After The Bailouts: A Cautionary Tale

2010 didn't dawn too auspiciously for the United States of America. The country was still reeling from the midsummer assassination of President Barack Obama by a crazed racist skinhead, and for all of his political experience, President Joseph Biden was not able to instill confidence in the American public and the world.

The recession was now formally into its third year, and showed no signs of lifting. The unemployment rate was stuck at 16% and the Dow Jones drowsed along in the 4,000s, dragged down by the closure of Sears and Target causing a manufacturing ripple effect which was felt everywhere except Bentonville, Arkansas where the WalMart chain galloped along, swiftly becoming a behemoth which in any other age would have spurred anti-trust action. However, the U.S. government didn't dare move against the Waltons as millions of precious manufacturing, transportation and service jobs relied upon them.

The list of defunct companies was like a litany of a former Fortune 500: Boeing, General Electric, Procter & Gamble, Bank of America, Hewlett-Packard, Johnson & Johnson, American Express, even North American Airlines, the conglomeration of Delta, United, American and Air Canada was gone. United States Motors, the nationalized conglomerate created from the structure of Ford Motor Company after Paul Volcker placed General Motors and Chrysler into bankruptcy was still losing market share and had just been outsold in the last quarter by Hyundai.

Canada was forced to dynamite the Ambassador Bridge linking Windsor, Ontario to Detroit after the Motor City's core was burned to the ground by rampaging rioting mobs of unemployed workers. The National Guard was unable to stop the rioting so it fell back to a perimeter marked by Grosse Point, Hamtramck and Dearborn, acknowledging that the city's center was lost, but trying to preserve the suburbs.

Governor Schwarzenegger had just placed a separation referendum on the California ballot which would see the Golden State along with parts of Southern Nevada secede from the union under an autonomy statute. So demoralized and shellshocked by the years of economic turmoil was the U.S. Congress that they seemed to barely raise any meaningful objections. Many Representatives and Senators admitted in private that California might just be better off alone.

But by far the worst problem was that the United States government was on the edge of default, unable to keep up with the interest payments on the trillions of dollars of debt accumulated during the Iraq War and the enormous bailouts of 2009.

Tax rates on income earners over $250,000 a year skyrocketed and so did their departure from American soil. So many wealthy Americans had moved to Costa Rica that English was now an official language, and citizenship was automatically granted to any U.S. investor who purchased a house there. Given the collapse of the middle class and the stratospheric unemployment, the government's revenues could not possibly hope to keep up with its expenditures and debts, thus what was once the world's economic engine stood at the edge of the chasm.

It had seemed at the time that the best way to halt the economic slide provoked by the subprime mortgage crisis was to toss money at the system, but it turned out that no one truly estimated who was going to have to pay for all those trillions of dollars: When the bill came due, there was no money left in the piggy bank.

Apparently the American public had believed that the government could just wave its magic wand and create all those trillions out of thin air, when in reality those bailouts were the most toxic mortgage security of them all: mortgaging the future of the citizens of the nation.

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Comments 20 comments

Writer Rider 7 years ago

Maybe in the 60s, Hal, maybe in the 60s.


Ann 7 years ago

Yup, a massive (unimaginably jumbo) subprime mortgage held by all the unemployed Americans who were left holding the note(s) after the "bailouts," which didn't bail anybody out other than the execs who banked the payoffs. Scary stuff. I don't like your assassination assumption; otherwise, thanks for a thought-provoking hub. --Ann

P.S. California (my state) could "separate," all right. The rest of the U.S. would benefit--at least Boxer and Feinstein and Waxman and the rest could no longer represent us in the U.S. government! :-)


robie2 profile image

robie2 7 years ago from Central New Jersey

I'm on my way out into the back yard to devour my young right now---arrrrrgh! This is cautionary indeed.


kyleburke profile image

kyleburke 7 years ago from Naples, Florida

This is the kind of post that is fun to look back on in a couple years. I hope you're wrong.


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

Writer Rider, if you're referring to the Obama assassination, just last week I was sitting at a restaurant in a major CANADIAN city when the subject of conversation at the next table was how long it was going to be until the Klan "took out the 'N-word'." Of course it's repugnant, but don't think for a second that the 21st century has brought emancipation to radical bigots.

Ann, California as a stand-alone economy could very likely outperform the rest of the nation, although the thought of the Governator leading a nation is enough to give me pause. :)

robie2, let's just hope that it never comes to pass, but right now it doesn't look too good.

kyleburke, I sure hope I'm wrong too, but unless the U.S. Gov't finds a whole money tree plantation somewhere... :)


artfuldodger profile image

artfuldodger 7 years ago from Earth

wow. i think maybe you read some of the same stuff i do. Empire of Debt by Bonner or The Sovereign Individual by Davidson and Rees-Mogg perhaps? I can totally see this being realistic. i hope not, but you never know. Mainly, I do believe the USA will eventually fragment, USSR style. Which may not be a bad thing. Russia's better off as a result.


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

Actually, it pains me to say this, but I haven't read a book (that I haven't written) for years. I just love the aspect of being able to project a current trend into the future to see where it ends up. I'd love nothing better but to write entire books in this manner, but given the fact that publishers are too busy folding to actually buy anything from writers lately, I think I'll just stick to Hubbing. :)


Misha profile image

Misha 7 years ago from DC Area

You forgot Russians taking Alaska back by force and raping Sarah Palin :)


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

I'm sure that the Russians do want to take back Russian America, but I think even they have better taste than to want to have anything to do with Sarah. :)


Misha profile image

Misha 7 years ago from DC Area

LOL As well as Americans, Russians have pretty diverse tastes, so you never know :)


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

With Alsou, Ksenia Belaya, Dana Borisova, Oksana Fedorova, Alina Kabaeva and Adriana Sklenarikova to gaze at, why would they even give a second thought to impaling Palin? :)


Misha profile image

Misha 7 years ago from DC Area

I am impressed by you knowledge of Russian beauties. Seriously :)


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

Too bad none of them can hold a candle to the talent of the legendary Lyubov Orlova!


pgrundy 7 years ago

Yikes! I hope you are wrong, but you may be erring on the side of underestimating the carnage. Seriously, I'm scared. Thanks! (Always start the day stone cold terrified--it's so invigorating!)


countrywomen profile image

countrywomen 7 years ago from Washington, USA

Hal- When you said this: "until the Klan "took out the 'N-word'." Did you mean ku klux klan? I thought they were extinct in 60's. But anyway I hope you are wrong about your predictions. That's too scary to imagine.


William F. Torpey profile image

William F. Torpey 7 years ago from South Valley Stream, N.Y.

Your scenario, Hal, would be right on the mark if the right wingers had stole another election, but, with luck, we'll now dig ourselves out of this hole (eventually) and bring sanity back to the U.S. By the way I like the feature HubPages has on you in the most recent newsletter. I am not a fan of motorcycles, but I enjoyed Pirsig's book (Zen and the Art of Motorcycle Maintenance.)


Writer Rider 7 years ago

Hal, the most heinous thing the Klan did this election was pass out anti-Obama fliers. Of course it still exists, but people resort to slander these days not violence.


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

pgrundy, I hope I'm wrong too, and also agree that it could be a lot worse than this. There are some fairly credible scenarios circulating out there that we could be mired in a post-Econolyptic feudalism within a decade. I'm glad I did my part in terrifying you today! :)

countrywomen, Yes, definitely the KKK. They are nowhere near dead and having lived in the Deep South for years, I can assure you that although the public lynchings may have abated, the organization continues to receive the loyalty of countless thousands of Americans.

William F. Torpey, as much as I'm a right winger myself, but more than willing to give President Obama all the support and goodwill I can (as a Canadian) I do have to wonder whether either side of the political spectrum has enough rabbits to pull out of their hats to resolve what has now become a fully systemic economic collapse.

Writer Rider, please remember that one racist-based assassination attempt against Obama has already been stopped. Although I wish him a long and healthy life, IMHO it is quite likely that there will be more attempts.


quicksand profile image

quicksand 7 years ago

Hal, for once I am hoping you would be wrong. May that skinhead be skinned before he loses his head and pulls that trigger!

Alaska going back to Russia? Well I guess America is fully satisfied with their purchase and will not forward Alaska back to Russia for a refund!!!


Hal Licino profile image

Hal Licino 7 years ago from Toronto Author

I, personally will go into mourning when Mr. Obama is assassinated. But that doesn't necessarily diminish the rather significant probability of the fact.

Russia only paid $7 million, so even with interest, it wouldn't pay for even a few days of a bailed-out GM's operations. :)

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