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Presenting The Wall Of Worry: The 50 Ugliest Facts About The US eCONomy
As we close on another week replete with ugly economic data and the usual bizarro counterintuitive market, here is a summary of the 50 most underreported facts about the state of the US economy, courtesy of the Coto report. After reading these it almost makes sense that the market has become completely desensitized to the sad reality now pervasive in this country. Readers are encouraged to add their own observations to this list.
Surely if the list is doubled, the market will go up to 72,000 instead
of just 36,000.
#50) In 2010 the U.S. government is projected to issue almost as much
new debt as
the rest of the governments of the world combined.
#49) It is being projected that the U.S. government will have a
budget deficit of
approximately 1.6 trillion dollars in 2010.
#48) If you went out and spent one dollar every single second, it
would take you more than 31,000
years to spend a trillion dollars.
#47) In fact, if you spent one million dollars every single day since
the birth of Christ, you still would
not have spent one trillion dollars by now.
#46) Total U.S. government debt is now up to 90
percent of gross domestic product.
#45) Total credit market debt in the United States, including
government, corporate and personal debt, has
reached 360 percent of GDP.
#44) U.S. corporate income tax receipts were
down 55% (to $138 billion) for the year ending September 30th,
2009.
#43) There are now 8 counties in the state of California that have
unemployment rates of
over 20 percent.
#42) In the area around Sacramento, California there is one closed business for every six that are still open.
#41) In February, there were 5.5
unemployed Americans for every job opening.
#40) According
to a Pew Research Center study, approximately 37% of all Americans
between the ages of 18 and 29 have either been unemployed or
underemployed at some point during the recession.
#39) More
than 40% of those employed in the United States are now working in
low-wage service jobs.
#38) According to one new survey, 24% of American workers say that they
have postponed their planned retirement age in the past year.
#37) Over 1.4 million Americans filed for personal bankruptcy in
2009, which represented a
32 percent increase over 2008. Not only that, more
Americans filed for bankruptcy in March 2010 than during any month
since U.S. bankruptcy law was tightened in October 2005.
#36) Mortgage purchase applications in the United States are down nearly 40 percent
from a month ago to their lowest level since April of 1997.
#35) RealtyTrac has announced that foreclosure filings in the U.S. established
an all time record for the second consecutive year in 2009.
#34) According to RealtyTrac, foreclosure filings were
reported on 367,056 properties in March 2010, an increase of nearly
19 percent from February, an increase of nearly 8 percent from March
2009 and the highest monthly total since RealtyTrac began issuing its
report in January 2005.
#33) In Pinellas and Pasco counties, which include St. Petersburg,
Florida and the suburbs to the north, there
are 34,000 open foreclosure cases. Ten years ago, there were
only about 4,000.
#32) In California’s Central Valley, 1 out of every 16 homes is
in some phase of foreclosure.
#31) The Mortgage Bankers Association recently announced that more
than 10 percent of all U.S. homeowners with a mortgage had missed at
least one payment during the January to March time period. That was a record high and up from 9.1 percent a
year ago.
#30) U.S. banks repossessed
nearly 258,000 homes nationwide in the first quarter of 2010, a 35
percent jump from the first quarter of 2009.
#29) For the first time in U.S. history, banks
own a greater share of residential housing net worth in the United
States than all individual Americans put together.
#28) More than 24% of all homes with mortgages in the United States were underwater as of the end of 2009.
#27) U.S. commercial property values are
down approximately 40 percent since 2007 and currently 18 percent
of all office space in the United States is sitting vacant.
#26) Defaults on apartment building mortgages held by U.S. banks
climbed to
a record 4.6 percent in the first quarter of 2010. That was almost
twice the level of a year earlier.
#25) In 2009, U.S. banks posted their sharpest decline in private
lending since 1942.
#24) New York state has
delayed paying bills totalling $2.5 billion as a short-term way of
staying solvent but officials are warning that its cash crunch could
soon get even worse.
#23) To make up for a projected 2010 budget shortfall of $280
million, Detroit issued $250 million of 20-year municipal notes in
March. The bond issuance followed on the heels of a warning from Detroit
officials that if its financial state didn’t improve, it
could be forced to declare bankruptcy.
#22) The National League of Cities says that municipal governments
will probably come up between
$56 billion and $83 billion short between now and 2012.
#21) Half a dozen cash-poor U.S. states have announced that
they are delaying their tax refund checks.
#20) Two university professors recently calculated that the combined
unfunded pension liability for all 50 U.S. states is
3.2 trillion dollars.
#19) According to EconomicPolicyJournal.com, 32
U.S. states have already run out of funds to make unemployment benefit
payments and so the federal government has been supplying these
states with funds so that they can make their payments to the
unemployed.
#18) This most recession has erased 8
million private sector jobs in the United States.
#17) Paychecks from private business shrank to
their smallest share of personal income in U.S. history during the
first quarter of 2010.
#16) U.S. government-provided benefits (including Social Security,
unemployment insurance, food stamps and other programs) rose
to a record high during the first three months of 2010.
#15) 39.68
million Americans are now on food stamps, which represents a new
all-time record. But things look like they are going to get even
worse. The U.S. Department of Agriculture is forecasting that
enrollment in the food stamp program will exceed 43 million Americans in
2011.
#14) Phoenix, Arizona features an
astounding annual car theft rate of 57,000 vehicles and has become
the new “Car Theft Capital of the World”.
#13) U.S. law enforcement authorities claim that there are now over 1
million members of criminal gangs inside the country. These 1 million
gang members are responsible for
up to 80% of the crimes committed in the United States each year.
#12) The U.S. health care system was already facing a shortage of
approximately 150,000 doctors in the next decade or so, but thanks to
the health care “reform” bill passed by Congress, that number
could swell by
several hundred thousand more.
#11) According
to an analysis by the Congressional Joint Committee on Taxation the
health care “reform” bill will generate $409.2 billion in additional
taxes on the American people by 2019.
#10) The Dow Jones Industrial Average just experienced the
worst May it has seen since 1940.
#9) In 1950, the ratio of the average executive’s paycheck to the
average worker’s paycheck was about 30 to 1. Since the year 2000,
that ratio has exploded
to between 300 to 500 to one.
#8) Approximately 40%
of all retail spending currently comes from the 20% of American
households that have the highest incomes.
#7) According to economists Thomas Piketty and Emmanuel Saez,
two-thirds of income increases in the U.S. between 2002 and 2007 went to
the wealthiest 1% of all Americans.
#6) The bottom 40 percent of income earners in the United States now
collectively own less than 1 percent of the nation’s wealth.
#5) If you only make the minimum payment each and every time, a
$6,000 credit card bill can
end up costing you over $30,000 (depending on the interest rate).
#4) According to a new report based on U.S. Census Bureau data, only
26 percent of American teens between the ages of 16 and 19 had jobs in
late 2009 which represents a record low since statistics
began to be kept back in 1948.
#3) According to a National Foundation for Credit Counseling survey,
only 58% of those in “Generation Y” pay
their monthly bills on time.
#2) During the first quarter of 2010, the total number of loans that
are at least three months past due in the United States increased for
the 16th consecutive quarter.
#1) According
to the Tax Foundation’s Microsimulation Model, to erase the 2010
U.S. budget deficit, the U.S. Congress would have to multiply each tax
rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15
percent rate would be 36 percent, and the 35 percent rate would have to
be 85 percent.
h/t Teddy KGB
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By October we will want to be throwing your tomatoes.
Perhaps after multiplying the loaves and fishes, Ron could head over to the mall and take a stroll on the reflecting pool.
I love Ron, but waiting around for him to make your dreams a reality isn't going to work. This is a time for self starters. Be sure you're right, then go ahead.
Our coin guy is the total opposite. He can't keep it on the shelves (or, rather, in the safes).
Funny, US Mint reported over 3mil. ASEs minted in June, YTD over 18mil. On track to exceed 36mil. by years end. US total domestic silver production about 40mil oz. Law requires US minted coins use domestic silver only. Mint due to release new 5 oz Am. the Beautiful coins end of July. Might be a good investment. Avail. thru mint distro network.
Back in the Roman Empire, Nero, facing bankruptcy, ordered the mint to secretly reduce the amount of silver in their coins... even going as far as to keep it pure silver on the outside so no one caught on.
I'm sure ONero wouldn't do that, right?
"Law requires US minted coins use domestic silver only."
Until supply runs out...then they can import for demand.
Cross check me...I think that's correct.
Does anyone in the US government give a rats arse about LAW
anymore ?
Apparently not.
They are suing Arizona over a law that hasn't even started and NOT suing state's who have similar laws already on the books and enforcing.
Your point is well taken...bizzaro world.
they are at the gun shop
Seriously Underpriced Silver by Richard Daughty (Mogambo Guru), July 9, 2010, LewRockwell.com
At breakfast I told the kids that I was instituting some new austerity measures around here, and they became so insistent that I heard all about how this was going to “ruin” them and their stupid social lives that I did not have to tell them that I was going to use the money to buy silver, which would have sent them ballistic.
The impetus for my New Mogambo Crusade (NMC) to acquire more silver came as a result of reading in Ed Steer’s Gold & Silver Daily where he noticed in the Comptroller of the Currency’s “Q1/2010 Report on Bank Trading and Derivatives Activities” that “the bottom-line numbers show that two US banks… JPMorgan and HSBC, USA hold between 97% and 99% of all the gold and silver derivatives held by all US banks.” Yow!
This is a result of naked short selling. Normally, to short something, you would have to borrow it from somebody, and then sell that. Now, to short gold or silver is as simple as getting somebody to pay money for a piece of paper that says it represents gold or silver. Easy! There is nothing behind it!
Of course, there are the slimy apologists who insist that while it is true, the shorts can simply buy back the paper gold or silver with cash, so everybody is happy.
It was this ridiculous comment that was the start of the now-infamous Mogambo Food Supply Program (MFSP) where I sold pieces of paper that promised “One complete, 5-course, home-cooked steak dinner,” and I only charged them one dollar! I took the dollar and invested the money in no-risk Treasuries.
Of course, business boomed, and any time anyone wanted to “cash in” their paper dinners, I would pay them with another piece of paper promising a complete, 5-course, home cooked steak dinner. Or, when they got tired of that scam, I would offer to pay them back their original dollar, while I keep the interest their money generated.
Of course, this Fabulous Mogambo Plan (FMP) was soon shut down, and my defense was that this is essentially the same scam that is going on – right now! – in the gold and silver futures markets!
This is not, of course, about how I am a soulless, greedy vulture who wants to make a lot of money in a hurry without actually working and using the actual workings of the futures markets and the stock markets and the bond markets as my business model, but about how JPMorgan and HSBC hold almost all the derivatives of gold and silver and, even worse, how this may actually be understating it.
Mr. Steer goes on “I want to qualify those percentages a bit, by saying that if a bank has a holding company [like Goldman Sachs does], any gold or silver derivatives held by them do not have to be reported to the OCC…and will not show up in this report. Right now the OCC reports that GS holds no derivatives in either gold or silver… but their bank holding company might… and there’s no way of finding that out.”
In fact, he goes on, “The other bottom-line number of interest is that the six largest US banks report holding 99.5% of all the precious metals derivatives in the US banking system.”
Now you know why silver, in serious short supply and evermore vitally needed, is selling for less than $19 an ounce right now, when gold is over $1,200! Using the last 4,500 years as evidence of their average correspondence, a gold-to-silver ratio of 15:1 means that silver should be $81 dollars an ounce! Right now! 426% higher!
And with the roaring inflation that is guaranteed because of all the money that the Federal Reserve is creating so that the federal government can borrow it and spend it, both silver and gold will be much, much, MUCH higher from here!
And if you have to cut the allowances of your own kids to get the money to buy silver, then trust me that the aggravation of them glaring at you all the time, and telling you how much they hate you, is a small price to pay to get more silver at such a low price, perhaps the Biggest Freaking Bargain (BFB) of the century!
And the best part is that it is so easy that I squeal in delight, like a hot pig in fresh mud, “Whee! This investing stuff is easy!” (emphasis mine)
http://www.lewrockwell.com/daughty/mogambo54.1.html
thanks for the post..
I love ....Richard Daughty (Mogambo Guru),
got GOLD.....got pizza
I'm glad Mogambo came back. We need the levity.
(BFB) is what I keep telling Fs and Fy. They are too locked into this world. They are more concerned with where they will put it vis-a-vis preserving wealth. It's too much effort.
umm, you should get out more often then.
on Fri, 07/09/2010 - 19:20
#461530
said
umm, you should get out more often then.
who was this posted to??????
I want a reply..
It’s to lynnybee, in the belief, I suppose, that if lynny’d get out more often and buy silver, biz for the coin guy would go up. scratch_n_sniff is just a good Samaritan, I'd say, drumming up the economy a little for Bernanke during the down turn. BTW, glad you liked that latest Mogambo!
Don't go that way. There's no time for that.
Business is slow all over and too many people are only half-way there. I have friends that 'aren't worried because we've got cash' and haven't quite figured out that their dollars may not be all they'd like either.
You're way ahead of them.
Go for a good walk and look at critters, bushes, trees and so on. You'll feel better. Then get on with living.
We're not dead yet.
http://www.youtube.com/watch?v=grbSQ6O6kbs
It's summer, expecting a pullback, and a lower IN price.
Silver @$18.00, IMHO, should be bought double fisted.
Why would you pay the extra prems for Eagles?..........
Use that prem $$$ for MORE slvr.
At this point, any dip, on either Gold @ $25.00/$40.00oz+,is a grab............Silver, as I said.
My personal take is, get PHYSICAL before the BOMB drops....too late when it does........you'll be one of the sheeple............
Too many MAJOR openings for a OVERNIGHT dump, to not be all in where you want by now....unless it just got stupid cheap.
Everyone should copy and paste this and email to everyone you know. Maybe it will wake a few more people up to what is really going on! Most people I talk to don't have a clue!!!!!!!
It's easier to take the blue pill and complain about the reception on your iPhone 4.
Hmm. I sense a glitch in the matrix.
I'd like to add one on strategic defaulting (not that it's bad) and the slow creep of the tearing of the social fabric.
% Manufacturing jobs lost since...
Illinois has a 50% budget gap.
Inner-city unemployment around 50%.
Type 2 diabetes is rampant in minority children.
Terrible demographics for health care and retirement entitlements.
Obesity exploding health care costs.
Cheap, processed foods are slowly killing Americans.
Re: entitlements - please stop calling it that until my lifelong contributions to SS have been refunded, with interest.
What a crock of shit. Not your comment, but the whole SS charade.
Which team do you play for? "Oh me? The team that never really contributed a damn dime to speak of, but have and will continue to suck on it like a leach FOREVER?"
How about you? "I play on the one that has paid in HARD for the last 25 damn years, knowing full well that by the time I should be eligible to get it back, it'll be FUCKING GONE!"
SS is one of three things, depending on who you are. If you retired last year, than you are realizing back what was promised, and that you paid for..... Up and until you actually live to be 85, and have overdrawn your account. Now you sluff off into group two, where you are a leech. Not an evil leech mind you, but sucking us dry none the less. Unfortunately for you, you are in bad company now, because you share the group with all of the people who live in the "SS is an entitlement world" now. Those who never paid in squat. Enjoy.
Or, if you are in your 30's-40's, you can belong to the "my truncated asshole is bleeding club", where you can rejoice in the knowledge that you are being tax-fucked extra hard, paying dues to a club you're never gonna be allowed to join. Not only do you not even get a single reach around during the 45 or so years you're gonna pay this shit, you get to hear people call it an entitlement.
Goddamn, what a great country.
who is worse off right now. a 25, 35 or 45 year old person....?
Excellent post Colonel.
So simple even a government school educated Generation Y'r can understand it...provided of course if you could get them to look up from furiously texting and read it ;-)
I am among the tax raped 40 somethings. After stealing the money that was supposed to be in a "Lock Box" I am forced to keep paying into this shit and watch as they scheme to steal more from me and my cohort by taking 401ks and the like and shifting them into another fund that they can then borrow and not give back all over again. People really don't understand. This one fact, paying in when they can't possibly give it back to you later (already insolvent), this done at the point of a gun/legislation, this should enrage everyone. It's an entitlement alright. They are entitled to seize my money and I am entitled to fucking lump it.
Another charming feature of SS is paying it twice when you're an "employer," only to then deduct the fucker on your income tax return. I mean, who comes up with this shit?
Giant,
Sent this out to all on my email listings, a week ago............
You would not believe the people who email me, and asked not to be sent this type of info.
Friends, and Gld/Slvr?.......I stopped talking to anyone who doesn't bring it up. Some sheeple are just NOT willing to put the time,nor the will into really checking it all out. To their ultimate detriment I know.
To some, it's like the OLD Tupperware/Amway parties...........
Bottom line, they are living in denial, and that's not the river in Egypt.
.
#29) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
What's that quote from a former US president about waking up destitute one day and finding that the bankers own everything? Seems like that day has arrived.
"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."
Thomas Jefferson
Ping!
Thanks IEVI, I knew someone would be able to quote it for me!
Seems very accurate a prediction, don't you think?
Where is TJ when you need him? Here's to Mr. Jefferson!
http://www.youtube.com/watch?v=CLAg8a0vCZQ
Saul,
Fannie, and Freddie hold 50%+ of all outstanding mortgages........paying ones, and walk aways,defaults.
Let's not forget the destruction of the fishing and tourist industry in the Gulf .................. and .......... all the elves have left Middle Earth for the Grey Havens.
+1
The national debt measures the wealth of the country....Senator Pete Stark
http://www.youtube.com/watch?v=UjbPZAMked0
I haven't seen any new material from this guy either ...Wish he'd embarass a few more of the noobs we have in DC.
Is that similar to the Roosevelt quote, "The measure of a man's wealth is not how much money he has, but how much he can borrow." ?(quoted loosely)
Col,
I liken that to FICO scores...........
Same principle..........the better your score, the more debt you have successfully paid off, and on time.
People with the worst FICO scores,absolute worst, are people who have always paid cash.
Here's an observation, from David A. Rosenberg Chief Economist & Strategist:
“The U.S. turned 234 years old (July 4th), and yet over half of the nation’s money supply was created since Helicopter Ben took over the flight controls four years ago . . .”
On the 4th of July,
they should of had Obama and Bennie
in his chopper
throwing $100 bills by the millions out the window,
maybe over the gulf region.
Hows that for stimulis?
Much more exciting than George Soros's pro western leaflets he would toss out of a plan onto East Germany back in the day.
#52) Only 40% of Americans have enough savings to cover three months of living expenses.
I'm truly surprised that the number is even that high.
and 95%+ of those have it in a bank :\
And 95% of them think 'living expenses' are a daily trip to Jack-in-the-Box and your cell phone bill.
I agree, GIANTKILR and am doing it.
I guess I'm not going to start to worry until I see that the majority of the "poor" people in the U.S. aren't disturbingly obese and smoking Marlboro reds at 5 bucks a pack. Per day.
If there's money for excess food and destructive, expensive habits, we're still in good shape, baby.
When the government provides all of your basic necessities, any money you manage to scrounge up on your own can be used towards your vices.
...so true. Make mine a quart of Night Train. :)
Night Train is a health drink. You can see the fiber!
99 weeks of unemployment benefits can lead to some 'good living'.
I guess gambling falls into the realm of "basic necessity"!
http://articles.latimes.com/2010/jun/25/local/la-me-welfare-casinos-2010...
- Ned
Frank,
Worry.............how you think they got that obese, and are buying $60.00 a carton cigs?.
Welfare BABY!!!!!!!!!!!!
4 more banks closed.......tonight (so far)
http://www.fdic.gov/bank/individual/failed/banklist.html
We must remember that the market anticipates. This week's rally was clearly a recognition of much brighter days ahead...about 6 months out.
<fucking bitter, pissed off sarcasm ON>
And then you've got this crusty old fuck living in DreamWorld:
http://www.bloomberg.com/news/2010-07-08/greenspan-says-economy-may-be-h...
what about ugly facts re the state of america
http://www.youtube.com/watch?v=3B_xBWsDpz0
Friends of your President:
http://www.youtube.com/watch?v=pZVbrvfAn_Q&feature=player_embedded#!
I give you my version of bad economy: Our city San Jose didn't pass budget (July2010 to June 2011) after June, our state California didn't pass budget after June, our country didn't have budget after June. OH, hight crime city Oakland wants to hire 5 policemen, they received 1100 applications in total.
And now Arnie's threatening to put a couple hundred thousand state emps. on minimum wage until the budget is approved. That is his legal right. But the accountant ( elected ) refuses to comply citing software glitches, etc......and despite losing in Court to Arnie.
Lameduck Billionaire Guvernator has a couple movies lined up. So he decides to put on some revenge gloves to stoke the boxoffice.
This whole mess will get a lot more fucked up by year's end.
It sure ain't boring...
More on this from Sacramento. It's like the money taps are rusted in the open position with little or no possibility of being shut off.
http://www.sacbee.com/2010/07/10/2880864/chiang-pleads-poor-technology.html
when they tell you 85-90% of the population is still working - things arent that bad
#39) More than 40% of those employed in the United States are now working in low-wage service jobs.
Yes, and what percent are working for the government?
Delta,
OVER 50%...................last check.
What they COULD have put in here is total population, and number of employed,( a tad over 1/3rd, of 300+ million) then took the precentages....
Add that to Gov stat.......you got it.
Ohh.. Ohh.. I know.. All we need to do is outsource more manufacturing and production to Asia and Mexico.. Then, corporate profits will be up and so will equities.. Then, we will just get rid of the lower 40% of people since they only represent 1% of the wealth..
See there... Lemonade baby!!
#29 is the key to understanding how the end game is going to play out. Certainly all of these are useful for understanding the end game. But knowing the banks are going to be the biggest holders of real value assets is key to understanding what banks are going to think about inflation.
I know we've turned into a nation of pussy barnacles, but my money's on the angry mob over the bankers when it comes the time.
Now what?
Our Orwellian Economy by Charlie Husen
http://www.prudentbear.com/index.php/guestcommentaryview?art_id=10405
I especially like this one:
This time is different.
In today's shadowstats.com update, Williams discusses the massive drop in his M3 measure. Discusses outlook for a depression/recession/slowing of economy.
He also talked about 2 examples: (1) a while ago about a major bank economist who in the green room talked about being bearish on the economy and then went on the air to be bullish; and (2) how recently a TV broadcaster told him they were under a "corporate mandate" to spin things positively. I realize most people on this site wouldn't be surprised by this, but he's hardly a tin-foil on the head guy.
In thinking about a 360% debt to GDP ratio for the economy as a whole, does that imply that, at a 5% interest rate, that the debt service requirement is 18% of the economy? Talk about how the banksters have come to rule the world.
Man, by the sounds of it a lot of folks here had a Meg Ryan, Katz Delicatessen orgasm on reading this doomsday end-of-times Mad Max post by ZH.
http://www.youtube.com/watch?v=F-bsf2x-aeE
Will you hold still, just for a second? Please.
No...no.
I enjoy lava lamps. Very soothing ;-)
And nursing on lava lamps...
A good bounce is hard to beat - thanks for the mammeries - er memories.
You guys talk about being unemployed like it's a bad thing. You all must have pensions that need to be filled by my tax dollars.
73 weeks right? I get like 60% of my current paycheck? Pelosi said I'd get health care and retirement all taken care of. Why the fuck am I still working?
LETS RIDE THIS FUCKER INTO THE SUNSET BABY YEAH!
After reading the list I still feel optimistic about our future - now that is American! (or I have been programmed really well)
'or' should read 'and' perhaps?
Another reason the shatner has hit the fan "There are more Americans employed in government than there are manufacturing and construction. It’s been that way since 2007 and it’s getting worse." see chart from Uncommon Wisdom
http://www.uncommonwisdomdaily.com/5-fixes-america-needs-right-now-9709
Implicit,
How else do you attempt to take over the Republic?.Put em' all on the dole, make them useful idiots, and then drive the last stake in.
A lot of people will do most anything for a dollar, except die for it......................IF they have the choice.
More importantly than the list would be Are Vienna and Jake going to get back together.
"Leo seems to think there is going to be a tidal wave of liquidity in the fall."
Generally - I would not agree with him. I'm die hard freaked out about the economy.
However......
Maybe it won't happen. Still, you can not escape that California is building an infrastructure to legalise pot. The banks are relaxing rules on bank accounts of medi pot businesses. There is class after class of how to run a pot business. And then this:
http://www.insidebayarea.com/oaklandtribune/localnews/ci_15479473?source...
When a city accepts that you are going to use a ton of power energy, and seems okay with it. You know things are changing.
It will be the single item that people will throw tax money at. And, not complain.
People will think the world will end. It won't. The deadbeats will still be deadbeats, and the highly professional and casual user will still be professional, and maybe not as casual. All the existing users will come from the darkness and admit they at least smoke every once in a while.
Initially it may be chaos. But, they are building the structure now. In case it is legalised. You see it everywhere. I bet they are up and ready to run very quickly.
So, let me see if I have this straight: A sustainable U.S. economy is going to revolve around bong hits? And how do we propose to pay for the pot?
OOooh. Keyensian dude. Pot farms are the new manufacturing sector. We produce pot, which we sell to the masses. This fuels growth in the pipe, bong, and paper sector, producing millions of jobs. Plus, as an added bonus, all of the baked people will have the munchies, and be eating out constantly, keeping the service and restaurant sectors hopping. We'll tax all of these magical pot sales, and the revenue generated will steadiliy close that 100 trillion dollar black hole.
The only war we'll need to fight will be with Mexico, because we'll be stepping all over their turf, but hey.
I think it'll work. How about a Harrelson/Chong ticket in 2012?
LOL...ahhhh...wow...like, yeah.
Huh?
http://www.youtube.com/watch?v=DPAfTDsx1-4
duuuude-green jobs, man
According to some classmates of Barry Soetoro, he used to deal a little weed in high school. Now he has his marines guarding his poppy fields in Afghanistan.
Shoot, we tried to just say no and look where it got us.
Dude, what's your problem.
I'd think every Bilda-bear on this website needs to be heavily sedated with some kush. Yes, everyone here should be smoking trees. Green dude. Chronic. Wow!!
You all follow Tyler around enamored by thoughts of a great collapse, end of the world, USA crash, fait accompli.
Yea. Go get some herb, a peach swisher and roll yourself a nice little blunt. Smoke it and check back.
Then you might start to day trade a little better against the mean, smart, aggressive algorithms who keep eating your lunch.
#13) U.S. law enforcement authorities claim that there are now over 1 million members of criminal gangs inside the country. These 1 million gang members are responsible for up to 80% of the crimes committed in the United States each year.
Do they include gov't employees and bankers in this count?
under normal circumstances that would be funny, but now???
Gallows humor my friend.
#51) 1% of the population is operating the farms and ranches that feed the other 99%. Of those 1%, 100% of them are 100% dependent on cheap petrochemicals for that production.
Ouch. Rusty nailed it again.
bingo ...BINGO HERE
http://www.youtube.com/watch?v=Rvwh9_HsUmU&feature=related
http://www.youtube.com/watch?v=AFM8i6jJFOc&feature=related
infinite supply of those cheap petrochemicals Rusty.
No worries mate...
Just pull them out of the ocean. Or just let it rain!
Got tarps?
"Ahhh! My eye! It burns!"
"Stop looking up in the sky or put on the goggles like I showed you!"
"I've been out in front of a dozen dead oceans
I've been ten thousand miles in the mouth of a graveyard
And it's a hard, it's a hard, it's a hard, and it's a hard
It's a hard rain's a-gonna fall" Bob Dylan
Authors of the late '80s and early '90s had it right: we're descending into a dystopian post-capitalist world of despotic global corporatism. The first steps and fateful decisions were taken during this crisis. TBTF was a key turning point which placed survival of the corporation above the law. Free market capitalism has morphed. Only this time the State merely thinks it is in charge whereas in truth it's the power of the corporation to shape policy that has triumphed. If you doubt it, look at the Financial Reform (Not!) Bill.
Caviar
"Authors of the late '80s and early '90s had it right..."
__
Let's not forget the 70s!!!
Bartholomew: Corporate society takes care of everything. And all it asks of anyone, all it's ever asked of anyone ever, is not to interfere with management decisions.
++
[at the start of the Tokyo game]
P.A. Announcer: Ladies and gentlemen, will you stand please for the playing of our Corporate Hymn.
Muir
Recent remakes of classic anti corporation films have removed the evil corporations. Funny huh.
Just like they continually promote NEW WW2 movies and series, you know the last one the US won.
Compare the quality of todays war movies to the Viet Nam films of the seventies.
Anyway a couple more quotes for you.
Bartholomew: [in a video conference with other corporate executives] In my opinion, we are confronted here with something of a situation. Otherwise, I would not have presumed to take up your time. Once again, it concerns the case of Jonathan E. We know we don't want anything extraordinary to happen to Jonathan. We've already agreeed on that. No accidents, nothing unnatural. The game was created to demonstrate the futility of individual effort. And the game must do its work. The Energy Corporation has done all it can, and if a champion defeats the meaning for which the game was designed, then he must lose. I hope you agree with my reasoning.
...
Mr. President: I have made the United Provinces of America the greatest power in the known universe.
...
Arthur Clements: [proposing that Titan Oil can raise their gasoline prices] The people will accept the 12 cents now because we can blame it on the Arabs!
Adam Steiffel, Chairman Titan Oil: Ah, Arthur, you're missing the point: We *are* the Arabs.
...
Carroll Commission Spokesman: Ladies and gentlemen, you have been invited here today for the official announcement of the inquiry into the death of Senator Charles Carroll. This is an announcement, not a press conference. Therefore, there will be no questions. A complete transcript of the investigation is being prepared for publication on March 1st. At that time, the committee will hold a full-scale press conference. After nearly four months of investigation, followed by nine weeks of hearings, it is the conclusion of this committee that Senator Carroll was assassinated by Thomas Richard Linden. It is our further conclusion that he acted entirely alone, motivated by a sense of patriotism and a psychotic desire for public recognition. The committee wishes to emphasize that there is no evidence of any wider conspiracy; no evidence whatsoever. It's our hope that this will put an end to the kind of irresponsible and exploitive speculation conducted by the press in recent months, as I've said in the complete text of the hearings, which provides the bases for the committee's findings which will be published on March 1st. When you've had a chance to examine the evidence, you'll have every opportunity to ask those questions which remain unanswered, if they are any. That is all. Thank you.
Hammond Commission Spokesman: Ladies and gentlemen, you've been invited here today for the official announcement of the inquiry into the death of George Hammond. A complete transcript of the investigation is in preparation. This committee has spent nearly six months of investigation, followed by eleven weeks of hearings. After careful deliberation, it is concluded that George Hammond was assassinated by Joseph Frady. An overwhelming body of evidence has revealed that Frady was obsessed with the Carroll assassination, and in his confused and distorted state of mind seems to have imagined that Hammond was responsible for the senator's death. He was equally convinced that Hammond was somehow plotting to kill him. And it is for those reasons that Frady assassinated him. Although I'm certain that this will do nothing to discourage the conspiracy peddlers: there is no evidence of a conspiracy in the assassination of George Hammond. Those are our findings. The evidence will be available as soon as possible. Thank you. This is an announcement, gentlemen. There will be no questions.
Very good Gully!
However, you left out the absolute best for the 70s!
(SHOULD BE THE ANTHEM ON ZH)
__
__
...and these people intend to run off
billions of dollars of this currency.
- They wanna obliterate their debts.
- What debts?
...
They can never pay it back.
They're too poor. You know that.
Their only hope is worldwide inflation,
but it has to be a huge one.
I mean, so big that paper money's not
worth anything. You use it for wallpaper.
Now, once they get these plates,
the ones that I robbed yesterday...
...which is American dollars,
now they're all set.
Set for what?
What do you think will happen
when they run off this dough...
...and there's trillions of extra dollars,
francs and marks floating around?
You've got a collapse of confidence
in the currency.
People are gonna panic. There's
gonna be gold riots, atonal music...
...political chaos, mass suicide.
Right? It's Germany before Hitler.
You can see that.
Jesus, I don't know
what people are gonna do...
...when a six pack of Budweiser
cost $ oo.
That'll be awful.
- You think I'm bullshitting?
- No, I don't.
- They thought I was bullshitting!
- Who thought that?
The CIA.
__
script The In-laws 1979
One of the best comedies ever written! But most here were born after that came out, and would probably find it quaint, excessively 'egghead', and sadly lacking in hip hop sound track.
+++
Many here would be familiar with The Sprawl Trilogy even if they don't realize it. These were the roots that inspired further writings and films like The Matrix films in the late '90s-early aughts. What's interesting yet disturbing is how each passing decade has only served to confirm the convergence of the theories in these stories with reality. Much like Jules Verne was a visionary far before his time who predicted space travel and much like Huxley and Wells were visionaries who predicted 20th century totalitarianism and it's methods.
We're entering a crossroads where major decisions regarding the future will be made. We're already getting early indications what that future might be like.
What was that? I was distracted by the boucing titties.
. . .ladies and gentlemen, I give you. . . amrkns.
"What was that? I was distracted by the boucing titties."
f u see k .
Walcot -- I believe you can say "fuck" here without major repercussions. It's not like any of us have not heard that word before.
Say it here? Hell, you can DO IT here.
But remember, we're all going to watch!
Dibs on sitting next to Dr. Sandi at the caberet.
I'm surprised Velobabe has not responded to this post. She seems "into" that sort of thing, I'm guessing...our resident exhibitionist. And no, I'm not saying it's a bad thing. ;-)
There was a World Cup finale to watch gentelmen. She made it clear what she'd be up to!
It's OK...trust her...she's a doctor ;-)
#52 1 in 4 Americans suffers from substance abuse (active or in recovery).
Also, the Mad Max routine above isn't how I think it would go down. I think we'd look a lot more like a fucked up third world country (like ones I lived in). Huge slums, corrupt government, obscene wealth concentration. But, you know, even in the slums, people help each other and pull for each other on a day to day basis. Argue as you will, but I've seen it. I wouldn't choose it, but I think when the shit hist the fan, people help each other more than prey upon one another. Still... pays to be clever and safe...
I was in Tijuana, Mexico and thought, "This is the America of the future."
America: The new Mexico.
I wonder if Mexico will let Americans slip across the border.
"America: The new Mexico" brings to mind a 2001 issue of TIME magazine with a special section, titled "La nueva frontera/The new frontier.” Perhaps you'll remember it.
The June 11 issue proclaimed on its cover in multicolored lettering (red, white, and blue, the colors of the United States’ flag plus red and green, the colors of the Mexican flag): “WELCOME TO AMEXICA.” The cover subtext read: “The Border is vanishing before our eyes, creating a new world for all us.”
On page 26 came the revelation: “Along the U.S.-Mexican border, where hearts and minds and money and culture merges, the Century of the Americas is born,” as the American Century died , I suppose, along with her "vanishing" borders.
I always wanted to live in a dysfunctional, third world country. TIME should have been straightforward and admitted it's the start of the Century of China.
TIME? OMG, you're cracking me up. Did you say TIME?
You must have been at Dr. Zero's office today for a check up.
OK, ok, busting your balls...but you read ZH and quote TIME?
Scotty, beam me outta here...
Just the shirt for you!
http://www.vintagevantage.com/products.php?productcat_id=2&product_id=93...
http://www.captaincanadacrusades.ca/articles/none-dare-call-it-conspirac...
FOURTEEN SIGNPOSTS TO SLAVERY
1. Restrictions on taking money out of the country and on the establishment or retention
of a foreign bank account by an American citizen.
2. Abolition of private ownership of hand guns.
3. Detention of individuals without judicial process.
4. Requirements that private financial transactions be keyed to social security numbers or
other government identification so that government records of these transactions can be
kept and fed into a computer.
5. Use of compulsory education laws to forbid attendance at presently existing private
schools.
6. Compulsory non-military service.
7. Compulsory psychological treatment for non-government workers or public school
children.
8. An official declaration that anti-Communist organizations are subversive and
subsequent legal action taken to suppress them.
9. Laws limiting the number of people allowed to meet in a private home.
10. Any significant change in passport regulations to make passports more difficult to
obtain or use.
11. Wage and price controls, especially in a non-wartime situation
12. Any kind of compulsory registration with the government of where individuals work.
13. Any attempt to restrict freedom of movement within the United States.
14. Any attempt to make a new major law by executive decree (that is, actually put into
effect, not merely authorized as by existing executive orders.)
As you are n6 doubt aware President Nixon already has invoked numbers 1, 14 and 14.
...
The Insiders are counting on your being too preoccupied with your own problems or too
lazy to fight back while the chains of slavery are being fastened on you. They are
counting on their mass media to con you, frighten you, or ridicule you out of saving your
freedom, and, most of all, they are counting on your thinking you can escape by not
taking part in opposing their takeover.
They are also counting on those of you who recognize the conspiracy becoming so
involved with watching all moves that you become totally mesmerized by their
machinations, and thus become incapable of acting.
Excellent book from the early 70's! Read it years ago.
Thanks for linking to a PDF version. Nice to have a copy of it again.
Creepy list. The only one that didn't resonate was #9. But then I don't know that many people.
#53 Allan: I wonder if she actually had an orgasm in the two years we were married, or did she fake it that night?
I ran some numbers the other night out of curiosity. I was wondering how much food stamps paid. I believe the site was for NY state. One scenario I had 4 people, 2 children, which got 1000/month in food stamps. The other scenario had 10 people, that got 1500/month.
The site said to put in because that would qualify the recipient for discounts on gas, electricity. Also add in getting welfare, disability, and medicare, section 8 housing; compared to working for $30,000 year and paying child care, food, medical, rent, clothing for work, gas and you can see the tradeoff. Also on a Huffington Post site someone who lost their unemployment benefit is encouraged to get food stamps and go to the food banks or churches to get food.
There is one person at the cafeteria at work who told me he has 12 children and his job pays 14/hour. I guess if you don't care about the quality of life for your children, you can put out as many as possible.
You can easily see how so many feel Uncle Sugar has the answer, especially with the dems controlling congress, president and soon the supreme court.
Unbelievable if true.
The way food stamps should work is that you go and pick up prepared amounts of food. For 4 people for 1 week, you get 28 entres, 28 lunches, and 28 breakfasts. No snacks, no meat, no sweets. Rice, beans, multivitamin. No meat. Hear that? Meat is a luxury you can't afford.
1000 a month? Christ. That's double what I spend for the same amount of people.
I just did the estimate for Texas and for the 4 people scenario it get 668/month, for the 10 people scenario it says
The estimated monthly SNAP benefit for your income and household size is $1352.
You can check for other states by searching
food stamp estimator. Some like Texas are one page, others are html form after form before you get an answer.
here is from california's web site showing max monthly amounts: http://www.foodstampguide.org/maximum-food-stamp-allotment-levels/
unfortunately the html table did not display well:
household size- max monthly benefit
1- $200
2- $367
3- $526
4- $668
5- $793
6- $952
7- $1052
8- $1202
each additional person +$150
If you really do it right, you could get food at churches and food banks, trade in the stamps and get a tattoo each month.
Here is some disability benefit info, from california's site
Benefit Amounts for Disability Insurance
For claims beginning on or after January 1, 2010, weekly benefits range from $50 to a maximum of $987. To qualify for the maximum weekly benefit amount ($987) an individual must earn at least $23,305.46 in a calendar quarter during the base period.
I know of someone who went to a 'shrink' who put him in for disability around 10 years ago. The shrink has him convinced he is not ready for work in his mind. According to him, when he wakes up he just does not feel like going to work. So he get Medicaid and disability and I assume food stamps, not the max but something. Now the good news is he has a pot card, so he picks up pot for his friends and they give him some everyday. He basically worked a few months, qualified for disability and then took it.
I also know of a lady who while getting disability was doing ballroom dance contests in florida. Sadly I know of other stories, I sure most people do. The middle class american is put on the termination list, ASAP.
Amerika is a wonderful country.
I used to date this multinational corporation. He always had a lot of money to buy other companies, take over their brands and fire the production workers, but he never paid a dime in income taxes. A total Welfare King.
.
The solution is make 10 staples available free of charge to anyone with a state issued id (drivers license, id card,...). No qualifing, no paper work, the richest and the poorest can get beans, rice, peanut butter, powdered milk, etc... The items would have no resale value, therefore could not be sold for drugs, booze, etc...
Eliminate ALL food stamp programs nationwide, only government payout would be to producers of the 10 staples. No one would ever starve to death, and the cost to taxpayers would be a fraction of current program.
#15 is incorrect.... 40.4 Million americans are on food stamps as of April 2010..latest numbers avail. ( the original projection was 40.5 by Sept 2010...I think that number will fall).
http://www.fns.usda.gov/pd/29SNAPcurrPP.htm
#49: the 2010 budget deficit is, I believe, $5,000 USD per man/woman/child...so the family of four is in the hole/on the future hook for $20K, in a single year?! JFC.
Jeez Ben
At least we saved Goldman so those slime buckets could bonus themselves for the F job they did on the Middle Class.
What's another 20k per year....
You're just not being positive....
A Golden Shower is trickling down....
http://www.youtube.com/watch?v=gqsT4xnKZPg
The Reagan Diaries, which follows Ronald Reagan's 8 year term through
his daily dairy entries, and lo and behold, early on at page 25 comes this obvious bombshell
from economist Arthur Laffer: "Art Laffer dropped a grenade on his colleagues when he said we weren't
going to solve the fiscal program until we returned to convertibility of money for gold. I would have
liked to heard the discussion among the economists after I left" - Ronald Reagan
I have posted this on some sites............I ask you all... do not be brain dead....paladin
and this from Karl Denninger
Laffer Loses His Mind
http://market-ticker.denninger.net/archives/2488-Laffer-Loses-His-Mind.html
what a load of crap..
Karl...... Laffer said this over a year ago.....I talked to him on a call in show....and Karl you can pray to to get your name on the web or paid for TV shows....it is not going to happen..
I know if you hate gold your chance is greater.........Grartman is in line before you....LOL
Denninger goes all religious over Laffer’s statement::
My suggestion would have been to take all $3.6 trillion and declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today? How does a 2.5% unemployment rate sound?
Denninger may not know it, but tariffs were the largest source of federal revenue from the 1790s to the eve of World War I!
"The first federal statutes imposing the legal obligation to pay a federal income tax were adopted by Congress in 1861 and 1862 to pay for the Civil War," according to Wikipedia, and repealed in 1872. "In 1909 Congress proposed the Sixteenth Amendment, which became part of the Constitution in 1913.. Congress re-adopted the income tax that same year (and adopted the Fed banking cabal, as well, I might add), levying a 1% tax on net personal incomes above $3,000, with a 6% surtax on incomes above $500,000"… and the rest is history.
Yet, verifies Wikipedia, “most historians agree that the period in which the greatest economic and technological progress occurred was between the end of the 18th century and the beginning of the 20th. During this period the nation was transformed from a primitive agricultural economy to the foremost industrial power in the world, with more than a third of the global industrial output. This can be illustrated by the index of total industrial production, which increased from only 4.29 in 1790 to 1975 in 1913, an increase of 460 times (base year 1850 - 100)."
As Laffer wrote in the WSJ June 6: “It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
“Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.”
Potholes in the Recovery Road - Reduce Speed Ahead By: Paul Kasriel | Friday, July 9, 2010
For various reasons that will be discussed below, we are lowering our 2010 real gross domestic product (GDP) forecast. At the same time, we are publicly unveiling our 2011 forecast - admittedly not nearly as anxiously awaited as LeBron's revelation. For the second half of 2010, we now are projecting annualized real GDP growth of 1.8% versus our May forecast of 2.5%. This lower second-half projection and the Commerce Department's revised lower first quarter growth reduces our Q4/Q4 2010 real GDP growth forecast to 2.2% versus May's forecast of 2.7%. As a result of our reduced 2010 real GDP growth projection, the forecast for the unemployment rate has been increased. For Q4:2010, we now place the average unemployment rate at 10.3% versus the May forecast of 10.0%. Our Q4/Q4 2011 forecast for real GDP growth is 3.2%.
Before getting into the reasons for downgrading the 2010 GDP forecast, we think it is important for investors to realize that this past recession and current recovery are of a different nature than most others in the post-war era - an exception being the recession/recovery/expansion of 1990-93. Most postwar recessions were brought on by the Federal Reserve intentionally tightening monetary conditions in order to extinguish undesired increases in the prices of goods and services. In this event, the nonfinancial sectors of the economy bear the brunt of monetary policy tightening. However, the financial sector, although also adversely affected, remains able to resume credit creation when the Fed adopts an accommodative policy after goods/services price increases moderate. The Fed lowers its policy interest rate, in effect providing cheaper credit to the financial sector, which, in turn, provides cheaper credit to the private nonfinancial sector. Credit growth created by the private financial sector picks up, growth in private sector spending picks up, and a robust recovery ensues.
Although the onset of the recent recession unfolded in a similar fashion as described above - the Fed intentionally tightening monetary conditions to restrain undesired increases in the prices of goods and services - the financial sector was more adversely affected in the recent recession than in prior ones. Of course, the reason for this was the post-war unprecedented decline in residential real estate prices. With home mortgages outstanding rising to both absolute and relative record highs in this past cycle (see Chart 1) and with the value of the collateral backing this debt falling precipitously, the financial sector experienced its biggest losses in the post-war era. These losses, which resulted in the massive "evaporation" of capital, rendered the financial sector unable to create net new credit for the private nonfinancial sector when the Fed slashed the cost of its credit.
Chart 2 shows that starting in Q1:2009 and continuing through Q1:2010 (the latest data point available) outstanding loans and investments on the books of private financial institutions contracted. In prior post-war recessions, loans and investments slowed in their rate of growth. But this is the first instance of an outright contraction in private financial sector issued credit. Judging from the annualized rate of contraction in bank loans and investments of 4.9% in April and 8.0% in May (see Chart 3), private financial sector credit creation likely contracted again in the second quarter of this year.
Chart 1
Chart 2
Chart 3
What all this means is that the transmission mechanism between the Federal Reserve and the nonfinancial sector of the economy is malfunctioning. The Fed is revving up the monetary engine, but these high rpms are not being transferred to the wheels of the economy. With regard to the revving up of the monetary engine, the Fed has reduced its effective policy rate to a level below 0.25% and has increased the amount of assets on its balance sheet from $877 billion at the end of 2007 to over $2.3 trillion today. Under normal circumstances, if the private financial system were functioning properly, this cheap and abundant Fed credit would have been transformed into cheap and abundant credit for the private nonfinancial sector. But this is not happening because the private financial sector monetary transmission mechanism is malfunctioning.
Qualitatively, but not of the same magnitude, the private financial sector transmission mechanism also was malfunctioning in the early 1990s. The commercial banking system incurred relatively large losses associated with falling commercial real estate values in the late 1980s. Because of capital constraints resulting from these losses, banks could create relatively little credit for the private sector. (An increase in private sector loans and investments incurs a charge against risk-based capital.) As shown in Chart 4, quarter-to-quarter growth in real final sales was very weak in the three quarters of the recovery. Subsequently, growth in real final sales accelerated, only to contract again in Q1:1993. The unemployment rate did not peak until the Q2:1992 and declined rather slowly in 1993. The Fed continued to reduce its federal funds target through September 1992, a full 18 months after the trough of the prior recession (March 1991). First associated with the weak and uneven recovery following the 1990-91 were terms such as "jobless recovery," "double-dip," and who could forget the Maestro's phrase, "financial market headwinds." Sound familiar?
Chart 4
In the past two years, the U.S. banking system has been recapitalized either through institutions raising capital in the financial markets or through taxpayer-injected capital (TARP). The U.S banking system is generally perceived to be at least adequately capitalized, if not well capitalized. Why, then, is bank credit continuing to contract? Yes, credit demand from large corporate potential borrowers is relatively weak. But are there not some small businesses that desire to borrow? With mortgage rates the lowest in decades and house prices exceptionally low relative to household income, are there not some households that desire to borrow? And even if there are not small businesses and households that want to borrow, there is one borrower out there with a near infinite demand for credit - the U.S. Treasury. Although commercial banks increased their holdings of U.S Treasury securities by $135 billion in the four quarters ended Q1:2010 - an absolute larger increase in their holdings than what occurred in the early 1990s, relative to the size of their balance sheets - bank holdings of Treasury securities in Q1:2010 pale in comparison to what they were in the early 1990s (see Chart 5).
Chart 5
Why are banks reluctant to commit their capital to new loans and investments, even U.S. Treasury securities? We think there are two reasons. First, as was reported in the July 8 edition of the Wall Street Journal (Bank Fix for Unpaid Commercial Property Loans: 'Extend and Pretend' - WSJ.com) there are $176 billion of commercial real estate loans of questionable value on banks' books. Depending on the amount of these loans that must be written off, a currently well-capitalized bank could become an under-capitalized bank down the road. Second, domestic and international bank regulators are expected to increase required capital ratios. There is uncertainty, however, as to by how much required capital ratios will be raised and when these higher capital ratios will take effect. Again, depending on these regulatory factors, a currently well-capitalized bank could find itself undercapitalized in the not-too-distant future. We believe that for these two reasons, banks are hoarding their capital rather than committing it to new loans and investments. Until the banking system starts creating credit, we expect growth in both real and nominal economic activity to be weak and uneven.
Now this factor of contracting bank credit is not something that just occurred, or occurred to us since our May forecast. It has been an important factor explaining why our real GDP forecast has been below that of the consensus for some time now. But there are new factors which have caused us to lower our real GDP forecast even further below that of the consensus. One of these factors is the condition of state and local government budgets, which has obvious implications for growth in state and local government spending. Although we had projected declines in state and local government spending for 2010, the budgetary problems are even more serious than we had assumed. As a result, we have lowered our forecast for this important component of aggregate demand. In the 30 years ended 2007, real state and local government expenditures averaged 12.9% of real GDP. This compares with average real GDP shares of real exports at 8.1% and real business equipment and software expenditures of 5.4%. And state and local government employment accounts for a relatively large share of total nonfarm employment. In the 30 years ended 2007, state and local government's share of total employment averaged 14.2%. This compares with 15.6% for manufacturing and 20.2% for trade, transportation (shipping) and utilities. No other major employment category share comes close to that of state and local government.
Another sector of aggregate demand we are revising down for 2010 is housing. Although we thought there would be some payback in residential real estate expenditures after the expiration of the home-purchase tax credit, the recent declines in home sales and housing starts have been more severe than expected. Thus, we suspect that there is a more fundamental weakness in housing, despite our view that owner-occupied housing is incredibly affordable now - incredibly affordable if a potential buyer is able to qualify for a mortgage.
Our forecast of exports has been revised lower. Two of the largest developing economies - China and Brazil - are experiencing a slowdown in their economic growth rates - not severe, but noticeable. Because a significant increase in U.S. exports in the past year has been to Asia excluding Japan and Latin America, these growth moderations in China and Brazil will likely lead to a slowdown in U.S. export growth. The first sign of this was a six-point drop in the June ISM New Export Orders index (see Chart 6). In addition, the fiscal austerity being embraced by Germany and the UK is likely, in our view, to slow domestic demand in western Europe. This, in turn, will have an adverse effect on global economic activity, and thus, an adverse effect on U.S. exports.
Chart 6
Our downward revision to second-half real GDP growth implies a weaker labor market. The month-to-month changes in the headline unemployment rate are difficult to forecast, given the month-to-month volatility in the labor force and the participation rate. So, if the participation rate were to fall, the headline unemployment rate might not move up as much as we are projecting. The important message we are attempting to convey to investors is that we see some renewed weakness developing in hiring and perhaps some renewed firing, assuming there is any one left to fire. Reinforcing this view is the fact that the year-over-year decline in initial unemployment insurance claims is moderating (see Chart 7).
Chart 7
The pick up in real economic growth we are projecting for 2011 is based on the assumption that the financial sector begins to create a modicum of credit. In addition, we expect that the sectors contracting in the second half of this year - state and local government spending, residential investment expenditures and non-residential investment expenditures - will begin to post modest growth in 2011. So, it is not that any one sector is exceptionally strong, but that all sectors are on forward gear.
The rate of increase in the prices of consumer goods and services is expected to remain muted. With bank credit continuing to contract, the unemployment rate staying high and factories continuing to run well below capacity, it is difficult for price increases to ramp up on a sustained basis.
All of which leads us to the outlook for Fed policy. With our downwardly-revised real GDP forecast for the second half of 2010, we have pushed out our forecast for the beginning of Fed tightening from early 2011 to mid-2011. And the risk is that the first tightening does not occur until early 2012. In fact, we would not be surprised to see the Fed take some actions in the direction of a more accommodative policy. Such actions might include reducing the interest rate it pays on bank excess reserves from 25 basis points to zero, resuming open market purchases of mortgage-backed securities and reactivating the Term Asset Liquidity Facility.
What about the prospects for another sustained contraction in real GDP in the next year?
Chart 8 shows that every recession since the one in 1957 has been preceded by an increase in the federal funds rate - an interest rate controlled by the Fed. If we are correct in our forecast that the earliest the Fed will start to raise its policy interest rate is June 2011, then, based on the historical precedent shown in Chart 8, it is unlikely that a recession will commence this year or next. But, as we discussed at the outset, this is a business cycle unlike any other in the post-war era. In prior cycles, as the Fed raised the funds rate, growth in bank credit slowed (see Chart 9). In the current environment, even with the Fed holding the funds rate at less than 25 basis points, bank credit continues to contract. Thus, we are going to utter the six most dangerous words in economic forecasting: This time it might be different.
Chart 8
Chart 9
*Paul Kasriel is the recipient of the Lawrence R. Klein Award for Blue Chip Forecasting Accuracy
THE NORTHERN TRUST COMPANY
ECONOMIC RESEARCH DEPARTMENT
July 2010
SELECTED BUSINESS INDICATORS
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Author: Paul KasrielPaul L. Kasriel
Director of Economic Research
The Northern Trust Company
Economic Research Department
Positive Economic Commentary
"The economics of what is, rather than what you might like it to be."
50 South LaSalle Street, Chicago, Illinois 60675
Paul joined the economic research unit of The Northern Trust Company in 1986 as Vice President and Economist, being named Senior Vice President and Director of Economic Research in 2000. His economic and interest rate forecasts are used both internally and by clients. The accuracy of the Economic Research Department's forecasts has consistently been highly-ranked in the Blue Chip survey of about 50 forecasters over the years. To that point, Paul received the prestigious 2006 Lawrence R. Klein Award for having the most accurate economic forecast among the Blue Chip survey participants for the years 2002 through 2005. The accuracy of Paul's 2008 economic forecast was ranked in the top five of The Wall Street Journal survey panel of economists. In January 2009, The Wall Street Journal and Forbes cited Paul as one of the few who identified early on the formation of the housing bubble and foresaw the economic and financial market havoc that would ensue after the bubble inevitably burst. Through written commentaries containing his straightforward and often nonconsensus analysis of economic and financial market issues, Paul has developed a loyal following in the financial community. The Northern's economic website was listed as one of the top ten most interesting by The Wall Street Journal. Paul is the co-author of a book entitled Seven Indicators That Move Markets.
Paul began his career as a research economist at the Federal Reserve Bank of Chicago. He has taught courses in finance at the DePaul University Kellstadt Graduate School of Business and at the Northwestern University Kellogg Graduate School of Management. Paul serves on the Economic Advisory Committee of the American Bankers Association.
The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The information herein is based on sources which The Northern Trust Company believes to be reliable, but we cannot warrant its accuracy or completeness. Such information is subject to change and is not intended to influence your investment decisions.
Copyright © 2005-2010 The Northern Trust Company
#54 - by actual count (family reunion last week), 68% of the people in my (very) extended family simply don't give a shit anymore. Some are doing OK, some not. Some are prepared for whatever happens, some not. Some are healthy and ready for anything, some not. Some are very smart, some are dumb as a stone. Some are hardworking honest people, and some have never done a day's honest work in their lives ( yep - lawyers and bankers). Some are too far gone to be coherent, and some are too young to do anything but babble, but 2/3 of those able to talk simply don't care anymore. About anything. They have given up on whatever dreams they once had. The few who say they still care and feel that things will turn out OK can't articulate why or how that will happen. The words 'faith' and 'God' come up way too often in these folks explanations of why they feel so positive.
Maybe this family is an exception, but I'm betting not. Maybe this is just a massive bad hair day and we'll all snap out of it, but I'm betting not. The words of 'America the Beautiful' still bring tears to my eyes, but now those tears are for what I am certain has been lost, not for what might yet be. I'm with the 68%. Good night America.
It is looking as though the bloom is off the rose, isn't it? Is the rose plant a perennial?
Nothing's been lost. The founding of America always was about resources. When we got here, we noticed these people everywhere, already on the land. We also noticed that they weren't maximally exploiting the land. What we should have done was said hello, and left. That would have been the moral and decent thing to do. Instead, what we did was instigate a genocide, murder, rape, and concentrate, and take what wasn't ours to take, by force and terror. Mexicans got in the way too, so we stole their land.
America was on the road to empire well before the year 2000. Jefferson himself, the great isolationist, ordered ships into the Mediterranean to kill north african "pirates." Ironic we still have them today.
It's always been about resources and conflict. Humans were used as slaves, environments were exploited without concern, wars were fought for resources, and so on.
Excuse my conceit and my cynicism, but the only thing that you've "lost" is the illusion that there, in fact, even was the America referred to in your song. My friend - it never existed. You have simply awoken to that fact, and you are, in my opinion, miscontruing your own epiphany with a change in the system. The system has not changed. The system has not changed in a very long time. The current economic and energy disturbance is not a change in the system. It's a change in the direction of the system.
Cry. But cry for the brutal reality you have now embraced, not for the loss of what never was, and, I believe, what will not be.
You know, the Native Americans through the millenia slaughtered each other over this land. Then the Europeans came and did the same. Is it somehow worse when slaughter is committed by peoples of a different race?
No. It's the same. My point wasn't that the natives were any better or worse. My point was that what happened was intentional genocide for the purpose of resource appropriation, and not whatever American history books say it was.
Yes, because when the natives did it, they generally left enough of their victims alive to continue the race.