You are probably familiar with the old fable about the scorpion and the frog. The one where the scorpion asks the frog for a ride across a river and the frog declines because it fears that the scorpion will kill it. Then the scorpion cons the frog by appealing to the logic that if it kills the frog, it would surely die too. Convinced, the frog agrees to help the scorpion but half way across the river, the scorpion stings the frog anyway. Paralyzed, in shock of disbelief, and just before sinking, the frog asks the scorpion "Why did you sting me"? The scorpion replies that it was just in its nature.

That's pretty much how I feel about the government's programs and promises to return the country to "economic growth". It's nothing but a con. And it is every bit in the nature of the government to prolong the con, since the country ceased being a functioning democracy long ago. Indeed, we aren't even a capitalist country anymore. As Michael Hudson, Mike Whitney, Simon Johnson, William Black, and many, many others have surmised, the USA is a Kleptocracy.

From Wikipedia:

Kleptocracy, alternatively cleptocracy or kleptarchy, from Greek klepto (theft) and kratos (rule), is a term applied to a government that extends the personal wealth and political power of government officials and the ruling class (collectively, kleptocrats), via the embezzlement of state funds at the expense of the wider population, sometimes without even the pretense of honest service. Political corruption is closely tied to the internal workings of a Kleptocracy.

I'd say that is a very accurate assessment of today's America. But even if, miraculously, we returned to the founders democratic principles overnight, I would submit that we could not achieve a "normal recovery", in any conventional understanding of the term.

To illustrate my point, I will borrow a chart from Karl Denninger and offer a few comments on economic growth.

I'm not positive, but I believe it was George Gamow that observed that exponential growth is one of the most misunderstood concepts in the world. Just as the stories of the water lily and the wheat and the chessboard illustrate, exponential growth is just not sustainable in the long run. Every schoolchild who has heard these stories is aware of this. Now, I'm not trying to be Malthusian here, rather I'm more a proponent of the adage "all good things must come to an end". And so it is with perpetual growth.

Looking at Denninger's chart, the close correlation of income and per capita credit up to 1984 is obvious. I believe that this represents a period of "stable" growth, even though I know that it could not be sustained indefinitely. I would suggest, however, that had we continued on that path, it would have been much easier to correct our behavior and expectations once we started to reach the limits of our growth path.

Instead, debt became an increasingly important factor in the economy. Except for a brief respite in the late 80s (coinciding with the S&L scandals), we have continued on this path, and at an exponential rate! This has created the illusion of sustained GDP "growth" throughout a 25 year period that also saw the destruction of the industrial labor unions and the offshoring of the American industrial base. Throughout the same period, the kleptocrats, using leveraged buyouts, mergers and hostile takeovers, have grown in size and power. In any event, we long ago passed the point of the limits to that growth path and we have borrowed all of the potential growth from future GDP for many, many years to come in the bargain. Consequently, any promises of "economic recovery" are disingenuous at best, and unachievable in fact.

What is needed is an admission of the truth of our current situation. A meaningful recovery means returning to an economic balance that we last saw 25 years ago! It's just not politically feasible to take that stance and therefore the folly of chasing a return to "economic growth" will persist and the legions of the suffering will only increase.

Mahatma Gandhi said that "poverty is the worst kind of violence". For me, the litmus test of a quality society is measured in how it provides for those who are most needy. At the state/county/municipality level is indeed "where the rubber meets the road", as the saying goes. A complex society cannot function if there are tens of millions living in poverty and with no good prospects for meaningful employment. For all the debate on Economic Indicators, green shoots and recovery, the truth of our viability lies on Main Street and not Wall Street.

The Center on Budget and Policy Priorities recently issued an updated report New Fiscal Year Brings No Relief From Unprecedented State Budget Problems. The data provides a clear look at the reality of declining revenues that the states are being forced to deal with.

At least 48 states have addressed or still face shortfalls in their budgets for fiscal year 2010 totaling $168 billion or 24% of state budgets.

An unusual number of these states are still struggling to balance their 2010 budgets two months after the start of the fiscal year. Three states [..] have not yet adopted budgets for 2010. In addition, new shortfalls have opened up in at least 15 of the states that have adopted budgets [..] . These additional gaps — some of which have already been addressed — totaled $28 billion.

At least 36 states have looked ahead and anticipate deficits for fiscal year 2011. These shortfalls total $74 billion — 15 percent of budgets — for the 30 states that have estimated the size of these gaps by comparing expected spending with estimated revenues.

[..] state budget gaps will continue to be significantly larger than in the last recession. All but a handful of states have had to face or are still dealing with shortfalls in fiscal year 2010 that total some $168 billion. If, as is widely expected, the economy does not begin to significantly recover until some time in calendar year 2010 and unemployment remains high through 2010, state shortfalls are likely to be even larger in fiscal year 2011 (which begins in July 2010 in most states). The deficits over the next two fiscal years — 2010 and 2011 — are likely to be more than $350 billion.

Several factors could make it particularly difficult for states to recover from the current fiscal situation. Housing markets might be slow to fully recover; their decline already has depressed consumption and sales tax revenue as people refrain from buying furniture, appliances, construction materials, and the like. This also would depress property tax revenues, increasing the likelihood that local governments will look to states to help address the squeeze on local and education budgets. And as the employment situation continues to deteriorate, income tax revenues will weaken further and there will be further downward pressure on sales tax revenues as consumers are reluctant or unable to spend. Unlike the federal government, the vast majority of states are governed under rules that prohibit them from running a deficit or borrowing to cover their operating expenses. As a result, states have three primary actions they can take during a fiscal crisis: draw down available reserves, cut spending, and raise taxes. States already have begun drawing down reserves; the remaining reserves are not sufficient to allow states to weather the remainder of the recession. The other alternatives — spending cuts and tax increases — can further slow a state’s economy during a downturn, which produces a cumulative negative impact on national recovery as well.

(Please access the full report for additional observations and projections on a state by state basis.)

This is the stark reality for 99% of the population in America and I wonder how many realize it? For the first time in our history it is highly likely, if not a foregone conclusion, that our offspring will not have a better life than we have right now. Ponder that idea and let it sink in.

Earlier this week, the excellent blog The Automatic Earth focused on one Trumbull County in northeast Ohio, in an effort to try to understand what is really going on in America. As Ilargi, the author, explained it:

I don’t want to listen to those speeches anymore, I don’t want to hear Geithner say that it's "unfortunate" (as in: but necessary) that the man in the street has to pay for banks' losses. Most of all I don't want to hear Obama state that the salaries of bank executives should not be regulated because those of NFL players are not. That sort of "logic" is so full of false and misleading intentions, I simply want to be spared any more of it. The whole lot of them will keep on repeating that all's looking up until it’s very obviously not, at which point they’ll say that events that no-one could have foreseen got in the way of all the goodies. And people will believe them. Somewhere in this world there must be a way to figure out what is really going on, or even what is real to begin with. I may have found such a place.

Specifically, he noted the Trumbull County Court Filings as reported this past Monday. Looking at the dozens of legal filings by large financial institutions in Trumbull County, what can we infer about the country as a whole? Or can we infer anything at all? A commenter provided the following clarification:

It's perhaps best to think of this area as the Mahoning Valley. The Mahoning River runs through both Trumbull and Mahoning counties, and various plants established themselves along it when steel was king here.

The big steel players here died in the early 80s. We called it "Black Friday," (yes, reminiscent of the Depression). For years people fought to bring steel back, as though it were possible. We wasted much time reinventing ourselves, and still haven't. My dad was a talented machinist retired from a finishing plant when it went belly up thanks to mismanagement. He lost one-half of his pension when PGGC assumed it, and his "medical coverage" was nearly worthless. Thank God my mother had good coverage as a retired teacher but even those benefits have since decreased. They have both passed on but so much of what they worked for was spent on elder care.

Our largest employers were (and are) the GM Lordstown plant--the site of today's visit by Obama--and the two city hospitals, one of which has been mismanaged into bankruptcy. Everyone's holding their breath about GM's survival.

Delphi was also a huge presence here: It's gone, and in its wake, has left salaried employees wondering IF they'll get any of their pension. My neighbor is a victim. His financial adviser encourged him and his wife to diversify out of Delphi stock before the bankruptcy. Delphi ASSURED its retirees that the stock was sound. They lost hundreds of thousands in retirement money. A lifetime of work and dedication--gone. What Delphi didn't take, last year's downturn pretty much has. They now speak of "watching" what they spend. There isn't much call for 60-somethings looking for work.

Countless small manufacturers have folded. Columbiana County, to our south, has seen the loss of American Standard. My PCP is located in Columbiana; I spoke with another patient/caregiver who told me the elderly in that county receive BOTH Medicare and Medicaid, because most cannot afford the 20% Medicare co-pay. She said some subsist on less than $800 to $1000 a month.

I think the recent unemployment number here ranges around 15%.

The malls are pretty empty. People do turn out with a REALLY good sale. Even a local Walmart worker said they're "slow."

I overheard in two separate financial institutions customers who were having "problems" with their accounts.

I also spoke with a neighbor who works retail at a local Sears hardware. He said he's never seen customers so "mean."

This is still largely an agricultural region as well. Farming is struggling. Banks aren't lending.

As far as the question someone posted about a five year comparison to the foreclosure rates, those were trending up at least three years ago.

I work in health care. There are virtually no jobs for x-ray techs locally; few in all of Ohio. Even nursing jobs are trailing off. One of the largest extended care facilities recently ended benefits for their employees; no 3% raise this year; no medical coverage; no "anniversary" raise; no retirement contribution. No discussion. I had occasion to speak separately with two nursing attendants: one worked with another STNA to care for 40 residents, and the other worked on an "assisted living" wing caring for 32. Both suffered back injuries.

I could go on but I've probably written enough. I hope this helps paint the picture you wanted.

The paradox of America is that we are a society built on individualism, but dependent upon the ideals of collectivism in times of trouble. If we were a functioning democracy, we would be talking more about the Trumbull Counties in America, than the TBTF financial institutions on Wall Street. We need to change that dynamic, even if the MSM won't pay attention.

Accordingly, I invite participation from around the country. Let us know what is happening in your locality. What do you read in your local daily papers, and your weekly/bi-weekly/monthly community papers that indicate the nature of reality in your neighborhood? Post a comment or an instapopulist and speak your mind. Share the local articles with the rest of us. We are all in the same boat that has been cast adrift, and we desparately need some oars to get back to shore.