Since crisis economic conditions
erupted in fall 2007, resolution has been sorely lacking.
US corporations and America's super-rich benefitted from over $3 trillion
in tax cuts.
Anywhere from $9 trillion to double or triple that amount went to bankers
that caused the crisis.
Ordinary Americans have been largely left out. The nation's economic
engine stalled. Recovery is more illusion than reality. Increasingly
it looks dangerously troubled. More on that below.
Financial analyst Martin Weiss said he's "never seen anything like the
whirlwinds and dark clouds now encircling the so-called advanced economies
of the world."
Since crisis conditions erupted, one fourth of developed countries'
workers are unemployed or underemployed. Debt levels too onerous to
repay were incurred. Solutions proposed involve piling on more.
Troubled countries include the PIIGS (Portugal, Ireland, Italy, Greece,
and Spain) making headlines. Vulnerable also include America, Britain,
France, Belgium, Canada, Japan, and others.
Even China's vaunted economic growth is weakening. Brazil and India
are also affected. It's not an encouraging sign. In a recent Bloomberg
interview, economist Nouriel Roubini warned of a 2013 meltdown worse
Banks are operating illegally, he said. The only way to stop it is "break
up these financial supermarkets" and hold responsible officials accountable.
Bankers are greedy, he said. Massive conflicts of interest exist. Firms
on both sides of major deals. Without substantive change, crises will
continue and worsen. Political will is lacking. Policy measures so far
A fundamentally corrupt system festers. Nothing changed. Too-big-to-fail
banks get bigger. No one high up faced prosecution. Things don't look
Market analyst Byron Wien calls the smartest man he knows in Europe
He left him unnamed. He's been writing about him for years. He's known
him for decades. He's "shown an almost uncanny ability to see major
events affecting financial markets before other observers."
For years, he's worried about excessive borrowing and debt. He sees
an inevitable day of reckoning coming. He calls himself a realist. In
recent years, policies employed haven't worked.
"Everything is fine as long as the cost of ten-year debt doesn't exceed
the nominal growth rate." When it does, servicing it it "becomes an
Spain, Italy and Greece passed the point of no return. Other countries
risk following. America isn't quite there yet. It's heading in the wrong
Piling on debt "can't go on forever." Germany will stop backing Eurozone
monetary expansion. Th Fed will "get uneasy as well."
At some point, inflation "will become a factor." Massive money printing's
Before things fall apart, "authorities will pull out every trick in
the book to prevent catastrophe." At best they'll buy time. Problems
aren't being solved. Greater ones are certain.
Spain and Greece will default, he predicts. "In the short term, interest
rates should rise because debt is growing faster than GDP." The same
dynamic affects America.
A banking crisis will follow one or more defaults. "What we are experiencing
is an accumulation of bad decisions."
Banking worldwide got through the 2008 crisis, but "hasn't done so well
since then." Looking ahead, things look grim. Wien said he left the
smartest man's office "somewhat dazed." He hopes he's wrong, but his
track record suggests otherwise.
Complacency masks deteriorating conditions. Hope springs eternal that
central banks will solve all problems. Eventually, they exhaust workable
The normally optimistic Fed sounded dour in its latest FOMC minutes,
"Information from manufacturing and transportation firms was generally
less optimistic than earlier in the year. There were a number of reports
of slowing sales to Europe and Asia."
"Contracts in some parts of the country also indicated that firms had
become more cautious in their hiring and investment decisions, with
most capital investment being undertaken to improve productivity and
reduce costs rather than to expand capacity."
"Some participants cited examples of business contracts saying that
heightened uncertainty about future tax and regulatory policies had
led them to put potential investment projects on hold until the uncertainty
America's economy is in the early stages of confronting two shocks -
Europe's deepening recession and a clouded fiscal outlook.
Monetary policy is a weak antidote to more fundamental problems, it
suggested. It's also worried about structural unemployment, inflation,
and unprecedented wealth destruction.
From 2007 - 2010, it collapsed an epic 39%. In 2010 dollars, median
household net worth declined from $126,400 to $77,300. It's down to
1992 levels. Fifteen years of wealth accumulation vanished. Left unsaid
is how much more may follow.
For now, households would have to see their net worth rise almost two-thirds
to return to pre-2007 levels. Secular economic decline prevents it.
Equities returned virtually nothing since spring 1999. Before crisis
conditions end, they may see steep declines. America's broken jobs engine
reflects it. Excuses don't hold water. Expect future downward revisions
to show conditions worse than now reported.
Progressive Radio News Hour regular Jack Rasmus says when economists
resort to metaphors, they have little idea about root causes or won't
say. Blaming poor results on weather or seasonality doesn't wash.
Counterproductive monetary and fiscal policies are coming home to roost.
Reported higher Q I jobs numbers didn't represent reality. According
"It was the outcome of statistical estimation methods by the US labor
department that consistently overestimates job creation over the winter
It erred three consecutive years. America's jobs engine is broken. Based
on the 1980s calculation model, real unemployment is 22.8%. The reported
8.2% number is blarney.
Obama's stimulus efforts did little to create growth. Now it's run out
of steam, says Rasmus. Fed money creation (QE) helped bankers, not the
economy or troubled households. Chickens are coming home to roost.
Real disposable income growth is nonexistent. Job creation is pathetic.
Full-time ones are disappearing. In the past three months alone, 700,000
Rasmus describes "churning" from full to part-time work. When that happens,
few net jobs are created. Ones that are pay less with few benefits.
A destructive downward cycle exacerbates dismal conditions.
Obama officials claimed manufacturing would produce growth. Most sector
jobs created were managerial, supervisory and professional.
In 2012 Q II, net rank and file job creation declined by 170,000. It
shows contraction, not growth. Expect acceleration ahead. New factory
orders slumped in June at the worst rate since 2009.
Public workers have been declining for over three years. State and local
governments have been especially hard hit.
Construction also shows contraction. In Q I, 13,000 jobs were lost.
In Q II, another 42,000 were eliminated. Ahead things look worse.
Putting a brave face on dark times doesn't wash. Sooner or later even
cockeyed optimists will come around. Weather expertise isnít necessary
to know which way the wind is blowing.
GE chairman/CEO Jeff Immelt also serves as Obama's Council on Jobs and
Competitiveness head. His idea of a jobs creation program, said Rasmus,
is "more free trade and deregulation in exchange for hiring a couple
thousand jobs temporary status workers in the US at half pay."
America's duopoly power enforces this and other destructive policies.
Imagine if current or future leaders go too far, especially on issues
affecting world peace.
Evolutionary biologist Ernst Mayr (1904 - 2005) expressed concern. He
said human intelligence doesn't guarantee survival. He believed beetles
and bacteria stand a better chance.
He said species on average survive about 100,000 years. Humanity's been
around about that long. He wondered if we'd use our remaining time to
If so, we'd be the only species ever to do it. Given our current path,
it's possible and perhaps sooner than most people imagine.
In the meantime, our wealth, freedom and well-being are being lost.
Stopping it should be priority one.
People control their own destinies if they're up to the challenge to
try. All great struggles are won the same way.
Stephen Lendman lives in Chicago and can be reached at email@example.com.
His new book is titled "How Wall Street Fleeces America: Privatized
Banking, Government Collusion and Class War"
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