Well, June is behind us, and here in the Northeast, the month was pretty much a complete washout. But as we delve further into the summer (here's to hoping it gets sunnier), the winds of entropy are picking up in severity, and the rumblings of slow collapse continue. Here is a smorgasbord of things that give hints at the future shape of life on the post-peak downslope.

First, California is broke. The state has a $24 billion budget shortfall, and there is a political stalemate both within the legislature, and between the legislature and the Governator. Gary Kamiya at Solon.com gives the California situation a nice once-over in this piece. Long story short: the California legislature, unlike most other state bodies which require only a simple majority, needs a two-thirds vote to approve a budget. This allows the minority party (the GOP, for now), to hold up any significant policy changes. The resulting stagnation makes the public unhappy, so the ballot initiative process runs wild in California, as people see direct democracy as the only way to get things done. Sounds good on the surface, but there are good reasons why regular citizens elect professional politicians to represent them, rather than voting on everything directly. People are easily swayed by big-money media campaigns, and thus end up voting against their own best interest in many ballot initiatives. Regular Joes are also prone to vacillate wildly from one hot-button issue to the next, which precludes the long-term thinking necessary to craft a sophisticated plan for a society or economy. A polity conditioned by the television remote is not one well-suited for complexity. Thus, as Kamiya points out, the seeds of the current crisis were actually planted in 1978, when Prop 13, the notorious property-tax slashing ballot initiative, was passed. Californians essentially said that they wanted lots of government services, but they didn't want to pay for them. The slow-bleed started in '78 has now left the Golden State all but lifeless.

Of course, California is not alone; it just sticks out because it the world's eighth largest economy. All told, state budgets face a collective shortfall of over $120 billion. So services are being cut and taxes raised everywhere. Here in Massachusetts, our sales tax will be going up 25%. Other states are hiking taxes on everything from ring tones to booze to candy. Teachers are being let go, states parks are being shut down, and Medicaid is taking a particular pounding. State revenues are, of course, way down, thanks to the continuing deflation of the housing bubble (which reduces property tax collections) and the bleak employment picture (which creates the double-whammy of reduced income taxes and increased unemployment insurance payouts). 

And speaking of unemployment, after an "encouraging" May, where we lost only 322,000 jobs, June numbers surged back up to 467,000 shedded jobs. That brings the official unemployment rate up to 9.5%, the worst in 26 years. But as we have discussed in earlier posts, this official rate is certainly a major understatement of actual joblessness and underemployment, since it does not include people who have given up on finding a job, people who work part-time but want to be working full-time, and the huge numbers of people swelling our prisons, which are essentially dumping grounds for the economically superfluous. The broader government measure, the U-6, includes some of these extra categories; and that surged to 16.5% in June. If we add a good portion of the prison/jail population, which is almost 2.5 million, I would estimate the "true" un(der)employment rate to be around 18 to 20%. And this doesn't even touch on the fact that many workers who are employed are seeing wage cuts, mandatory furloughs, increased benefit costs (when they have benefits), etc. This recession (depression?) is pounding away on everyone and everything, and I do not expect any return to business as usual, ever.

There is, however, one aspect of the US economy that seems to be doing fairly well: the business of war, weaponry, and occupation. In May, we found out that, joy of joys, we're building another massive embassy in the Middle East: a $736 million job in Islamabad, Pakistan. So while our domestic economy implodes, we're getting ready to squander even more treasure in the oil sands of Mesopotamia. I guess that our rousing successes in Iraq and Afghanistan, estimated costs of about $3 trillion so far, make it a no-brainer to plop down another gigantic US post in Pakistan. We're obviously so loved in that area that the more "embassies," the better. At least Obama is not pretending that we don't need to have an enormous presence in that area to secure steady access to the petro-breadbasket of the planet. If we want to continue to run our sprawling domestic crap-scape, and do so without throwing down eight bucks a gallon for gas, then we're really going to need that expanse of military and quasi-military installations in the fertile crescent. Unfortunately, the servicing of our military bases, around 800 or so worldwide, is already costing over $100 billion a year (see Chalmers Johnson's new piece on the current state of our bloated arms budget), so we're steadily transforming our country into one big banana republic, where the army runs everything and the rest of society goes to shit.

Oh, and by the way, even though you wouldn't know it from the mainstream media, we're currently engaged in a major assault on Taliban positions in Afghanistan. Thousands of marines helicoptered into the Helmand River valley, and they intend to stay there for a long time, to win the peace. This is the first major attack in Obama's presidency, a grim reminder that while he may be dialing things back in Iraq, he wants to double the forces on the ground in Afghanistan -- essentially just moving the war over a couple countries to the east. Any progressives who were harboring hopes that Obama will be an antiwar President should now be getting that sinking feeling in their guts. After all, it seems like elementary finance that if you need trillions of dollars in domestic rescue money, for schools, roads, bridges, green job training and the like, you should probably stop flushing hundreds of billions down the toilet in foreign lands. That Obama is in fact ramping up our military presence in Afghanistan just goes to show how important that area is for the future of America's petro-energy needs. Cars can't run on hope.

So all in all, it's been a pretty scary few weeks, even beyond Michael Jackson's bizarro death. In fact, the King of Pop's passing will probably prove to be one of the tamer things that happens in this summer of entropy.