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That is the first video from the BBC on the century of the self, 4 parts, it's not at all about boomers, although I think they are the first generation to be so completely raised on consumerisim mostly through TV.
Boomers are the most self indulgent force the planet has or will likely ever see, me me me me.
It's 4 hours long, not expecting you to watch it but if you did you'd see exactly how things have gotten where they are now.
Unleashing this force on the world, and we did invent it btw, modern consumerisim is all us baby.
It's a plauge of mankind is what it is, and it will ruin civilization and destroy what's left of America as people shed rights in supposed self interest by the buckets.
I disagree with you totally.
America hasn't been what you're talking about in a long long time, what it is, is a shadow of it's own principles, the truth hurts.
Don't pull a Hilary or anything Conrad, but man - how the heck do you get out of bed in the morning??
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Globalization was inevitable, however instead of managing it through our own competitive advantages as a SOCIETY, we allowed our corporations to manage it in their own self interests.
The interests of the corporation are not the interests of the American people as a whole, get that through your head once and for all.
Corporations have no soul and are not real, they're artificial entities we create to do business, and as such leaving them in control of our economic destiny is stupid.
Level playing fields, labor laws, antitrust legislation, accounting legislation all of this we put in place in the past to manage corporations understanding that human greed really knows no bounds.
Capitalisim is just one way to run a society, I think it's the best way but it has to be policed, and it hasn't been.
This is THE problem, you have off balance sheet financing, Enron like accounting running wild in our biggest financial giants, like Citi, they have SIV's that look strangely like all the off balance sheet companies Enron had.
These companies like Haliburton have no soul, they don't care about us, they care about the bottom line and if you don't watch them they can and will run amok of their own accord.
We had technological leads in so many areas we could have done things a thousand times smarter, but no we didn't because to a corporation America is just a place on the map, it's not home, it could care less where the money comes from or who gets paid to make the product.
You're a fool if you trust them, they are a great engine of commerce but if you just let it go you'll find that when the lights are off they're stealing you blind.
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
Don't pull a Hilary or anything Conrad, but man - how the heck do you get out of bed in the morning??
I get out of bed just fine 82 and I know what I stand for do you?
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
After all we've been through, and you still have to ask??
I know where you stand as well Conrad, hence the question about getting out of bed in the morning...
Really what makes me mad is what America could be, needs to be.
The world is a really unstable place and we provide a lot of stability, but we're not always the good guys like everyone pretends we are no matter how much some would like that to be so.
Intentions or not, the road to hell and all, so it's got to be about principles first or you're really not talking about what we were.
Principles like not making two sets of rules in Iraq so a young woman can be gang raped without hope of justice.
Principles like not invading soverign nations who haven't attacked you.
Principles like not allowing goods to be sold here produced in sweat shops in working conditions we'd jail people for.
Standing for something isn't easy though, so it's understandable that we've cut back on it.
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
Really what makes me mad is what America could be, needs to be.
Here's a BIG difference... This makes you sad, while this makes me excited!
Quote:
Originally Posted by conraddobler
The world is a really unstable place and we provide a lot of stability, but we're not always the good guys like everyone pretends we are no matter how much some would like that to be so.
Yup... The world in incredibly unstable. And yes, America offers hope, health, wealth and stability on a scale not other country can begin to dream of...
But no one person, and certainly no one country is ever perfect. Just like the rest of the world, America gets it wrong every once in a while too... But far more often than any other country, and again, on a scale other countries simply can't even contemplate, we get it right!
Quote:
Originally Posted by conraddobler
Intentions or not, the road to hell and all, so it's got to be about principles first or you're really not talking about what we were.
Completely agree!
Quote:
Originally Posted by conraddobler
Principles like not making two sets of rules in Iraq so a young woman can be gang raped without hope of justice.
Sorry, Iraqi's make the rules in Iraq... And by the way, here in America is justice carried out in perfect fashion 24x7x365??
Quote:
Originally Posted by conraddobler
Principles like not invading soverign nations who haven't attacked you.
The debate of our times...
Quote:
Originally Posted by conraddobler
Principles like not allowing goods to be sold here produced in sweat shops in working conditions we'd jail people for.
IMO, while not perfect, America has been actively engaged in clamping down on this sort of abuse...
Quote:
Originally Posted by conraddobler
Standing for something isn't easy though, so it's understandable that we've cut back on it.
Not sure how old you are Conrad... Not even sure it matters really... But it seems to me that you base so much of your disdain for todays' America, off of some sort of fantastical, orgasmagorical Utopia of what America once was... Was she never flawed?? Or did all of these warts surface in the last 25, 30, 40 years?
Here's a BIG difference... This makes you sad, while this makes me excited!
Yup... The world in incredibly unstable. And yes, America offers hope, health, wealth and stability on a scale not other country can begin to dream of...
But no one person, and certainly no one country is ever perfect. Just like the rest of the world, America gets it wrong every once in a while too... But far more often than any other country, and again, on a scale other countries simply can't even contemplate, we get it right!
Completely agree!
Sorry, Iraqi's make the rules in Iraq... And by the way, here in America is justice carried out in perfect fashion 24x7x365??
The debate of our times...
IMO, while not perfect, America has been actively engaged in clamping down on this sort of abuse...
Not sure how old you are Conrad... Not even sure it matters really... But it seems to me that you base so much of your disdain for todays' America, off of some sort of fantastical, orgasmagorical Utopia of what America once was... Was she never flawed?? Or did all of these warts surface in the last 25, 30, 40 years?
The basic ideals we stand for are not compatible with modern society, the government knows this.
We were founded as a nation of independent farmers for the most part, and as such we leaned heavily towards individual liberties.
In a modern complex society these are a burden for government and will be taken away.
So though never perfect we were most times based or grounded in the right place, that anchor is gone and it's not comming back by itself.
Your government is not your friend, conservative or liberal, it's got it's own agenda, survive, consolidate power and grow, that's it.
Conservatives tried starving it, didn't work, liberals try tweaking it to some agenda or another, dosen't work.
Whoever runs it just makes it bigger and it's gotten totally out of hand and if we don't stop it, big business and it will collude to carve us up into nothing more than Soviet style citizens, one right at a time.
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
I've seen first hand capitlisim gone haywire, amok in my own idustry mortgage lending, I'm 42 years old, I have 3 wonderful daughters, my own business and I'm a happy person 82.
I know you find this hard to believe but I've been married to the same worman for 21 years now and I'm believe it or not reasonably stable.
I don't dismiss what this country has given me the opportunity to do, I'd simply like to pass that on to my children in as good or better condition than it was handed to me that is all.
Being a debt merchant I can see how the debt thing is going to play out, I can see how our society is so hopelessly based on it and how it's grown during the time I've been involved in it.
The path we are on is not sustainable with our core values, it's an abomination of them plain and simple.
I don't claim to pine away for the good ole days, there is no such thing, every good thing we've ever done as a nation has been hard work and painful if nothing else to achieve.
I interact with consumers every day, the extent to which most are unable to tell the difference between good and bad actors in my business is frankly saddening.
It's a symptom of how far corporations have taken this mind control stuff in terms of playing on our emotions not our rational thoughts.
Watch the series I posted, all of the marketing is designed to appeal to our emotional desires because telling people the truth dosen't sell, that's our problem we've become so good at selling we don't know the truth when it's staring us in the face anymore.
I'll never see SSI as it's structured now, by the time I get to that age they'll have effectively done away with most of what it is out of necessity, all the while pandering to this or that implied threat or crisis of the day.
We're bankrupt as a nation in many ways, things have to change or the outcome just gets worse, saying it'll be alright isn't solving the problems its just words.
__________________
At what point then is the approach of danger to be expected? I answer, if it ever reach us, it must spring up amongst us. It cannot come from abroad. If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen, we must live through all time, or die by suicide.
Experts Warn of Recession -- Duh, We're Living in One Already
By Barbara Ehrenreich, Barbaraehrenreich.com. Posted January 10, 2008.
Growth and productivity mean nothing when they are de-coupled from most people's lived experience: being squeezed.
The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: Rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, god forbid, recession?
To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical -- or at least the newspapers' standard -- definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then "recession" doesn't seem to be a very useful term any more.
The economists' odd fixation on growth as a measure of economic well-being puts them in a parallel universe of their own. WorldMoneyWatch's website tells us that, for example, that "The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income." And the latest issue of US News and World Report advises, "The key... for America is to keep its economy growing as fast as possible without triggering inflation."
But hellooo, we've had brisk growth for the last few years, as the president always likes to remind us, only without those promised increases in personal income, at least not for the middle class. Growth, some of the economists are conceding in perplexity, has been "de-coupled" from mass prosperity.
Growth is not the only economic indicator that has let us down recently. In the last five years, America's briskly rising productivity has been the envy of much of the world. But at the same time, real wages have actually declined. It's not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently.
And what about the unemployment rate? The old liberal faith was that "full employment" would create a workers' paradise, with higher wages and enhanced bargaining power for the little guy and gal. But we've had nearly full employment, or at least an unemployment rate of under five percent, for years now, again, without the predicted gains. What the old liberals weren't counting on was a depressed minimum wage, impotent unions, and a witch's brew of management strategies to hold wages and salaries down.
Now if those great and solemn economic indicators -- growth, productivity and employment rates -- have become de-coupled from most people's lived experience, then there's something wrong with the economists, the economy, or both. The clue lies in the word "most." We have become so unequal as a nation that we increasingly occupy two different economies -- one for the rich and one for everyone else -- and the latter has been in a recession, if not a depression, for a long, long time. Not all economists can bring themselves to admit this.
I suspect that America's fabulous growth in productivity is another illustration of the disconnect between economic measures and human experience. It's been attributed to better education and technological advances, which would be nice to believe in. But a revealing 2001 study by McKinsey also credited America's productivity growth to "managerial innovations" and cited Wal-Mart as a model performer, meaning that we are also looking at fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads, and cutting back on breaks. Productivity may look good from the top, but at the middle and the bottom it can feel a lot like pain.
When employees are squeezed hard enough, then you have the possibility of a genuine recession as technically defined. People buy less, so growth declines, to the point where even the economic over-class has to sit up and take notice. This is happening in Japan, where a recent Wall Street Journal headline announces: "Growing Reliance on Temps Holds Back Japan's Rebound: Firms Increasingly Add Part-Time Workers; Spending Power Lags." The U.S., where consumer spending accounts for 70 percent of the economy compared to a little more than half in Japan, is even more vulnerable to a downturn in personal consumption.
What is this fixation on growth anyway? As a general rule of biological survival, any creature or entity that depends on perpetual growth is well worth avoiding, lest you be eaten alive. As Bill McKibben argues in his book Deep Economy, the "cult of growth" has led to global warming, ghastly levels of pollution, and diminishing resources. Tumors grow, at least until they kill their hosts; economies ought to be sustainable.
Apocalypse aside, the mantra of growth has deceived us for far too long. What it translates into is: Don't worry about the relative size of your slice, just concentrate on growing the pie! Now, with a recession threatening even more suffering for those who are already struggling, may be the perfect time to get out the pie-cutter again. Too bad that the one leading Democratic candidate who promises to do so now appears to be on the ropes.
Barbara Ehrenreich is the author of thirteen books, including the New York Times bestseller Nickel and Dimed. A frequent contributor to the New York Times, Harpers, and the Progressive, she is a contributing writer to Time magazine. She lives in Florida.
__________________
In politics, nothing happens by accident. If it happens, you can bet it was planned that way.
Franklin D. Roosevelt
"Those who can make you believe absurdities can make you commit atrocities." --Voltaire
Globalization was and is inevitable Conrad. The "competitive advantage" America has always enjoyed is not only found within our people, but in our way of life, the way we are governed, the freedom we as people and as an economy have been able to enjoy while the rest of the world wallowed in state-controlled environments...
Do you really believe that Americans are smarter, or somehow more intelligent than the rest of the world? Of course not... Global competition was inevitable. As a country, our mission is to do all we can to ensure our culture and our economy remain as free and open as ever. Why is it that for GM and Ford, their profit per car sold outside the U.S. dwarfs that of cars sold in America? Is that the "fault" of "we"?? I think you're smarter than that...
To an extent yes it was inevitable. and yes we have learned from "them."
Case in point, not even 10 years ago the concept of "dumping" was a big deal in the Bay Area. Companies from Japan, China and Korea in particular were doing that they were coming into US markets and selling goods below costs. The entire idea was eat the losses, bury the competition who can't eat the loss, and then take over the market and raise your prices so you're making a profit now. The US eventually made the practice illegal. US companies couldn't do it there because the trade laws in those countries allowed them to either ban foreign competition, or slap huge tariffs on foreign goods that made it impossible to compete.
What's happened in semiconductors in the last few years(for me I'm quite familiar with DSL since that's where I work) is legalized dumping. TI started it TI is huge and they came into existing DSL markets and competed entirely on price, your best modem was better than theirs so they just cut their price until you couldn't compete. TI got a big part of the market, and their competitors all competed by offshoring engineering and cutting their costs.
When much of the business went overseas(selling to overseas markets) the only way to compete was on price, by then the laws had changed enough that US companies could compete on a semi fair level, but they still had to be able to compete on price.
TI eventually reached a point where they started getting out of the DSL market entirely. I think they sold off the last portion of their business to Infineon they might still have some legacy products not sure. But basically for about 5 years TI had one impact on the DSL market, they cut the prices and forced everyone else to offshore to lower their costs. TI singlehandedly drove down the prices in the entire industry. Competition is supposed to be a good thing for consumers it cuts prices and we all save but in that case because of how they compted they simply buried companies and destroyed innovation.
When DSL became "commoditized" most of those smaller companies either got gobbled up or vanished. The same thing has been happening in virtually every semiconductor segment some big company like TI was using the dumping strategy to win market share and bury the small competitors who were doing all the innovation.
In that scenario I think unfortunately we learned our lesson too well from "them."
“It's All Downhill From Here, Folks”
Fri, 08 Feb 2008 06:22:00
By Mike Whitney
"I just saw a picture Bernanke stripped to the waist in the boiler-room shoveling greenbacks into the furnace.” Rob Dawg, Calculated Risk blog-site
(ICH) -- On January 14, 2008 the FDIC web site began posting the rules for reimbursing depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC) is required to “determine the total insured amount for each depositor....as of the day of the failure” and return their money as quickly as possible. The agency is “modernizing its current business processes and procedures for determining deposit insurance coverage in the event of a failure of one of the largest insured depository institutions.” (http://www.fdic.gov/news/news/financ...8002.html#body)
The implication is clear, the FDIC has begun the “death watch” on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible.
Good luck.
It's worth noting that, due to a rule change by Congress in 1991, the FDIC is now required to use “the least costly transaction when dealing with a troubled bank. The FDIC won't reimburse uninsured depositors if it means increasing the loss to the deposit insurance fund....As a result, uninsured depositors are protected only if a bank acquiring the failed bank will pay more for all of the deposits than it would for insured deposits only.” (MarketWatch)
Great. That's reassuring. And there's more, too. FDIC Chairman Shiela Bair warned that “as of Sept. 30, there were 65 institutions with assets of $18.5 billion on its list of "problem" institutions;” although she wouldn't give names.
So, what does it all mean?
It means there's going to be an unprecedented wave of bank closures in the US and that people who want to hold on to their life savings are going have to be extra vigilant as the situation continues to deteriorate. And it is deteriorating very quickly.
Right now, many of the country's largest investment banks are holding $500 billion in mortgage-backed securities and other structured investments that are steadily depreciating in value. As these assets wear-away the banks' capital, the likelihood of default becomes greater. This week, Fitch Ratings announced that it will (probably) cut ratings on the 5 main bond insurers (Ambac, MBIA, FGIC, CIFG,SCA) “regardless of their capital levels”. This seemingly innocuous statement has roiled markets and put Wall Street in a panic. If the bond insurers lose their AAA rating (on an estimated $2.4 trillion of bonds) then the banks could lose another $70 billion in downgraded assets. That would increase their losses from the credit crunch--which began in August 2007---to $200 billion with no end in sight. It would also impair their ability to issue loans to even credit worthy customers which will further dampen growth in the larger economy. Structured investments have been the banks' “cash cow” for nearly a decade, but, suddenly, the trend has shifted into reverse. Revenue streams have dried up and capital is being destroyed at an accelerating pace. The $2 trillion market for collateralized debt obligations (CDOs) is virtually frozen leaving horrendous debts that will have to be written-down leaving the banks' either deeply scarred or insolvent. It's a mess.
There were some interesting developments in a case involving Merrill Lynch last week which sheds a bit of light on the true “market value” of these complex debt-pools called CDOs. The Massachusetts Secretary of State has charged Merrill with “fraud and misrepresentation” for selling them a CDO that was "highly risky and esoteric" and "unsuitable for the City of Springfield.” (Most cities are required by law to only purchase Triple A rated bonds) The city of Springfield bought the CDO less than a year ago for $13.9 million. It is presently valued at $1.2 million---MORE THAN A 90% LOSS IN LESS THAN A YEAR.
Merrill has quietly settled out of court for the full amount and seems genuinely confused by the Massachusetts Secretary of State's apparent anger. A Merrill spokesman said blandly, “We are puzzled by this suit. We have been cooperating with the Secretary of State Galvin's office throughout this inquiry.”
Is it really that hard to understand why people don't like getting ripped of?
This anecdote shows that these exotic mortgage-backed securities are real stinkers. They're worthless. The market for structured debt-instruments has evaporated overnight leaving a massive hole in the banks' balance sheets. The likely outcome will be a rash of defaults followed by greater consolidation of the major players. (re: banking monopolies) The Fed's multi-billion bailout plan; the “Temporary Auction Facility” (TAF) is a quick-fix, but not a permanent solution. The real problem is insolvency, not liquidity.
The smaller banks are dire straights, too. They're bogged down with commercial and residential loans that are defaulting faster than any time since the Great Depression. The Comptroller of the Currency,John Dugan--who is presently investigating commercial real estate loans---discovered that commercial banks “wrote off $524 million in construction and development loans in the third quarter of 2007, almost nine times the amount of 2006”. The commercial real estate market is following residential real estate off a cliff and will undoubtedly be the next shoe to drop.
Dugan found out that, “More than 60% of Florida banks have commercial real estate loans worth more than 300% of their capital, a level that automatically attracts more attention from examiners.” (Wall Street Journal) He said that his office was prepared to intervene if banks with large real estate exposure maintained unreasonably low reserves for bad loans. Dugan is forecasting a steep “increase in bank failures.”
According to Reuters: “Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction," predicts Gerard Cassidy, RBC Capital Markets analyst. Apart from the growing losses in commercial and residential real estate, the banks are carrying over $150 billion of “unsyndidated” debt connected to leveraged buyout deals (LBOs) which are presently stuck in the mud. Like CDOs, there's no market for these sketchy transactions which require billions in cheap, easily available credit. They've just become another anvil dragging the banks under.
On January 31, Bloomberg News reported: “Losses from securities linked to subprime mortgages may exceed $265 billion as regional U.S. banks, credit unions and overseas financial institutions write down the value of their holdings.” Standard and Poor's added that “it may cut or reduce ratings of $534 billion of subprime-mortgage securities and CDOs as default rates rise.” Another blow to the banks withering balance sheets. Is it any wonder why the "new loans" spigot has been turned off?
Surprisingly, there's an even bigger threat to the financial system than these staggering losses at the banks. A default by one of the big bond insurers could trigger a meltdown in the credit-default swaps market, which could lead to the implosion of trillions of dollars in derivatives bets. The inability of the under-capitalized monolines (bond insurers) to “make good” on their coverage is likely to set the first domino in motion by increasing the number of downgrades on bond issues and intensifying the credit-paralysis which already is spreading throughout the system.
MSN Money's financial analyst Jim Jubak summed it up like this:
"Actually, I'm worried not so much about the junk-bond market itself as the huge market for a derivative called a credit-default swap, or CDS, built on top of that junk-bond market. Credit-default swaps are a kind of insurance against default, arranged between two parties. One party, the seller, agrees to pay the face value of the policy in case of a default by a specific company. The buyer pays a premium, a fee, to the seller for that protection.
This has grown to be a huge market: The total value of all CDS contracts is something like $450 trillion..... Some studies have put the real credit risk at just 6% of the total, or about $27 trillion. That puts the CDS market at somewhere between two and six times the size of the U.S. economy.
All it will take in the CDS market is enough buyers and sellers deciding they can't rely on this insurance anymore for junk-bond prices to tumble and for companies to find it very expensive or impossible to raise money in this market." (Jim Jubak's Journal; "The Next Banking Crisis is on the Way", MSN Money)
Jubak really nails it here. In fact, this is what Wall Street is really worried about. $450 trillion in cyber-credit has been created through various off balance sheets operations which neither the Fed nor any other regulatory body can control. No one even knows how these abstruse, credit-inventions will perform in a falling market. But, so far, it doesn't look good.
The enormity of the derivatives market ($450 trillion) is the direct result of Greenspan's easy-credit monetary policies as well as the reconfiguring of the markets according to the “structured finance” model. The new model allows banks to run off-balance sheets operations that, in effect, create money out of thin air. Similarly, “synthetic” securitization, in the form of credit default swaps (CDS) has turned out to be another scam to avoid maintaining sufficient capital to cover a sudden rash of defaults. The bottom line is that the banks and non-bank institutions wanted to maximize their profits by keeping all their capital in play rather than maintaining the reserves they'd need in the event of a market downturn.
In a deregulated market, the Federal Reserve cannot control the creation of credit by non-bank institutions. As the massive derivatives bubble unwinds, it is likely to have real and disastrous effects on the underlying-productive economy. That's why Jubak and many other market analysts are so concerned. The persistent rise in home foreclosures, means that the derivatives which were levered on the original assets (sometimes exceeding 25-times their value) will vanish down a black hole. As trillions of dollars in virtual-capital are extinguished by a click of the mouse; the prospects of a downward deflationary spiral become more likely.
As economist Nouriel Roubini said:
“One has to realize that there is now a rising probability of a 'catastrophic' financial and economic outcome, i.e. a vicious circle where a deep recession makes the financial losses more severe and where, in turn, large and growing financial losses and a financial meltdown make the recession even more severe. That is why the Fed has thrown caution to the wind and taken a very aggressive approach to risk management.” (Nouriel Roubini EconoMonitor)
"In the fourth quarter of 2007, new foreclosures averaged 2,939 a day, double the pace of a year earlier." (RealtyTrac Inc.) The banks are presently cutting back on home equity loans which provided an additional $600 billion to homeowners last year for personal consumption. Bush's $150 billion “stimulus package” will barely cover a quarter of the amount that is lost. As consumer spending slows and the banks become more constrained in their lending; businesses will face overproduction problems and will have to limit their expansion and lay off workers. This is the downside of “low interest” bubble-making; a painful descent into deflation.
Capital is now being destroyed at a faster pace than it is being created. That's why the Fed is looking for solutions beyond mere rate cuts. Bernanke wants direct government action that will provide immediate stimulus. But that takes political consensus and there's still debate about the gravity of the upcoming recession. The pace of the economic contraction is breathtaking. This week's release of the Institute for Supply Management's Non-Manufacturing Index (ISM) was a shocker. It showed steep declines in all areas of the nation's service sector---including banks, travel companies, contractors, retail stores etc—The Business Activity Index, the New Orders Index, the Employment Index, and the Supplier Delivery Index have all contracted at a “historic” pace. Everyone took a hit.
“The numbers are so terrible, it's beyond belief,” said Scott Anderson, senior economist at Wells Fargo & Co.
The $2 trillion that has been wiped out from falling home prices, the slowdown in lending activity at the banks, the loss $600 billion in home equity loans, and the faltering stock market have all contributed to a noticeable change in the public's attitudes towards spending. Traffic to the shopping malls has slowed to a crawl. Retail shops had their worst January on record. Homeowners are hoarding their earnings to cover basic expenses and to make up for their lack of personal savings. The spending-spigot has been turned off. America's consumer culture is in full-retreat. The slowdown is here. It is now. We are likely to see the sharpest decline in consumer spending in US history. Bush's $150 billion will be too little too late.
America's place in the world has been guaranteed not by what it produces but by what it consumes. The American consumer has been the locomotive that drives the global economy. Now that engine has been derailed by the reckless monetary policies of the Fed and by shortsighted financial innovation. When equity bubbles collapse; everybody pays. Demand for goods and services diminishes, unemployment soars, banks fold, and the economy stalls. That's when governments have to step in and provide programs and resources that keep people working and sustain business activity. Otherwise there will be anarchy. Middle class people are ill-suited for life under a freeway overpass. They need a helping hand from government. Big government. Good-bye, Reagan. Hello, F.D.R.
The Bush stimulus plan is a drop in the bucket. It'll take much, much more. And, we're not holding our breath for a New Deal from George Walker Bush
Alright. Between this and the NY shopkeepers posting "Euros Accepted Here" signs, we're in for a world of hurt. Sadly, CD called it LOOOONG ago....
Yeah, unfortunetly none of us want to say we told you so. This was inevitable with the leveraging of finance in this country. Once the consumer was tapped out and couldn't borrow anymore to spend it was lights out. The powers that be have done a great diservice to our nation and it will take many years of people downsizing and realizing that there is more to life than there morning Starbucks. We have to learn to be a production based economy again before we turn this around. No more Confidence games like what the StockMarket makers have perpetrated on so many. Most won't realize it until there 401k or there pension statement reads 0. The deleveraging has already begun and the next few months are going to be some of the most interesting that our country has faced financially. Banks will fail, and local governments will be under great stress. The unimaginable debt has put them and indeed all of us in the worst position possible. Hope for real leadership that can avoid the reset of our economy( depression). But in reality it is the course we have been on for along time if you believe in supercycle business models. Hope all have tried there best to cover there bases.
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Pain heals, chicks dig scars and glory lasts forever. In the 4th qt fast guys are slower but Big guys are still BIG.
