta lock your doors and keep protection handy—lots of burglaries—stealing food. We locked our door that night for the first time in 7 years.
We don’t have any food. Somebody needs to do something!
Well, I suppose that TARP was something. QE is still that something. But we’ve seen diminishing returns on QE and the economy contracted severely in the first quarter of 2014 due to weather.
Weather, my Aristotelian arse!
I have an uncle whose life was saved by emergency heart surgery. I had a friend who passed away at age 40 from colon cancer after chemo failed to stop its advance. Tarp was the surgery. QE is the Chemo. My friend lost vitality first, lost his hair, and finally started saying goodbye to everyone. He left behind a wife and four boys, one with Down’s syndrome.
I am concerned for the future of the patient, and justifiably so. I am angry at those who propagate the lie of recovery, frustrated at those who believe them. I am exasperated at those who continue claiming that markets are trading on fundamentals, those who are expert enough to know better. And I am livid about leadership that continues to do nothing to begin the process of economic repair. Perhaps that leadership has other plans?
I hope the system does not collapse, that whoever is in charge, exercising their divine wisdom, will manage a reasonably smooth transition to a new money system without a banking collapse.
But, in spite of their wisdom, they did not do very well at avoiding 2008, they are rattling their sabers even now, and prudent nations are hoarding gold while they decouple their economies from the dollar. Where will that leave the United States and its satellites, all run by corrupt idiots?
And today, my wife and I are doing something for ourselves, doing our best to NOT be that helpless dependent, with no options, if our leaders fail or betray us.