This is No Recession: It’s a Planned Demolition
Mike Whitney
August 11, 2009
Credit is not flowing. In fact, credit is contracting. That means things aren’t getting better; they’re getting worse. When credit contracts in a consumer-driven economy, bad things happen. Business investment drops, unemployment soars, earnings plunge, and GDP shrinks. The Fed has spent more than a trillion dollars trying to get consumers to start borrowing again, but without success. The country’s credit engines are grinding to a halt.
Bernanke has increased excess reserves in the banking system by $800 billion, but lending is still slow. The banks are hoarding capital in order to deal with the losses from toxic assets, non performing loans, and a $3.5 trillion commercial real estate bubble that’s following housing into the toilet. That’s why the rate of bank failures is accelerating. 2010 will be even worse; the list is growing. It’s a bloodbath.
The standards for conventional loans have gotten tougher while the pool of qualified credit-worthy borrowers has shrunk. That means less credit flowing into the system. The shadow banking system has been hobbled by the freeze in securitization and only provides a trifling portion of the credit needed to grow the economy. Bernanke’s initiatives haven’t made a bit of difference. Credit continues to shrivel.
The S&P 500 is up 50 percent from its March lows. The financials, retail, materials and industrials are leading the pack. It’s a “Green Shoots” Bear market rally fueled by the Fed’s Quantitative Easing (QE) which is forcing liquidity into the financial system and lifting equities. The same thing happened during the Great Depression. Stocks surged after 1929. Then the prevailing trend took hold and dragged the Dow down 89 percent from its earlier highs. The S&P’s March lows will be tested before the recession is over. Systemwide deleveraging is ongoing. That won’t change.
No one is fooled by the fireworks on Wall Street. Consumer confidence continues to plummet. Everyone knows things are bad. Everyone knows the media is lying. Credit is contracting; the economy’s life’s blood has slowed to a trickle. The economy is headed for a hard landing.
Bernanke has pulled out all the stops. He’s lowered interest rates to zero, backstopped the entire financial system with $13 trillion, propped up insolvent financial institutions and monetized $1 trillion in mortgage-backed securities and US sovereign debt. Nothing has worked. Wages are falling, banks are cutting lines of credit, retirement savings have been slashed in half, and home equity losses continue to mount. Living standards can no longer be bandaged together with VISA or Diners Club cards. Household spending has to fit within one’s salary. That’s why retail, travel, home improvement, luxury items and hotels are all down double-digits. The easy money has dried up.
According to Bloomberg:
“Borrowing by U.S. consumers dropped in June for the fifth straight month as the unemployment rate rose, getting loans remained difficult and households put off major purchases. Consumer credit fell $10.3 billion, or 4.92 percent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $5.38 billion in May, more than previously estimated. The series of declines is the longest since 1991.
A jobless rate near the highest in 26 years, stagnant wages and falling home values mean consumer spending… will take time to recover even as the recession eases. Incomes fell the most in four years in June as one-time transfer payments from the Obama administration’s stimulus plan dried up, and unemployment is forecast to exceed 10 percent next year before retreating.” (Bloomberg)
This is No Recession: It’s a Planned Demolition
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
What a mess. The Fed has assumed near-dictatorial powers to fight a monster of its own making, and achieved nothing. The real economy is still dead in the water. Bernanke is not getting any traction from his zero-percent interest rates. His monetization program (QE) is just scaring off foreign creditors. On Friday, Marketwatch reported:
“The Federal Reserve will probably allow its $300 billion Treasury-buying program to end over the next six weeks as signs of a housing recovery prompt the central bank to unwind one its most aggressive and unusual interventions into financial markets, big bond dealers say.
Right. Does anyone believe the housing market is recovering? If so, please check out this chart and keep in mind that, in the first 6 months of 2009, there have already been 1.9 million foreclosures.
The Fed is abandoning the printing presses (presumably) because China told Geithner to stop printing money or they’d sell their US Treasuries. It’s a wake-up call to Bernanke that the power is shifting from Washington to Beijing.
That puts Bernanke in a pickle. If he stops printing; interest rates will skyrocket, stocks will crash and housing prices will tumble. But if he continues QE, China will dump their Treasuries and the greenback will vanish in a poof of smoke. Either way, the malaise in the credit markets will persist and personal consumption will continue to sputter.
The basic problem is that consumers are buried beneath a mountain of debt and have no choice except to curtail their spending and begin to save. Currently, the the ratio of debt to personal disposable income, is 128% just a tad below its all-time high of 133% in 2007. According to the Federal Reserve Bank of San Francisco’s “Economic Letter: US Household Deleveraging and Future Consumption Growth:
“The combination of higher debt and lower saving enabled personal consumption expenditures to grow faster than disposable income, providing a significant boost to U.S. economic growth over the period. In the long-run, however, consumption cannot grow faster than income because there is an upper limit to how much debt households can service, based on their incomes. For many U.S. households, current debt levels appear too high, as evidenced by the sharp rise in delinquencies and foreclosures in recent years. To achieve a sustainable level of debt relative to income, households may need to undergo a prolonged period of deleveraging, whereby debt is reduced and saving is increased.
“The Federal Reserve will probably allow its $300 billion Treasury-buying program to end over the next six weeks as signs of a housing recovery prompt the central bank to unwind one its most aggressive and unusual interventions into financial markets, big bond dealers say.
Right. Does anyone believe the housing market is recovering? If so, please check out this chart and keep in mind that, in the first 6 months of 2009, there have already been 1.9 million foreclosures.
The Fed is abandoning the printing presses (presumably) because China told Geithner to stop printing money or they’d sell their US Treasuries. It’s a wake-up call to Bernanke that the power is shifting from Washington to Beijing.
That puts Bernanke in a pickle. If he stops printing; interest rates will skyrocket, stocks will crash and housing prices will tumble. But if he continues QE, China will dump their Treasuries and the greenback will vanish in a poof of smoke. Either way, the malaise in the credit markets will persist and personal consumption will continue to sputter.
The basic problem is that consumers are buried beneath a mountain of debt and have no choice except to curtail their spending and begin to save. Currently, the the ratio of debt to personal disposable income, is 128% just a tad below its all-time high of 133% in 2007. According to the Federal Reserve Bank of San Francisco’s “Economic Letter: US Household Deleveraging and Future Consumption Growth:
“The combination of higher debt and lower saving enabled personal consumption expenditures to grow faster than disposable income, providing a significant boost to U.S. economic growth over the period. In the long-run, however, consumption cannot grow faster than income because there is an upper limit to how much debt households can service, based on their incomes. For many U.S. households, current debt levels appear too high, as evidenced by the sharp rise in delinquencies and foreclosures in recent years. To achieve a sustainable level of debt relative to income, households may need to undergo a prolonged period of deleveraging, whereby debt is reduced and saving is increased.
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
Going forward, it seems probable that many U.S. households will reduce their debt. If accomplished through increased saving, the deleveraging process could result in a substantial and prolonged slowdown in consumer spending relative to pre-recession growth rates.” (”U.S. Household Deleveraging and Future Consumption Growth, by Reuven Glick and Kevin J. Lansing, FRBSF Economic Letter”)
A careful reading of the FRBSF’s Economic Letter shows why the economy will not bounce back. It is mathematically impossible. We’ve reached peak credit; consumers have to deleverage and patch their balance sheets. Household wealth has slipped $14 trillion since the crisis began. Home equity has dropped to 41% (a new low) and joblessness is on the rise. By 2011, Duetsche Bank AG predicts that 48 percent of all homeowners with a mortgage will be underwater. As the equity position of homeowners deteriorates, banks will further tighten credit and foreclosures will mushroom.
The executive board of the IMF does not share Wall Street’s rosy view of the future, which is why it issued a memo that stated:
“Directors observed that the crisis will have important implications for the role of the United States in the global economy. The U.S. consumer is unlikely to play the role of global “buyer of last resort”— other regions will need to play an increased role in supporting global growth.”
The United States will not be the emerge as the center of global demand following the recession. Those days are over. The world is changing and the US role is getting smaller. As US markets become less attractive to foreign exporters, the dollar will lose its position as the world’s reserve currency. As goes the dollar, so goes the empire. Want some advice: Learn Mandarin.
SAGGING EMPLOYMENT: A “no new jobs” recovery
July’s employment numbers came in better than expected (negative 247,000) lowering total unemployment from 9.5% to 9.4%. That’s good. Things are getting worse at a slower pace. What’s striking about the BLS report is that there’s no jobs-surge in any sector of the economy. No signs of life. Outsourcing and offshoring are ongoing, and downsizing is the new path to profitability. Businesses everywhere are anticipating weaker demand. The jobs report is a one-off event; a lull in the storm before the layoffs resume.
Unemployment is rising, wages are falling and credit is contracting. In other words, the system is working exactly as designed. All the money is flowing upwards to the gangsters at the top. Here’s an excerpt from a recent Don Monkerud article that sums it all up:
“During eight years of the Bush Administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top one percent claimed 22 percent of the national income, while the top ten percent took half of the total income, the largest share since 1928
Over 40 percent of GNP comes from Fortune 500 companies. According to the World Institute for Development Economics Research, the 500 largest conglomerates in the U.S. “control over two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60 percent of the sales, and collect over 70 percent of the profits.”
… In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, representing an epochal shift of wealth upward in the U.S.” “Wealth Inequality destroys US Ideals”
Working people are not being crushed by accident, but according to plan. It is the way the system is supposed to work. Bernanke knows that sustained demand requires higher wages and a vital middle class. But what does he care. He’s not a public servant. He works for the banks. That’s why the Fed’s monetary policies reflect the goals of the investor class. Bubblenomics is not the way to a strong/sustainable economy, but it is an effective tool for shifting wealth from one class to another. The Fed’s job is to facilitate that objective, which is why the economy is headed for the rocks.
The free market has become a sham to conceal the crimes of the rich.
The financial meltdown is the logical outcome of the Fed’s monetary policies. That’s why it’s a mistake to call the current slump a “recession”. It’s not. It’s a planned demolition.
This is No Recession: It’s a Planned Demolition
A careful reading of the FRBSF’s Economic Letter shows why the economy will not bounce back. It is mathematically impossible. We’ve reached peak credit; consumers have to deleverage and patch their balance sheets. Household wealth has slipped $14 trillion since the crisis began. Home equity has dropped to 41% (a new low) and joblessness is on the rise. By 2011, Duetsche Bank AG predicts that 48 percent of all homeowners with a mortgage will be underwater. As the equity position of homeowners deteriorates, banks will further tighten credit and foreclosures will mushroom.
The executive board of the IMF does not share Wall Street’s rosy view of the future, which is why it issued a memo that stated:
“Directors observed that the crisis will have important implications for the role of the United States in the global economy. The U.S. consumer is unlikely to play the role of global “buyer of last resort”— other regions will need to play an increased role in supporting global growth.”
The United States will not be the emerge as the center of global demand following the recession. Those days are over. The world is changing and the US role is getting smaller. As US markets become less attractive to foreign exporters, the dollar will lose its position as the world’s reserve currency. As goes the dollar, so goes the empire. Want some advice: Learn Mandarin.
SAGGING EMPLOYMENT: A “no new jobs” recovery
July’s employment numbers came in better than expected (negative 247,000) lowering total unemployment from 9.5% to 9.4%. That’s good. Things are getting worse at a slower pace. What’s striking about the BLS report is that there’s no jobs-surge in any sector of the economy. No signs of life. Outsourcing and offshoring are ongoing, and downsizing is the new path to profitability. Businesses everywhere are anticipating weaker demand. The jobs report is a one-off event; a lull in the storm before the layoffs resume.
Unemployment is rising, wages are falling and credit is contracting. In other words, the system is working exactly as designed. All the money is flowing upwards to the gangsters at the top. Here’s an excerpt from a recent Don Monkerud article that sums it all up:
“During eight years of the Bush Administration, the 400 richest Americans, who now own more than the bottom 150 million Americans, increased their net worth by $700 billion. In 2005, the top one percent claimed 22 percent of the national income, while the top ten percent took half of the total income, the largest share since 1928
Over 40 percent of GNP comes from Fortune 500 companies. According to the World Institute for Development Economics Research, the 500 largest conglomerates in the U.S. “control over two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60 percent of the sales, and collect over 70 percent of the profits.”
… In 1955, IRS records indicated the 400 richest people in the country were worth an average $12.6 million, adjusted for inflation. In 2006, the 400 richest increased their average to $263 million, representing an epochal shift of wealth upward in the U.S.” “Wealth Inequality destroys US Ideals”
Working people are not being crushed by accident, but according to plan. It is the way the system is supposed to work. Bernanke knows that sustained demand requires higher wages and a vital middle class. But what does he care. He’s not a public servant. He works for the banks. That’s why the Fed’s monetary policies reflect the goals of the investor class. Bubblenomics is not the way to a strong/sustainable economy, but it is an effective tool for shifting wealth from one class to another. The Fed’s job is to facilitate that objective, which is why the economy is headed for the rocks.
The free market has become a sham to conceal the crimes of the rich.
The financial meltdown is the logical outcome of the Fed’s monetary policies. That’s why it’s a mistake to call the current slump a “recession”. It’s not. It’s a planned demolition.
This is No Recession: It’s a Planned Demolition
Link removed by moderator
This is No Recession: It’s a Planned Demolition
Oh but Bernanke's initiatives have done something - they've made things worse.
Instead of addressing the fundamental imbalances, he's been no more than a ponzi schemer. He's turned the market into a Generational Ponzi Scheme - borrowing 2 trillion from future generations, pushing it over to the banks so they can create a phony puffed-up market. The gimmick was that as the media would then have green-shoot-gasms over this, and the consumer would then open up the wallet.
But of course the consumer is tapped out. It's time to stop portraying Bernanke as this noble guy who is trying everything. At a time when we need real leadership and someone to get us to understand the tough medicine, we've gotten a ponzi schemer. Someone who just tried to hide the housing bubble within a bailout bubble
When the bailout bubble, commercial real estate and consumer debt bubbles pop, the Great Depression will look like a tea party. I predict that Bernanke will have to be removed from his position. I don't mean not nominated for reappointment, I mean physically removed. Time to start calling this guy out as the irresponsible and dangerous ponzi schemer that he is.
Instead of addressing the fundamental imbalances, he's been no more than a ponzi schemer. He's turned the market into a Generational Ponzi Scheme - borrowing 2 trillion from future generations, pushing it over to the banks so they can create a phony puffed-up market. The gimmick was that as the media would then have green-shoot-gasms over this, and the consumer would then open up the wallet.
But of course the consumer is tapped out. It's time to stop portraying Bernanke as this noble guy who is trying everything. At a time when we need real leadership and someone to get us to understand the tough medicine, we've gotten a ponzi schemer. Someone who just tried to hide the housing bubble within a bailout bubble
When the bailout bubble, commercial real estate and consumer debt bubbles pop, the Great Depression will look like a tea party. I predict that Bernanke will have to be removed from his position. I don't mean not nominated for reappointment, I mean physically removed. Time to start calling this guy out as the irresponsible and dangerous ponzi schemer that he is.
-
Accountable
- Posts: 24818
- Joined: Mon May 30, 2005 8:33 am
This is No Recession: It’s a Planned Demolition
Bernanke's position itself needs to go away. We need to return to the gold standard. Growth will not be as fast, but it will be more stable.
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology, The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared. Americans are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.
Forced part-time work is at an all-time high, going all the way back to 1956 and including the 1982 recession. In May 2009, 8.8 million workers were forced to work part time for economic reasons, in other words they were forced out of the job market by the banksters and their long-standing plot to turn the country into a third world cesspool.
During the last bankster engineered economic depression in the 1930s, the official unemployment rate was 24.9%. If we accept the premise that the actual unemployment rate is double the officially cooked figures, then the states with 12 percent or higher unemployment are actually experiencing unemployment on par with the so-called Great Depression.
The GDP is now floundering in negative territory — officially at -1.89% — which means massive job losses will continue. Conventional economic wisdom states that in order to maintain stable employment, the GDP must be around 2.5% per year and it must go much higher to make up for the catastrophic losses suffered since the “recession” began in November, 2007.
Once again, the government is playing a shell game with the numbers. The GDP numbers are distorted by manipulation of the money supply, which creates inflation. If you look at the Federal Reserve’s M3 data, you will see that GDP has decreased substantially since 1990. In order to hide this from the American people, the Fed stopped publishing the M3 monetary aggregate report on March 23, 2006. The discontinuation of the M3 detracts from the transparency the Fed preaches and adds to the suspicion that the Fed wants to hide anything showing money growth high enough to fuel inflation, just so people won’t know how bad it is and possibly react and thus make it worse.
Earlier this month, the U.S. government told the one-worlders at the European Union that at the end of the third quarter it will not meet its forecast for the annual budget deficit and the forecast must be revised to a figure in excess of 10.75%. On Saturday, Obama’s budget office said the figure will be 11.2% of GDP, a staggering $1.8 trillion, the highest deficit as a percentage of GDP since 1945 when the people were obliged to pay for the last world war created by the banksters and their international minions.
In order to give this dire situation a somewhat softer and fuzzier glow, Obama’s folks removed from the 2009 budget deficit projection $250 billion given away to the banksters.
Even if the “recession” ends this quarter — and in the meantime, you may as well wish for a pony — Obama’s number crunchers admit unemployment will continue to skyrocket.
It doesn’t take a rocket scientist to figure out things will get worse — much worse.
Forced part-time work is at an all-time high, going all the way back to 1956 and including the 1982 recession. In May 2009, 8.8 million workers were forced to work part time for economic reasons, in other words they were forced out of the job market by the banksters and their long-standing plot to turn the country into a third world cesspool.
During the last bankster engineered economic depression in the 1930s, the official unemployment rate was 24.9%. If we accept the premise that the actual unemployment rate is double the officially cooked figures, then the states with 12 percent or higher unemployment are actually experiencing unemployment on par with the so-called Great Depression.
The GDP is now floundering in negative territory — officially at -1.89% — which means massive job losses will continue. Conventional economic wisdom states that in order to maintain stable employment, the GDP must be around 2.5% per year and it must go much higher to make up for the catastrophic losses suffered since the “recession” began in November, 2007.
Once again, the government is playing a shell game with the numbers. The GDP numbers are distorted by manipulation of the money supply, which creates inflation. If you look at the Federal Reserve’s M3 data, you will see that GDP has decreased substantially since 1990. In order to hide this from the American people, the Fed stopped publishing the M3 monetary aggregate report on March 23, 2006. The discontinuation of the M3 detracts from the transparency the Fed preaches and adds to the suspicion that the Fed wants to hide anything showing money growth high enough to fuel inflation, just so people won’t know how bad it is and possibly react and thus make it worse.
Earlier this month, the U.S. government told the one-worlders at the European Union that at the end of the third quarter it will not meet its forecast for the annual budget deficit and the forecast must be revised to a figure in excess of 10.75%. On Saturday, Obama’s budget office said the figure will be 11.2% of GDP, a staggering $1.8 trillion, the highest deficit as a percentage of GDP since 1945 when the people were obliged to pay for the last world war created by the banksters and their international minions.
In order to give this dire situation a somewhat softer and fuzzier glow, Obama’s folks removed from the 2009 budget deficit projection $250 billion given away to the banksters.
Even if the “recession” ends this quarter — and in the meantime, you may as well wish for a pony — Obama’s number crunchers admit unemployment will continue to skyrocket.
It doesn’t take a rocket scientist to figure out things will get worse — much worse.
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
Manufacturing employment in the U.S. peaked in June 1979 with 19,553,000 jobs, and by July of this year manufacturing employment had fallen to 11,817,000, the lowest level of manufacturing jobs since April 1941.
As a percent of the total labor force, manufacturing employment fell below 9% in July, the lowest level in BLS history (back to 1939).
Delinquency and foreclosure rates for U.S. mortgages continued to rise in the second quarter, with loans to the most qualified borrowers going bust at an unnerving clip, especially in hard-hit states such as Florida and California.
The quarterly National Delinquency Survey showed that almost one in 10 homeowners with a mortgage was at least one payment late, and thus delinquent, while another 4 percent had entered the foreclosure process on their loan.
As a percent of the total labor force, manufacturing employment fell below 9% in July, the lowest level in BLS history (back to 1939).
Delinquency and foreclosure rates for U.S. mortgages continued to rise in the second quarter, with loans to the most qualified borrowers going bust at an unnerving clip, especially in hard-hit states such as Florida and California.
The quarterly National Delinquency Survey showed that almost one in 10 homeowners with a mortgage was at least one payment late, and thus delinquent, while another 4 percent had entered the foreclosure process on their loan.
Link removed by moderator
This is No Recession: It’s a Planned Demolition
This is No Recession: It’s a Planned Demolition
Love it when a plan comes together.
Love it when a plan comes together.
I AM AWESOME MAN
-
fuzzywuzzy
- Posts: 6596
- Joined: Mon Feb 02, 2009 5:35 pm
This is No Recession: It’s a Planned Demolition
OOH OHHH OHHH Mr Cotterrrrr!!!!!............The A team !!!!!
This is No Recession: It’s a Planned Demolition
this happens when they want to numb your brain and send you off to war. which country is it this week?
People need someone to blame for their predicament.
People are too busy with coping to give two hoots about what goes on outside their own problems.
Nasty stuff is put forth when nobody is watching.
This is No Recession: It’s a Planned Demolition
this happens when they want to numb your brain and send you off to war. which country is it this week?
People need someone to blame for their predicament.
People are too busy with coping to give two hoots about what goes on outside their own problems.
Nasty stuff is put forth when nobody is watching.
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
Private employers cut 298,000 American jobs last month, far above economists’ expectations, and squeezed more work out of staff over fewer hours.
The ADP Employer Services report on jobless numbers in August exceeded the 250,000 staff cuts economists had forecast.
Employees who kept their jobs worked even harder over shorter hours, according to the Labor Department today.
The ADP Employer Services report on jobless numbers in August exceeded the 250,000 staff cuts economists had forecast.
Employees who kept their jobs worked even harder over shorter hours, according to the Labor Department today.
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
The Federal Deposit Insurance Corp. reported late last week that the fund that insures some $4.5 trillion in U.S. bank deposits fell to $10.4 billion at the end of June, as the list of failing banks continues to grow. The fund was $45.2 billion a year ago, when regulators told us all was well and there was no need to take precautions to shore up the fund.
Link removed by moderator
This is No Recession: It’s a Planned Demolition
I AM AWESOME MAN
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
10 possible financial crashes
These overheated economic markets could be headed toward catastrophe.
Ten Bubbles in the Making
One year after America's brush with economic catastrophe, there's plenty of looking back at the bubbles that caused financial chaos.
But what's next?
There are surely dangerous economic bubbles forming as we speak. As Alan Greenspan warned this week, "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
The trick, of course, is spotting them. By definition, most people don't spot a bubble before they form and burst.
Here's 10 for which you should be on alert:
1. China bubble: Despite the weak global economy, the Chinese stock market has soared like crazy this year. But many believe the rally has been driven purely by government-supplied liquidity, rather than fundamentals. The fear is that companies are flush with cash, but have little "real" to do with the cash, so they're parking it in the stock market casino. The Chinese real estate market appears to be on a similar trajectory.
2. Green bubble: Green has been everywhere. With observers saying the "Age of Cleantech and Biotech" will be the next major economic revolution, and Washington pouring billions of dollars into alternative energy projects, you'd think a bubble would have already formed. But, as we noted this spring, it did not, at least from an investment perspective.
Still, as the economic recovery takes shape, alternative energy could see excess investment on hopes of big future returns. There's plenty of hype left, and if investors regain the cash to get in the game, could green become the next internet or housing bubble?
3. Gold bubble: Gold prices just keep going up. They've risen for seven straight years, recently breaking $1,000 per ounce.
Is it a bubble? Right now, it doesn't look too bad. Gold is good in both inflationary and deflationary periods, as it holds wealth tangibly. And, as the Telegraph notes, there's real demand, especially from China.
But with some predicting a doubling of prices to $2,000 an ounce, too many people could jump in and spike the real value of the precious metal. The "rise forever" mentality usually means trouble.
4. Federal Reserve bubble: Is the Fed saving the financial system or creating another dangerous credit bubble by snapping up mortgage-backed securities?
At first glance, the Fed's effort to clean up mortgage-backed securities is a winner. But, as Heidi Moore wrote for Slate's The Big Money, the Fed is actually creating a bubble similar to the one it's trying to do damage control on. By eagerly trying to save banks and stabilize the housing market, Washington is taking on too much: $1.25 trillion of mortgaged-backed securities, including both the original toxic assets and products of foreclosures to come. So who would bail the Fed out? You.
5. Trash stock bubble: There's a rush to trash going on. Stocks like Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG) and even GM made big runs in August -- trading in trash financials made up nearly one-third of NYSE's August volume.
So why are people buying junk? Charlie Gasparino says shares of junk financials -- companies like Fannie, Freddie, AIG, Citi and Bank of America -- are being pushed up by a short squeeze. The Wall Street Journal suspects its high frequency traders. And others say its retail speculation and day traders getting their way while Wall Street went on vacation.
6. Education bubble: More people are going back to college and taking on huge debt to do it, despite questions about what the degree is really worth.
Last year, the amount borrowed by students and received by schools grew some 25% over the previous year, to $75.1 billion. That's a huge amount, especially with weak, low-paying job prospects for graduates in this economy.
As we've noted, all this student loan debt is crazy. Despite the desire to see more subsidization of college, we suspect there will be a collapse in student loan debt availability and desire to take on new debt.
Short of telling kids not to go to college, something's going to give.
The pop may be starting already. As Bloomberg reports, as many as one-third of all private colleges surveyed said they expected enrollment to drop in the next academic year. And almost 40 percent of those colleges said some of their students dropped out due to personal economic reasons and a quarter said full-time attendees switched to part time. Half said families had to cut back their expected contributions as the value of college savings plans dropped 21 percent last year.
7. Subprime bubble, 2.0: What are banks doing with all those subprime mortgages? They're repackaging with a higher rating -- "re-securitization of real estate mortgage investment conduits" -- and selling them.
As we've noted, it's a plan nearly identical to the complicated investment packages of the financial crisis a year ago. That being said, the problem was not strictly securitization, but the underlying housing bubble. So the return of complicated products isn't necessarily the end of the world.
8. Life insurance securitization bubble: In its search for new profits, Wall Street is planning on securitizing “life settlements" -- policies that the sick and elderly can sell for cash while they're alive -- much like it did subprime mortgages. The New York Times warns that we could be looking at subprime all over again.
Maybe. As we've noted, it wasn't securitization that caused the financial meltdown. It was the bursting of the housing bubble. Yes, there was a feedback loop, whereby securitization allowed more money to flow towards housing, but it seems unlikely that "life settlements" would get big enough to infect all portions of the financial world.
9. Commercial real estate bubble: This bubble is already hissing, if not popping outright.
While the economy is improving and some home sales are slowly coming back, the commercial real estate market could get far worse.
As The New York Times reports, "Even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s."
As UPI notes, commercial mortgage defaults could reach 4.1 percent by the end of the year, up from 2.25 percent in the first quarter, and Real Capital Analytics estimates commercial property loans worth $83 billion have been involved in default, foreclosure or bankruptcy in 2009.
Badly hit will likely be malls. "The next financial tsunami to hit will be the widespread failure of shopping center mortgages," says Peter Monroe, co-chair of REOMAC, a not for profit trade association to CNBC. "Half a trillion dollars of commercial loans financed on historically low rates, are due for refinancing in the next three years," says Monroe. "The negative impact of these shopping center mortgages is enormous."
10. Emerging market bubble: It's not just China. Risk-tolerant investors are bidding up emerging market shares to valuations not seen in 9 years. With an average PE of 20x, they're not in bubble territory just yet, but watch for things to get out of hand.
http://finance.yahoo.com/tech-ticker/ar ... g?tickers=
These overheated economic markets could be headed toward catastrophe.
Ten Bubbles in the Making
One year after America's brush with economic catastrophe, there's plenty of looking back at the bubbles that caused financial chaos.
But what's next?
There are surely dangerous economic bubbles forming as we speak. As Alan Greenspan warned this week, "They [financial crises] are all different, but they have one fundamental source," he said. "That is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
The trick, of course, is spotting them. By definition, most people don't spot a bubble before they form and burst.
Here's 10 for which you should be on alert:
1. China bubble: Despite the weak global economy, the Chinese stock market has soared like crazy this year. But many believe the rally has been driven purely by government-supplied liquidity, rather than fundamentals. The fear is that companies are flush with cash, but have little "real" to do with the cash, so they're parking it in the stock market casino. The Chinese real estate market appears to be on a similar trajectory.
2. Green bubble: Green has been everywhere. With observers saying the "Age of Cleantech and Biotech" will be the next major economic revolution, and Washington pouring billions of dollars into alternative energy projects, you'd think a bubble would have already formed. But, as we noted this spring, it did not, at least from an investment perspective.
Still, as the economic recovery takes shape, alternative energy could see excess investment on hopes of big future returns. There's plenty of hype left, and if investors regain the cash to get in the game, could green become the next internet or housing bubble?
3. Gold bubble: Gold prices just keep going up. They've risen for seven straight years, recently breaking $1,000 per ounce.
Is it a bubble? Right now, it doesn't look too bad. Gold is good in both inflationary and deflationary periods, as it holds wealth tangibly. And, as the Telegraph notes, there's real demand, especially from China.
But with some predicting a doubling of prices to $2,000 an ounce, too many people could jump in and spike the real value of the precious metal. The "rise forever" mentality usually means trouble.
4. Federal Reserve bubble: Is the Fed saving the financial system or creating another dangerous credit bubble by snapping up mortgage-backed securities?
At first glance, the Fed's effort to clean up mortgage-backed securities is a winner. But, as Heidi Moore wrote for Slate's The Big Money, the Fed is actually creating a bubble similar to the one it's trying to do damage control on. By eagerly trying to save banks and stabilize the housing market, Washington is taking on too much: $1.25 trillion of mortgaged-backed securities, including both the original toxic assets and products of foreclosures to come. So who would bail the Fed out? You.
5. Trash stock bubble: There's a rush to trash going on. Stocks like Fannie Mae (FNM), Freddie Mac (FRE), AIG (AIG) and even GM made big runs in August -- trading in trash financials made up nearly one-third of NYSE's August volume.
So why are people buying junk? Charlie Gasparino says shares of junk financials -- companies like Fannie, Freddie, AIG, Citi and Bank of America -- are being pushed up by a short squeeze. The Wall Street Journal suspects its high frequency traders. And others say its retail speculation and day traders getting their way while Wall Street went on vacation.
6. Education bubble: More people are going back to college and taking on huge debt to do it, despite questions about what the degree is really worth.
Last year, the amount borrowed by students and received by schools grew some 25% over the previous year, to $75.1 billion. That's a huge amount, especially with weak, low-paying job prospects for graduates in this economy.
As we've noted, all this student loan debt is crazy. Despite the desire to see more subsidization of college, we suspect there will be a collapse in student loan debt availability and desire to take on new debt.
Short of telling kids not to go to college, something's going to give.
The pop may be starting already. As Bloomberg reports, as many as one-third of all private colleges surveyed said they expected enrollment to drop in the next academic year. And almost 40 percent of those colleges said some of their students dropped out due to personal economic reasons and a quarter said full-time attendees switched to part time. Half said families had to cut back their expected contributions as the value of college savings plans dropped 21 percent last year.
7. Subprime bubble, 2.0: What are banks doing with all those subprime mortgages? They're repackaging with a higher rating -- "re-securitization of real estate mortgage investment conduits" -- and selling them.
As we've noted, it's a plan nearly identical to the complicated investment packages of the financial crisis a year ago. That being said, the problem was not strictly securitization, but the underlying housing bubble. So the return of complicated products isn't necessarily the end of the world.
8. Life insurance securitization bubble: In its search for new profits, Wall Street is planning on securitizing “life settlements" -- policies that the sick and elderly can sell for cash while they're alive -- much like it did subprime mortgages. The New York Times warns that we could be looking at subprime all over again.
Maybe. As we've noted, it wasn't securitization that caused the financial meltdown. It was the bursting of the housing bubble. Yes, there was a feedback loop, whereby securitization allowed more money to flow towards housing, but it seems unlikely that "life settlements" would get big enough to infect all portions of the financial world.
9. Commercial real estate bubble: This bubble is already hissing, if not popping outright.
While the economy is improving and some home sales are slowly coming back, the commercial real estate market could get far worse.
As The New York Times reports, "Even though industry lobbyists were able to persuade Congress to extend a loan program aimed at prodding the stalled securitization market back to life, several analysts said it was unlikely to head off a spate of defaults, foreclosures and bankruptcies that could surpass the devastating real estate crash of the early 1990s."
As UPI notes, commercial mortgage defaults could reach 4.1 percent by the end of the year, up from 2.25 percent in the first quarter, and Real Capital Analytics estimates commercial property loans worth $83 billion have been involved in default, foreclosure or bankruptcy in 2009.
Badly hit will likely be malls. "The next financial tsunami to hit will be the widespread failure of shopping center mortgages," says Peter Monroe, co-chair of REOMAC, a not for profit trade association to CNBC. "Half a trillion dollars of commercial loans financed on historically low rates, are due for refinancing in the next three years," says Monroe. "The negative impact of these shopping center mortgages is enormous."
10. Emerging market bubble: It's not just China. Risk-tolerant investors are bidding up emerging market shares to valuations not seen in 9 years. With an average PE of 20x, they're not in bubble territory just yet, but watch for things to get out of hand.
http://finance.yahoo.com/tech-ticker/ar ... g?tickers=
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
US Census Bureau report: 40 million living in poverty
The overall poverty rate in the US rose to 13.2 percent in 2008, as workers across all sectors of the economy became jobless and increasing numbers of families were forced into destitution, according to a new government report. Real median household income also declined by 3.6 percent.
The report released Tuesday, part of the US Census Bureau’s American Community Survey, is the most recent to measure the recession’s impact on working class families and the poor. Based on the changes between 2007 and 2008, the first full year of the recession, its findings do not reflect increases in poverty and joblessness this year as the consequences of the crisis have become even more acute.
The official poverty rate of 13.2 percent in 2008 was up from 12.5 percent in 2007. This figure translates into 39.8 million people in poverty across America. The official poverty level is set at $22,000 annually for a family of four with two children or $12,000 for an individual, an absurdly low threshold. This means that far more people than indicated by the survey do not have adequate resources to pay for food, shelter, medical care and other basic necessities.
The poverty rate rose across virtually all demographic groups. Poverty among Hispanics climbed from 21.5 percent in 2007 to 23.2 percent in 2008. Non-Hispanic whites saw poverty rise from 8.2 percent in 2007 to 8.6 percent in 2008, while poverty among Asians was up from 10.2 percent in 2007 to 11.8 percent in 2008. African-Americans were the only group where poverty remained statistically unchanged at a staggering 24.7 percent, or about one in four people.
The Census Bureau reported a rise in poverty in 31 states and the District of Columbia. Two of the four most populous states—California and Florida—saw poverty rates rise by 1 percent, to just over 13 percent in each state.
Connecticut saw the largest increase in poverty, rising to 9.3 percent, with an additional 1.4 percent of the state’s population living in poverty. Connecticut’s proximity to Wall Street, the center of the financial collapse, contributed to the state’s poverty as spending cuts by bankers and other financial employees in the New York City suburbs were reflected in declines in income for the lowest paid workers.
William Frey, a demographer at the Brookings Institution, commented in an interview, “People don’t go from being a CEO or a hedge fund manager into poverty, but there is a trickle-down effect when these groups of people start to cut back on their spending. In many places, the first people to go when things get tight are the lowest-earning workers.
Michigan, which has been devastated by the collapse of the auto industry, is the only state that has seen poverty increase for two years in a row, with the rate now standing at 13 percent. The industrial states of Pennsylvania and Indiana also saw significant increases in poverty, along with Oregon and Hawaii.
The South remained the most impoverished, at 14.3 percent, up slightly from 14.2 percent in 2007. Mississippi, with 21.2 percent in poverty, saw the highest rate of any state, while poverty in Kentucky, West Virginia and Arkansas hovered around 17 percent.
The Midwest poverty rate rose to 12.4 percent from 11.1 percent the previous year. The West saw the largest increase in poverty, up by 1.5 percent, rising from 12 percent in 2007 to 13.5 percent. The Northeast, which saw an increase in poverty in 2007, saw the rate remain statistically unchanged, at 11.6 percent in 2008.
The rate of poverty among America’s children is alarming, with 19 percent—14.1 million children—affected in 2008, up a full percentage point from a year earlier. This rate increased in 26 states and in Washington, DC. Children in families headed by a single female suffered the highest rates of poverty: 43.5 percent of those under 18 years of age live in poverty, while 53.3 percent of children under 6 years are poor.
Increasing numbers of families, both the jobless and workers facing shrinking hours and paychecks, are turning to food pantries and the Food Stamp program. Food Stamp use in 2008 jumped 13 percent to nearly 9.8 million US households, led by Louisiana, Maine and Kentucky. Two cities—Pharr, Texas, and the former General Motors production center, Flint, Michigan—each had more than a third of their residents on food stamps. Families with two or more workers accounted for 28.4 percent of food stamp recipients in 2008, up 1.5 percent from 2007.
Following three years of annual income increases, real median income declined in the US by 3.6 percent between 2007 and 2008, falling from $52,163 to $50,303. The Midwest and South saw the biggest declines in median income, 4 percent and 4.9 percent respectively.
The gap between the richest and poorest Americans is also widening as the economic crisis ravages household budgets. An Associated Press analysis of the Census Bureau statistics shows that the wealthiest 10 percent of Americans, those making $138,000 or more a year, earned 11.4 times the $12,000 made by individuals living below the poverty line in 2008. In 2007, the richest 10 percent made 11.2 times more.
The jump in poverty and income inequality comes as the job market continues to shrink, even as government and economic analysts speak of a turnaround. According to US Labor Department figures from July, job seekers now outnumber openings six to one, with only 2.4 million full-time, permanent jobs open while 14.5 million people are officially unemployed and looking for work.
Many companies remain cautious about hiring new workers in the uncertain economic environment. Having trimmed back workers’ hours and laid off temporary workers, even if businesses do expand in the future they are likely to increase output by increasing the workload on existing employees.
Heidi Shierholz, an economist at the Economic Policy Institute, told the New York Times, “They have tons of room to increase work without hiring a single person. For people who are out of work, we do not see signs of light at the end of the tunnel.
From December 2007 through July 2009, job openings have declined in every area of the country: 45 percent in the West and South, 36 percent in the Midwest, and 23 percent in the Northeast. According to the Times, since the end of 2008 virtually every sector of the economy has been hit by the collapse in job openings, which have shrunk 47 percent in manufacturing, 37 percent in construction, 22 percent in retail, and 21 percent in education and health services.
While it is estimated that the government could spend in excess of $23 trillion to bail out the banks, and hundreds of billions to pursue its military conquests in Iraq and Afghanistan, nothing of any substance is being done to help the millions of Americans being plunged into joblessness and poverty.
The National Employment Law Project, an advocacy group, estimates that 400,000 Americans nationwide could exhaust their unemployment benefits by the end of September and 1.4 million long-term unemployed could stop receiving checks by the end of the year.
In some states, such as California, where the unemployment rate hit 12.2 percent in July—the highest level since 1940—workers laid off early in the recession have received three extensions on the regular 26 weeks of benefits, bringing them to a maximum of 79 weeks of payments.
The US House recently passed a $1.4 billion bill to provide another 13 weeks of jobless benefits in high unemployment states like California. The legislation still faces a vote in the Senate. The extension in benefits, however, would not cover many of the newly unemployed, or those yet to lose their jobs.
In California, for instance, hundreds of thousands who filed claims after June 14 of this year would be eligible for no more than 39 weeks of benefits. A House bill that would have provided longer extensions through 2010 was scrapped because it would have cost $70 billion, a price tag the lawmakers were unwilling to authorize.
US Census Bureau report: 40 million living in poverty
The overall poverty rate in the US rose to 13.2 percent in 2008, as workers across all sectors of the economy became jobless and increasing numbers of families were forced into destitution, according to a new government report. Real median household income also declined by 3.6 percent.
The report released Tuesday, part of the US Census Bureau’s American Community Survey, is the most recent to measure the recession’s impact on working class families and the poor. Based on the changes between 2007 and 2008, the first full year of the recession, its findings do not reflect increases in poverty and joblessness this year as the consequences of the crisis have become even more acute.
The official poverty rate of 13.2 percent in 2008 was up from 12.5 percent in 2007. This figure translates into 39.8 million people in poverty across America. The official poverty level is set at $22,000 annually for a family of four with two children or $12,000 for an individual, an absurdly low threshold. This means that far more people than indicated by the survey do not have adequate resources to pay for food, shelter, medical care and other basic necessities.
The poverty rate rose across virtually all demographic groups. Poverty among Hispanics climbed from 21.5 percent in 2007 to 23.2 percent in 2008. Non-Hispanic whites saw poverty rise from 8.2 percent in 2007 to 8.6 percent in 2008, while poverty among Asians was up from 10.2 percent in 2007 to 11.8 percent in 2008. African-Americans were the only group where poverty remained statistically unchanged at a staggering 24.7 percent, or about one in four people.
The Census Bureau reported a rise in poverty in 31 states and the District of Columbia. Two of the four most populous states—California and Florida—saw poverty rates rise by 1 percent, to just over 13 percent in each state.
Connecticut saw the largest increase in poverty, rising to 9.3 percent, with an additional 1.4 percent of the state’s population living in poverty. Connecticut’s proximity to Wall Street, the center of the financial collapse, contributed to the state’s poverty as spending cuts by bankers and other financial employees in the New York City suburbs were reflected in declines in income for the lowest paid workers.
William Frey, a demographer at the Brookings Institution, commented in an interview, “People don’t go from being a CEO or a hedge fund manager into poverty, but there is a trickle-down effect when these groups of people start to cut back on their spending. In many places, the first people to go when things get tight are the lowest-earning workers.
Michigan, which has been devastated by the collapse of the auto industry, is the only state that has seen poverty increase for two years in a row, with the rate now standing at 13 percent. The industrial states of Pennsylvania and Indiana also saw significant increases in poverty, along with Oregon and Hawaii.
The South remained the most impoverished, at 14.3 percent, up slightly from 14.2 percent in 2007. Mississippi, with 21.2 percent in poverty, saw the highest rate of any state, while poverty in Kentucky, West Virginia and Arkansas hovered around 17 percent.
The Midwest poverty rate rose to 12.4 percent from 11.1 percent the previous year. The West saw the largest increase in poverty, up by 1.5 percent, rising from 12 percent in 2007 to 13.5 percent. The Northeast, which saw an increase in poverty in 2007, saw the rate remain statistically unchanged, at 11.6 percent in 2008.
The rate of poverty among America’s children is alarming, with 19 percent—14.1 million children—affected in 2008, up a full percentage point from a year earlier. This rate increased in 26 states and in Washington, DC. Children in families headed by a single female suffered the highest rates of poverty: 43.5 percent of those under 18 years of age live in poverty, while 53.3 percent of children under 6 years are poor.
Increasing numbers of families, both the jobless and workers facing shrinking hours and paychecks, are turning to food pantries and the Food Stamp program. Food Stamp use in 2008 jumped 13 percent to nearly 9.8 million US households, led by Louisiana, Maine and Kentucky. Two cities—Pharr, Texas, and the former General Motors production center, Flint, Michigan—each had more than a third of their residents on food stamps. Families with two or more workers accounted for 28.4 percent of food stamp recipients in 2008, up 1.5 percent from 2007.
Following three years of annual income increases, real median income declined in the US by 3.6 percent between 2007 and 2008, falling from $52,163 to $50,303. The Midwest and South saw the biggest declines in median income, 4 percent and 4.9 percent respectively.
The gap between the richest and poorest Americans is also widening as the economic crisis ravages household budgets. An Associated Press analysis of the Census Bureau statistics shows that the wealthiest 10 percent of Americans, those making $138,000 or more a year, earned 11.4 times the $12,000 made by individuals living below the poverty line in 2008. In 2007, the richest 10 percent made 11.2 times more.
The jump in poverty and income inequality comes as the job market continues to shrink, even as government and economic analysts speak of a turnaround. According to US Labor Department figures from July, job seekers now outnumber openings six to one, with only 2.4 million full-time, permanent jobs open while 14.5 million people are officially unemployed and looking for work.
Many companies remain cautious about hiring new workers in the uncertain economic environment. Having trimmed back workers’ hours and laid off temporary workers, even if businesses do expand in the future they are likely to increase output by increasing the workload on existing employees.
Heidi Shierholz, an economist at the Economic Policy Institute, told the New York Times, “They have tons of room to increase work without hiring a single person. For people who are out of work, we do not see signs of light at the end of the tunnel.
From December 2007 through July 2009, job openings have declined in every area of the country: 45 percent in the West and South, 36 percent in the Midwest, and 23 percent in the Northeast. According to the Times, since the end of 2008 virtually every sector of the economy has been hit by the collapse in job openings, which have shrunk 47 percent in manufacturing, 37 percent in construction, 22 percent in retail, and 21 percent in education and health services.
While it is estimated that the government could spend in excess of $23 trillion to bail out the banks, and hundreds of billions to pursue its military conquests in Iraq and Afghanistan, nothing of any substance is being done to help the millions of Americans being plunged into joblessness and poverty.
The National Employment Law Project, an advocacy group, estimates that 400,000 Americans nationwide could exhaust their unemployment benefits by the end of September and 1.4 million long-term unemployed could stop receiving checks by the end of the year.
In some states, such as California, where the unemployment rate hit 12.2 percent in July—the highest level since 1940—workers laid off early in the recession have received three extensions on the regular 26 weeks of benefits, bringing them to a maximum of 79 weeks of payments.
The US House recently passed a $1.4 billion bill to provide another 13 weeks of jobless benefits in high unemployment states like California. The legislation still faces a vote in the Senate. The extension in benefits, however, would not cover many of the newly unemployed, or those yet to lose their jobs.
In California, for instance, hundreds of thousands who filed claims after June 14 of this year would be eligible for no more than 39 weeks of benefits. A House bill that would have provided longer extensions through 2010 was scrapped because it would have cost $70 billion, a price tag the lawmakers were unwilling to authorize.
US Census Bureau report: 40 million living in poverty
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg reports that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.
The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low-cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.
JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.
Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each, with the highest paid as much as 10 million pounds ($16 million).”
In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine — “How To Spend It.” New York City’s retailers are praying for some of it, suffering a 15.3 percent vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”
Meanwhile, New York City’s homeless shelters have reached the all-time high of 39,000, 16,000 of whom are children.
New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city and charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.
Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 percent to 20 percent. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.
A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. On a Wise, Va., fairgrounds, 2,000 people waited in lines for free dental and health care.
While the U.S. speeds plans for the ultimate bunker-buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the U.S. economy.
Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas. While jobs decline, high rates of legal immigration continue, bringing more competition for fewer jobs.
The offshoring of jobs, the bailout of rich banksters and war deficits are destroying the value of the U.S. dollar. Since last spring, the U.S. dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14 percent against the Botswana pula, 22 percent against Brazil’s real and 11 percent against the Russian ruble. Once the dollar loses its reserve currency status, the U.S. will be unable to pay for its imports or finance its government budget deficits.
Offshoring has made Americans heavily dependent on imports, and the dollar’s loss of purchasing power will further erode American incomes. As the Federal Reserve is forced to monetize Treasury debt issues, domestic inflation will break out. Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the U.S. economy.
The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.
The Rich Have Stolen the Economy
Link removed by moderator
-
TruthBringer
- Posts: 3567
- Joined: Sat Feb 11, 2006 5:39 pm
This is No Recession: It’s a Planned Demolition
TruthBringer;1253941 wrote:
Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg reports that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.
The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low-cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.
JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.
Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each, with the highest paid as much as 10 million pounds ($16 million).”
In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine — “How To Spend It.” New York City’s retailers are praying for some of it, suffering a 15.3 percent vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”
Meanwhile, New York City’s homeless shelters have reached the all-time high of 39,000, 16,000 of whom are children.
New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city and charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.
Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 percent to 20 percent. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.
A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. On a Wise, Va., fairgrounds, 2,000 people waited in lines for free dental and health care.
While the U.S. speeds plans for the ultimate bunker-buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the U.S. economy.
Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas. While jobs decline, high rates of legal immigration continue, bringing more competition for fewer jobs.
The offshoring of jobs, the bailout of rich banksters and war deficits are destroying the value of the U.S. dollar. Since last spring, the U.S. dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14 percent against the Botswana pula, 22 percent against Brazil’s real and 11 percent against the Russian ruble. Once the dollar loses its reserve currency status, the U.S. will be unable to pay for its imports or finance its government budget deficits.
Offshoring has made Americans heavily dependent on imports, and the dollar’s loss of purchasing power will further erode American incomes. As the Federal Reserve is forced to monetize Treasury debt issues, domestic inflation will break out. Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the U.S. economy.
The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.
The Rich Have Stolen the Economy
Just wanted to wish everybody a Happy Depression.
Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg reports that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.
The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low-cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.
JPMorgan Chase announced that it has earned $3.6 billion in the third quarter of this year.
Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works. The London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around 500,000 pounds ($800,000) each. Senior executives will get bonuses of several million pounds each, with the highest paid as much as 10 million pounds ($16 million).”
In the event the banksters can’t figure out how to enjoy the riches, the Financial Times is offering a new magazine — “How To Spend It.” New York City’s retailers are praying for some of it, suffering a 15.3 percent vacancy rate on Fifth Avenue. Statistician John Williams (shadowstats.com) reports that retail sales adjusted for inflation have declined to the level of 10 years ago: “Virtually 10 years worth of real retail sales growth has been destroyed in the still unfolding depression.”
Meanwhile, New York City’s homeless shelters have reached the all-time high of 39,000, 16,000 of whom are children.
New York City government is so overwhelmed that it is paying $90 per night per apartment to rent unsold new apartments for the homeless. Desperate, the city government is offering one-way free airline tickets to the homeless if they will leave the city and charging rent to shelter residents who have jobs. A single mother earning $800 per month is paying $336 in shelter rent.
Long-term unemployment has become a serious problem across the country, doubling the unemployment rate from the reported 10 percent to 20 percent. Now hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. High unemployment has made 2009 a banner year for military recruitment.
A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall. According to Jay Brinkmann of the Mortgage Bankers Association, job losses have spread the problem from subprime loans to prime fixed-rate loans. On a Wise, Va., fairgrounds, 2,000 people waited in lines for free dental and health care.
While the U.S. speeds plans for the ultimate bunker-buster bomb and President Obama prepares to send another 45,000 troops into Afghanistan, 44,789 Americans die every year from lack of medical treatment. National Guardsmen say they would rather face the Taliban than the U.S. economy.
Little wonder. In the midst of the worst unemployment since the Great Depression, US corporations continue to offshore jobs and to replace their remaining US employees with lower paid foreigners on work visas. While jobs decline, high rates of legal immigration continue, bringing more competition for fewer jobs.
The offshoring of jobs, the bailout of rich banksters and war deficits are destroying the value of the U.S. dollar. Since last spring, the U.S. dollar has been rapidly losing value. The currency of the hegemonic superpower has declined 14 percent against the Botswana pula, 22 percent against Brazil’s real and 11 percent against the Russian ruble. Once the dollar loses its reserve currency status, the U.S. will be unable to pay for its imports or finance its government budget deficits.
Offshoring has made Americans heavily dependent on imports, and the dollar’s loss of purchasing power will further erode American incomes. As the Federal Reserve is forced to monetize Treasury debt issues, domestic inflation will break out. Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the U.S. economy.
The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.
The Rich Have Stolen the Economy
Just wanted to wish everybody a Happy Depression.
Link removed by moderator