Open Letter To Mr & Mrs America

Dear Mr & Mrs America,

I would like to take this opportunity to write to you in order to explain precisely why you won't be able to afford that European vacation this year, and why the cost of living has risen as it has.

I understand you have lots of questions, and that your sources of potential enlightenment are prone to disinform you. And that you might feel like markets are punishing you, personally at the moment. Let there be no mistake: they ARE, and it is, in all frankness, your own fault .

To avoid doubt, and for the sake of clarity, I will use bullet points to assist your digestion of the facts as they are:

- the Gov't is YOU and YOU are the Gov't. Their debt is YOUR debt. As a result, your children will soon despise you, if they do not already do so.

- you have no national energy policy to speak of. This means that while everyone else in the world was moving towards great efficiency in energy use, YOU were buying SUVs, top-loading agitating washers, blindly and chaotically sprawling your suburbs, and building uninsulated 4500 sq ft homes with 30 ft gallery celings that could never be reasonably heated or air-conditioned with anything other than $30 or less oil.

- your energy levies are far to low relative to the quantities that need to be imported if you wish NOT to impoverish yourselves at the expense of your transport bill. This would not be quite as problematical if you in fact had more things to export than dubious mortgage paper, but in the absence of such levies, you cannot "eat your cake and have it too".

- your federal marginal tax rates are set too low relative to what you spend (and seemingly demand from gubmint), as well as in relation to all the rest of your peers in the OECD.

- your military spending is WAY too high relative anyone, anything and everything in the known universe. Do you really think it preferable to consume Cluster bombs and M1 Abrams Tanks in lieu of basic medical care, a prosthetic hip replacement in older age or raising kids that can spell algebra, as well as adequately perform it??

- this is of course why you feel like you are being taxed heavily, but that you've nothing to show for it - at least not things you can use such as: health-care, education, public infrastructure, public transport, consumer & environmental protection, social safety nets and so forth.

- you consume too much - more than you produce - and you do not save. Remember the parables about 7 fat years and 7 lean ones? Of the Ant and the grasshopper? Sometimes shit just happens and YOU ARE NOT PREPARED! Since it y understanding you are religiously faithful, think of it terms of the Old Testament: It was the Pharaoh who organized the stores of grain for the 7 lean years. The bible SAYS it's OK to let the government save for you by raising taxes, but don't encourage them to torch the grain stores!

- globalization IS challenging for workers in advanced economies. But progressive taxation and wise redistribution can help reduce the stress of adjustment in society, and fund the transitioning to higher-value added goods and services. It also encourages the majority of people to believe the system is a good one (for everyone - not just asset owners). Cutting taxes to give the wealthy even more during times of rgeat stress and adjustment is both unnecessary and unwise - at least until such time as the more basic economic problems facing the nation are confronted.

- the Asian mercantilists are one of the most prolific sources of "something for nothing" the world has ever seen. They should be nurtured and valued, irrespective of their shenanigans in interest rate and fx markets. But YOU risk killing the golden goose by engorging yourselves like gluttons at a smorgesbord. You should be treating it parsimoniously, using them to provide labour intensive goods at attractive prices. But if you (and I mean your companies too) abuse this privilege, you will as a by-product produce too many dollars to digest. Yes, the markets should adjust, and make such imports more expensive, the more we want, and so we are seeing it now. But YOUR leaders have been aware that the markets have NOT been working and rather than take action deal with the problem of excess demand and overly-zealous vendor financing (like raise taxes, or levy a VAT-like consumption tax) they chose to ignore it. And remember that despite what any charlatan may tell you: tax cuts have NEVER "paid for themselves".

- your political process is broken and morally bankrupt. Your leaders and policy so important to your country and the world can be "bought" - directly - for insultingly small sums of money. The folly of this would amusing were it not so incredibly sad and dangerous.

- your leaders - speaking quite frankly - suck. But YOU voted for them. Ergo..

I undertand that you may find some of what I've said contentious, uncomfortable, bordering upon the insulting. Confronting truths dissonant one's current perceptions is never easy. But, if you do not desire to see your nation, your old age, your savings, and your children's futures continue to disintegrate before your eyes, you really must get a little more stoic about things and DEAL WITH REALITY AS IT IS which contrary to what you've been told, involves difficult consumption decisions and personal sacrifices to rectify, that in a fair and just nation would and should be borne by all segments of society.

Yours truly.

"a Cassandra"


p.s. - You also simply must do something about your diet, and foreign policy. It's a small world and its getting smaller, so as people, maybe we, too, should consider downsizing rather than supersizing.