- Despite a deepening global depression, establishment
economists are in denial. On June 9, the Wall Street Journal said those
surveyed expected slow, steady growth through 2011, despite high US unemployment,
a housing depression, European sovereign debt in crisis, and the unreported
insolvency of major French and other banks.
-
- On June 8, testifying before the House Budget Committee,
Fed chairman Bernanke fantasized about 3.5% US growth through 2011, stopping
just short of ruling out the possibility of recession he called "unlikely."
-
- And in 2007, when equity and housing bubbles peaked,
neither he or Greenspan expressed alarm, destroying their credibility in
the process.
-
- Based on an early August survey, establishment (in bed
with Wall Street) economists now put the chance of "another"
downturn at 30%, compared to 15% in May, expecting 2.5% growth over the
next year.
-
- Some, in fact were sanguine, calling America's economy
strong, attributing negative views to a crisis of confidence, not hard
reality, signaled by the August 4 shot across the bow market rout.
-
- Despite a predictable rebound, it signified much worse
to come because conditions are dire getting worse. Even manipulated data
show enough to sound alarms, highlighted by economists like David Rosenberg.
-
- On August 15, he expressed surprise about so "little
reaction to the shocking US consumer sentiment data that were released
on Friday - the worst since the tail end of the Jimmy Carter recession
era in 1980."
-
- Moreover, consumer spending is weak even with suspect
upward revisions. In addition, "(n)ew mortgage and refinancing loan
volumes fell 19% in Q2 to" a three-year low. Further, auto buying
plans declined to a decade low, likely headed much lower as economic conditions
deteriorate. Other big ticket buying plans also dropped to 2008-09 depths
when the economy falling off a cliff seemed possible.
-
- In fact, growth indicators overall are rapidly heading
south at a time they're already woefully weak. There's no end to decline
in sight. Remarkably, negative household assessments of government policy
hit record lows, surpassing the depths of the early 1980s recession and
Watergate.
-
- As a result, Rosenberg called the US economy "recession-bound,
expecting" even manipulated data to show negative Q 3 growth, followed
by greater contraction in Q 4 and 2012 Q 1.
-
- "(P)ractically every major variable is" negative.
"We are past the point of no return....I can understand the innate
need to be hopeful," he said, but it's impossible to dispute reality.
-
- Weakness and imbalances are extreme. American and European
sovereign debt are overextended and troubled. "Anyone who thinks this
gets contained (especially in Europe) slept through the last financial
crisis after Lehman failed."
-
- And when weak economies beg for stimulus, austerity is
force-fed, assuring far greater economic pain. It's coming, will deepen
and persist because policy measures are opposite of what's needed.
-
- Commenting on the August 4 market rout, Rosenberg said
nearly always it signals downturns. Western economies are fundamentally
weak. Unlike earlier times when the Fed could cut interest rates, it now
relies on "untested methods to underpin investor confidence and the
economy."
-
- And if America's economy plunges, so do others even deeper.
Hunker down believes Rosenberg and independent economists believing the
worst is yet to come.
-
- Other Respected Views
-
- Economist Michael Hudson is unequivocal explaining a
debt deflation caused Depression. The game is over. The global ponzi scheme
ran its course. Papering over conditions only works so long before hitting
a wall. Tunnel vision assures trouble. Wrecking economies to save banks
is lunacy, and forced austerity when stimulus is needed guarantees disaster.
It's not a matter of if, just when, how deep and protracted.
-
- Economist Paul Craig Roberts, trends analyst Gerald Celente,
and others worry whether Washington will choose greater war to distract
public attention from economic distress. In 2009, in fact, Celente warned
about the oldest trick in the book, saying:
-
- "Given the pattern of governments to parlay egregious
failures into mega-failures, the classic trend they follow, when all else
fails, is to take their nation to war."
-
- In 2011, he called it a worrisome wild card, perhaps
preceded by a major 9/11 type false flag to enlist public support.
-
- Bet on it, in fact, if conditions become bad enough,
public anger grows, and Obama's approval rating crashes ahead of the 2012
election. War based on heightened fear is how to raise it perhaps high
enough to win.
-
- Highly respect analyst Jeremy Grantham began his August
letter to investors headlined, "Danger: Children at Play" with
a "Stop Press Addendum," saying:
-
- "My worst fears about the potential loss of confidence
in our leaders, institutions, and 'capitalism itself' are being realized.
We have been digging this hole for a long time. We really must be serious
in our attempts to resuscitate the 'average (number of) hour(s) worked'
and the fortunes of the average worker."
-
- "Walking across the Boston Common this morning,
I came to realize that the unpalatable (to me) option of some debt forgiveness
on mortgages looks increasingly to be necessary as well as tax changes"
he discussed in his report.
-
- "To go further, if we mean to prosper long term,
I am sure we need to act to make debt less attractive to everybody: it
really is a snare and a delusion" to think otherwise.
-
- Calling America's Congress "dysfunctional,"
he said it has to decide between two bad choices:
-
- -- austerity to kill demand when the economy is on its
knees; or
-
- -- do nothing, risk default, compromise the integrity
of the dollar and send "a powerful signal to the world that the US,
at least for now," is past its prime.
-
- In fact, growing numbers acknowledge that reality. "Come
to think of it," said Grantham, "the choice was between a technical
default and looking like a Banana Republic (or) technical blackmail and
looking" like the same thing. "Just different bananas perhaps."
-
- Overall he sees hard times, "lean years." Any
pretense otherwise "is beyond wishful thinking or weak math skills.
It is either childish or gross and cynical politics: that is to say, even
worse politics than usual."
-
- With balanced budgets mathematically impossible without
major politically unpalatable policy changes, the alternative is "kicking
an enormous can down the road" for even greater predictable disaster.
-
- It's the equivalent of not dealing with a metastasizing
cancer until the patient dies or is too far gone to save.
-
- Adding his own grim assessment, Grantham said if we keep
"drift(ing) around rudderless, if we don't develop some real (nowhere
in sight) leadership soon, then seven lean years may be the least of"
America's woes.
-
- Commenting on the August 4 market rout, he added that
it "always (has a) disturbing habit of ignoring the obvious and ignoring
it some more, until, in the blink of an eye, it doesn't."
-
- On August 4, it blinked, making "risk avoidance....a
good idea," Grantham believes that may be his polite way of saying
watch out! I warned you! There's no visible light at the end of this tunnel,
getting increasingly darker. Watch out indeed.
-
- In fact, a deepening global Depression just began. It'll
last years before ending, and cause grave harm to billions worldwide, not
responsible for their leaders' malfeasance, especially those domiciled
on Wall Street, complicit with political puppets in Washington they own.
-
- Moreover, the greater pain caused, the more they benefit
like their Western counterparts, wrecking their economies for personal
gain.
-
- No wonder astute analysts like Grantham expressed lack
of confidence in America's leaders, disgust with a "dysfunctional
Congress," and questioned "capitalism itself," perhaps self-destructing
as he wrote.
-
- For billions of global victims, it can't happen a moment
too soon, if it isn't already too late to help.
-
- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net.
-
- Also visit his blog site at sjlendman.blogspot.com and
listen to cutting-edge discussions with distinguished guests on the Progressive
Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central
time and Saturdays and Sundays at noon. All programs are archived for easy
listening.
-
- http://www.progressiveradionetwork.com/the-progressive-news-hour/.
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