- Long-time economic, political and market analyst Bob
Chapman publishes the International Forecaster, offering incisive analysis
absent through mainstream sources, especially important now given America's
deepening economic crisis getting harder to conceal as evidence mounts.
-
- His August 25 issue says the following:
-
- "Twenty countries (including America) are headed
into bankruptcy and more will follow. That brings up the subject of state
debt in the US. America has been in an inflationary depression for 18 months.
States have been cutting back for two years," but still face huge
budget gaps required to be closed....2011 will be a terrible year (with)
80% of states expect(ing) deficits of more than $200 billion. 2012 looks
even worse." Most worrisome, "there is no recovery and there
never has been....the US economy and financial system is comatose."
The worst is yet to come and will hit hard on arrival.
-
- On August 24, economist David Rosenberg said, "Now
(I'll) tell you why this is a depression, and not just some garden-variety
recession," what he's been repeating for months unlike few others,
corporate analysts claiming the fall 2007 downturn "ended sometime
last year." Not so, it's deepened, growing evidence providing more
clarity.
-
- Offering a historical perspective, Rosenberg said the
Great Depression wasn't marked by declining GDP each quarter. The 1929
- 33 recession lasted four years, followed by recovery and another "deep
downturn" in 1937 - 38.
-
- During the first one, "there were no fewer than
six - six! - quarterly bounces in GDP data," averaging 8% at an annual
rate, accompanied by sharp market increases, then declines confirming false
positives. So "guess what? We may be reliving history (now). If you're
keeping score, we have recorded four quarterly advances in real GDP,"
averaging only 3%. The late 1930s reversal showed "how fragile the
post-bubble recovery really was," a faux one again repeated in a weaker
economy now than then, one headed for serious trouble ahead, harming millions
more Americans as a result.
-
- The Fed cut interest rates to near zero with no effect,
at best buying time, resolving nothing. "Then the Fed tripled the
size of its balance sheet - again with little sustained impetus to a broken
financial system."
-
- Weeks back, then confirmed with new data, Rosenberg stressed
weakness, numerous indicators turning down, including production, retail
sales, consumer confidence, and housing, a bellwether industry impacting
the entire economy. New reports show it's collapsing, some readings to
record lows, others disturbingly weak throughout the country.
-
- July existing home sales dropped 25.5%, the largest monthly
decline since records began in 1968, bringing annualized sales back to
1995 levels, and signaling worse trouble ahead. Other housing data confirm
the malaise, including new home sales, housing starts and permits.
-
- As worrisome were increasing layoffs and first-time unemployment
claims hitting 500,000, flashing red for trouble nearly three years after
the initial downturn, combined with a near-22% unemployment rate, not the
bogus 9.5% headline number, the 1980 calculation reengineered to conceal
weakness like all other fake economic data, putting lipstick on an economy,
increasingly looking and smelling more like a pig, a sick one.
-
- According to Rosenberg, "You know you are in a depression
when:
-
- -- "Congress (extends) jobless benefits seven times
(in the past two years) when almost half (of those) unemployed have been
looking for at least a half year;"
-
- -- the adult male unemployment rate (25 - 54 years) "hit
a post-WW II (high and still tops) the 1982 peak," the worst then
since the Great Depression;
-
- -- "youth unemployment is stuck near 25%,"
and for inner-city black youths it's 80% or higher; "these developments
will have profound long-term consequences - social, economic and political;"
-
- -- the depression's fiscal costs keep mounting, the federal
deficit soaring with no end to it in sight;
-
- -- for over a year into a supposed recovery, the Fed
still contemplates new ways to stimulate growth, its tool, of course, printing
money (funny money, or as one analyst calls it, "toilet paper")
and quantitative easing, compounding the deficit, or the equivalent of
throwing fuel on a fire instead of monetary and fiscal sanity plus sound
economy policies to extinguish it;
-
- -- after two years of record trillion dollar plus deficits
to kick-start the economy, interest rates are shockingly low, flashing
weakness, not strength; to wit, on August 24, the 5-year note was 1.36%,
7-year at $1.95%, 10-year at 2.50%, and 30 year at 3.57%; as well as 30-year
fixed mortgage rates at record lows below 4.5% (4.42% on August 24), despite
"no fewer than eight (government) programs to put a floor under the
housing market;" we're in big trouble "when (Washington) can
expend so many resources (on) one sector" in vain;
-
- -- the FDIC keeps shuttering more banks; again, the carnage
keeps spreading, yet most economists cling tenaciously an economic recovery
theme, at most hit by a soft patch; Rosenberg's response - "Some recovery
(when) the private credit market is basically defunct....what replaced
it was rampant government intervention (buying time) by trying to (put)
a floor under the economy;" once it stops, and it will, they'll be
no hiding the dire truth, and no end of pain for growing millions.
-
- The Worst Is Yet to Come
-
- Financial expert and investor safety advocate Martin
Weiss began warning about a major economic decline long before it began
and keeps at it, citing evidence most analysts downplay or ignore, including:
-
- -- America's worst ever housing depression showing no
signs of abating; since January 2006, housing starts alone have plunged
from 2.3 million annually to a recent 477,000 low that may not yet reflect
a bottom because demand is so weak for this bellwether industry;
-
- -- record long-term unemployment, its worst since first
officially tabulated over 60 years ago; and
-
- -- "the most chronic credit squeeze ever recorded....suffer(ing)
its deepest plunge since WW II."
-
- As a result, he sees deepening economic trouble ahead,
no matter what steps the administration, Congress or the Fed undertake.
He expects little more stimulus, just another futile central bank attempt
to print money (lots of it) to buy time. "These paper dollars will
not create real prosperity," just an illusory, "temporary, false
prosperity," but none at all for most people, hung out to dry on their
own.
-
- He also expects a sovereign debt crisis to hammer Europe
and the US, saying America's plight exceeds the dire situation of PIIGS
countries (Portugal, Italy, Ireland, Greece and Spain), citing the Bank
of International Settlements (the central bank of central bankers) saying
US debt will hit 400% of GDP, more than triple Greece's burden at 129%
that plunged the country into (undeclared) bankruptcy. Indeed the worst
for America is yet to come..
-
- America Is Already Bankrupt
-
- Boston University Economics Professor Laurence Kotlikoff
explains it in his August 10 article, titled "US Is Bankrupt and We
Don't Even Know It," saying:
-
- "Let's get real. The US is bankrupt. Neither spending
more nor taxing less will help the country pay its bills." What's
needed, he says, is reengineering the economy by "radically simplify(ing)
its tax, healthcare, retirement and financial systems...." Revitalization
depends on it with unfunded liabilities topping $110 trillion and growing.
Even the IMF is worried, saying "closing (America's) fiscal gap requires
a permanent annual fiscal adjustment equal to about 14 percent of US GDP,"
meaning, of course, from working households, not corporate interests or
national security, the most glaring areas needing reform.
-
- The fiscal gap represents "the difference between
projected spending (including debt service) and projected revenue in all
future years. (It's) the government's credit-card bill and each year's
14 percent GDP is the interest on that bill."
-
- When it's not paid, it increases the balance owed. And
each trillion the Fed prints bailing out bankers compounds it. Make them
pay, not the public they robbed, starting with shutting them down, breaking
them up, seizing their assets, and nationalizing them for the collective
good.
-
- Kotlikoff is scary saying "Uncle Sam's Ponzi scheme
will stop, (perhaps) in a very nasty manner," citing three possibilities:
-
- (1) massive benefit cuts on retirees;
-
- (2) huge tax increases hitting working Americans hardest,
and/or
-
- (3) printing vast amounts of money ad infinitum until
debt overload crashes the economy eventually.
-
- Calling America "Worse than Greece," he believes
"Most likely we will see a combination of all three responses with
dramatic increases in poverty, tax(es), interest rates and consumer prices,"
the path we're on heading us for the worst of all possible worlds.
-
- Based on the latest Congressional Budget Office (CBO)
data, he calculates a $202 trillion fiscal gap - "more than 15 times
the official debt" because Congress "label(s) most of its liabilities
'unofficial' to keep them off the books, (out of sight) and far in the
future" to concern other officials, not them. Labeling, of course,
isn't fixing. It's just concealing unpleasant realities, letting others,
not them, face the music in out years.
-
- Current federal revenue totals $14.9% of GDP, the IMF
saying that closing it requires "an immediate and permanent doubling
of our personal-income, corporate and federal taxes as well as the payroll
levy set down in the Federal Insurance Contribution Act."
-
- Such policy would produce a 5% surplus this year, the
IMF prescribing ad infinitum fiscal austerity, saying delay will make it
tougher ahead. "Is the IMF bonkers?" Not at all, just preferential,
wanting workers, not special interests hit hardest, the way it's raped
and mauled economies for years, serving capital, not people, now aiming
at America, the biggest plum of all ripe for plucking with millions of
vulnerable households, easy pickings for the powerful, harming, not relieving
their needs by:
-
- -- cutting wages and benefits;
-
- -- destroying, not creating jobs; privatizing everything
for private gain; and
- -- turning America into Guatemala, a corporatist's dream.
-
- Indeed let's get real. Bad policy begets bad results,
and bad solutions makes it worse. For sure, America is "broke and
can no longer afford no-pain, all-gain 'solutions.' "
-
- It needs responsible ones, too many to list, but here's
a few:
-
- -- end imperial wars and a bloated defense budget;
-
- -- reinvent government to make it responsive to public
needs and democratic values;
-
- -- make offenders pay most, starting with Wall Street,
defense contractors, Big Oil, Big Pharma, Agribusiness, and other corporate
predators profiting at public expense for decades;
- -- make now the time for payback, assuring their victims
fair and equitable reimbursements;
-
- -- reinvigorate industrial America;
-
- -- end Wall Street's financial chokehold;
-
- -- return money creation power to Congress as the Constitution
mandates;
-
- -- encourage publicly-owned state banks like North Dakota's,
making it prosperous when most states are debt-strapped and faltering;
-
- -- create full-time, good-paying jobs with benefits;
don't destroy them;
-
- -- bring back those offshored;
-
- -- protect homeowners from foreclosure;
-
- -- re-institute progressive taxes, including a Tobin
tax (perhaps 1%) on all speculative financial transactions, a millionaire's/Wall
Street bank levy generating a huge windfall, enough to smack if not close
the budget gap, making those most able pay; for example, the Bank for International
Settlements estimated annual 2008 global over-the-counter derivatives trading
at $743 trillion; a 1% tax would yield $7.43 trillion, and if taxes curbed
speculation, the take would still be enormous;
-
- -- dismantle corporate predators;
-
- -- think small and local, not big and global;
-
- -- reinstitute financial, environmental, and other consumer-friendly
regulations;
-
- -- get money out of politics;
-
- -- end the two-party monopoly;
-
- -- institutionalize a free, open, fair media and Internet;
-
- -- assure equitable social benefits for all, including
universal, single-payer health care, government-supported public and higher
education, and more; and
- -- reinvigorate an eroding democracy before it's too
late to matter.
-
- Responsible policies, all of the above and more, will
reinvigorate America. The unsustainable fiscal crisis is reason enough
to do it.
-
- 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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