United States Heading towards a Depression?

Even if all $787B were spent today, it wouldn't "create" one real job.

Quoting from Great Myths of the Great Depression:

A brief analogy will illustrate this point. If a thief goes house to house robbing everybody in the neighborhood, then heads off to a nearby shopping mall to spend his ill-gotten loot, it is not assumed that because his spending “stimulated” the stores at the mall he has thereby performed a national service or provided a general economic benefit. Likewise, when the government hires someone to catalog the many ways of cooking spinach, his tax-supported paycheck cannot be counted as a net increase to the economy because the wealth used to pay him was simply diverted, not created. Economists today must still battle this “magical thinking” every time more government spending is proposed — as if money comes not from productive citizens, but rather from the tooth fairy.​

Obama's "Stimulus Package" was nothing more than the Democrats stealing almost a trillion dollars from the U.S. taxpayers and using it to bribe the special interest groups who got them elected.

 

The US is still bleeding money bailing out banks and homeowners.

Fannie, Freddie to expand refinance program to homeowners whose loan-to-value ratio is 125 percent.

http://news.yahoo.com/s/nm/20090701/bs_nm/us_financial_housing

Freddie Mac gets another $6.1 billion

After drawing the funds, Freddie Mac has now received $51.7 billion from the Treasury Department and still has access to an additional $149.3 billion to help it finance operations.

June unemployment report is coming out tomorrow.

ADP Employment Survey Says June Worse than May. ADP survey reported that 473,000 private jobs were lost in June.

 

That pretty much sums it up.

The only way to create true stimulus, jobs and innovation is to allow those of us that do all three for a living to do so. You do this by cutting out taxes, or eliminating them.

 

You also do it by eliminating regulation, shrinking government, and allowing EVERYONE to compete in the marketplace.

Of course, Bush and Obama failed on all three.

 

Yes exactly. Most people confront taxes & regulation in the back of their heads as screw it. Its too complicated or too costly to venture into this idea.
If you hack away and remove alot of the needless regulation you'd probably see alot of business just spring up, people would get busy.

 

It seems evident that we are seriously screwed. The Obama administration seems stuck between two choices: deflationary depression and inflationary depression.

If you look at Inflation Data, you will see that we have just seen three months of deflation -- the first deflation we've seen since 1955.

On the other hand, the monetary base is expanding twelve times faster than it's average since 1981. This is driving M1 to expand at three times it's average and M2 at 50% higher than it's average. Inflation is coming, and the current temporary deflation will just give the government more political will to print money.

We're looking at eight to ten years of economic hardship. Can you live on 60% of what you are now spending? You will soon learn how. The only question now is whether the cash in your pocket now will deflate or inflate before you spend it.

This could end up looking a lot like the Japanese depression of the 1990's, except that the Japanese had a huge pile of savings to carry them through the lean years in relative comfort. We started into this depression already deeply in debt and federal spending is now at 28.1% of GDP -- a level not seen since the end of WWII. The money to pay for all of that government excess has to come from somewhere, and the somewhere is your pocket.

A sign above the gate of the Auschwitz concentration camp read Arbeit macht frei (Work brings freedom). Americans are going to have to work very hard to free themselves from all of this debt.

 

Obama not doing that good huh?

 

It is Sunday morning and a good laugh is a good way to start the day, so I quoted couple of Mia's posts from beginning of this thread.

It is interesting to see how much the Bush gang have changed their mind since the change of the president.

 

It's interesting how when the economy changes, our view of it changes. That's what happens when your eyes are not covered with the blinders of ideology.

When I visited the U.S. recently my old neighborhood had been converted from a thriving downtown area to a nightmarish collection of closed shops. Unemployment is heading past 10% and the government is implementing myriad policies which will drive unemployment significantly higher.

The combined effects of increased taxation and increased regulation, multiplied by exorbitant compliance costs, make doing business in the U.S. uncompetitive globally.

In addition to the direct effects which these naive policies have on business and unemployment, they also cause investment to decline radically, because investors see high risk for very little reward. Investors are hoarding cash, because they don't see anything worth investing in.

Worse, the process is self-reinforcing. Investors who can't invest lead to businesses who can't hire which leads to increased unemployment -- which leads to increased foreclosures and lower real estate prices. It also leads to lower tax revenue, which means that even more tax increases must be applied to squeeze the same amount of revenue out of a small group of productive citizens.

The U.S. government is going to squeeze the productive classes until they no longer resist collectivization.

 

It's interesting how when the president changes, our view of economy changes. That's what happens when your eyes are covered with the blinders of ideology.

Corrected it for you.

 

It is truly bizarre how you can be so blind to enormous macroeconomic changes.

 

It is truly bizarre how you can believe that every aspect of economy was perfect during the last 8 years but there was such enormous macroeconomic changes during the last 6 month that made everything to a disaster, just because the president is democrat and black.

 

Exactly. The US as a whole is not going to get any better unless it gets more money into it then it spends (ie: more export than import), which we both know, isn't going to happen anytime soon Not that I can say much for Australia; however, I'm certainly doing MY part. I bring more into this country than what I spend on imported goods.

Which is why I even wonder why I work sometimes; after tax (most of which goes to fat lazy slobs on social security), house payments etc, I don't get much more than dole bludging scum sitting on the couch drinking booze all day... And, honestly, why get a job for $25k a year (which a lot of younger people make) when you could be a f****'n loser sponge mother f****'n piece of **** that deserves to be roasted like a pig on a spit, and make $15-$20k a year after tax? (not that I make $25k, I make way more, but nearly everyone else thats 19 makes that). I know a lot of people working hard for their $15 an hour while deserve-nothing life-drainers play xbox and make almost as much! I can't blame people for getting frustrated and just joining the dole line, make almost as much and do 40 hours a week less work! It's not their fault, it's the stupid government for handing out so much hard-earned cash to those who don't have a *#*#&#& and prefer to TAKE rather than GIVE anything to this planet. Then again, with the amount of losers I know, I'm assuming every house in the country would be robbed bear if they stopped giving them free money, it's basically us people making something of our lives paying those no-lifes to "not rob us".

I don't have anything wrong with those who HONESTLY need it, such as those crippled by some illness, those who have a severe injury due to war etc, which actually DESERVE something. If someone put their life on the line to save my country, so I could even EXIST, I don't mind giving them a few bucks a week. Fact is 90% of the people getting money DESERVE $0 and are getting a ton for doing nothing but DRAIN us of getting ANYWHERE.

Getting off topic, but if some more people actually contributed to this god forsaken place, we might actually get places quicker and have less depressions. Need I even mention the countless people who spent years, if not decades, to selflessly invent and improve things that have benefited human kind for many years to come. Nowadays, 99.99% people/companies that invent improve anything are only doing so for the financial gain. "Geez, I only have $10 billion in the bank, better make something else and charge a shitload for that, because I'm totally going to go bust soon". All these companies that give money away because they're "good" are basically throwing it down the drain, barely any INVEST it in anything worthwhile. Like the football teams that get $2k off some local business, and all they get are new jerseys (I wish I was exaggerating). What a !*#&%& waste. Could easily get so much more for that amount of money (given they live off donations, they should be tightass as), getting a bunch of equipment that will improve their clubs skills, win them more games, and inevitably win more competitions (which of course means more people wanting to play for the club, more businesses wanting to sponsor them etc)

</rant> (for now )

 

Thomas Jefferson, one of America's early leaders, stated the morality of this very clearly:

To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, 'the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.'
​

He also foresaw the results of our current folly:

The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.
​

 

Exactly, you don't move forward by slowing down the race leaders, you go forward by getting rid of those holding it back.

 

How could someone be so clueless with all the economic evidence around them? In California no less, a state that is insolvent!

Those quotes are a true indictment of the incompetence of many Americans.

How do you survive in such ignorance?

This shows me people will never learn until they are homeless, bankrupt, and without a source of income.

You try to warn people, tell them about your experiences...

Instead of them listening, they just want to demean, undermine, or attack you rather than looking at your warnings and investigating for themselves.

Many Americans in this country are so entitled, so lazy, and so clueluess, that when the hammer hits, they are going to come whining and complaining about no one having told them the truth or giving them a chance to prepare.

Pathetic.

 

We are in a serious recession. It is not as if there are genius's out there with great experience dealing with these issues that can determine exactly how to get out of this mess.

The political loudmouths might get great satisfaction out of continuously repeating the same old the overriding evidence is that by not reining in the real estate markets, and by not reining in overwhelming borrowing the nation fell into a huge private debtor world that has exploded upon us into negative economic conditions and a downward spiral.

Take new car sales.

A few years ago, and for quite a few years before that the US was seeing about 16 million new cars and more sold every year. (that is all cars and trucks including vehicles built by US and foreign companies)

According to NADA (National Association of Auto Dealers) the average price of a new vehicle in 2008 was about $28,400.

Currently we are running at an annual sales level of 10 million new vehicles. New car sales have dropped by 6 million or over 37%.

In other words, 6 million times the average price of $28,400 = a little more than $170 billion.

Assume 50% (that has to be low) of that equals labor, from the automotive factory workers, the parts factory workers, white collar folks in the automotive industries, less delivery people, less people on the sales end, less everything.

That is estimated at $85 billion less in wages. All of the businesses in the industry are earning less, probably showing losses in many cases--less corporate taxes.

That is just one industry. Take new homes. That has crashed worse than new cars. That much more in losses.

Very few businesses are expanding in any way. There is a huge drop in money floating around the economy.

The efforts to put money in the economy, and create jobs by the administration is an effort to in some way jump start parts of the economy.

It doesn't make sense today to simply cut corporate taxes as Mia endlessly wants. Cutting his taxes isn't going to spur the economy. When there is less demand all around in all industries nobody is going to hire more. Every time I hear these comments I can only think that is the endless crying of someone who whines...."gimmee more money". Only an idiot business is going to hire more people if there isn't any demand.

So the Obama administration is trying to put money into the economy through what are primarily govt jobs. Some of it goes directly to private industries, no doubt a lot of it is spent on govt efforts. It is in fact the largest consumer in the nation.

The effort is not going well. It seems as if actual money for these projects is moving way slow. It needs to be picked up.

Hopefully if people go back to work there will be more money spent in the economy and more private business will pick up.

Clearly this is causing big debt problems. Notwithstanding the GOP loyalists who simply ignored enlargening budget deficits during the entire period of the Bush administration....who simply never said anything about it....they are now clamoring about deficits going out of whack.

Of interest, someone with more business intelligence than all the mouths here...Warren Buffett said....1) we may need more stimulus spending (ie more of what the Obama administration is doing) AND 2. We are creating enormous budget deficits that will cause huge problems.

At least he can state two things contradictory without putting outrageous political gibberish spin on it.

It is a horribly difficult time. Even as there are some signs that the negative downward spiral is slowing...there are endless signs that it could get worse.

Its a difficult time. Its only too bad that the endless GOP rightwing mouths can only see a very small part of the picture and endlessly babble the same thing.

I seem to remember that this whole horrible economic condition occurred during the watch of the GOP and even as there were serious indicators that huge problems were on the horizon...they did nothing.

 

There's only been $373 million spend on infrastructure so far.

The money supply is at all time highs.

It could get critical at the end of the year in December.

I don't think that Bush knew what hit him with the financial mess.

Senate Banking Committee Christopher Dodd (28 years in the Senate) and Representative Barney Frank chairman of the House Financial Services Committee (27 years in Congress) broke the system.

http://www.faithandfacts.com/2008/09/22/fannie-mae-five-five-key-players-who-broke-the-system/

 

gwirled is a Canadian/American if that helps you any.

 

The financial "stimulus" is nothing of the sort. It's a big payoff scheme for the people who got Obama elected. It will have ZERO effect on the economy.

You can't take money from one American and give it to another American and announce "Look! We're making America richer!" It's a lie that only people raised in public school system are ignorant enough to believe.

The only way to make the country richer is to increase productivity. That requires reducing government debt and reducing government regulation. Government is not the solution to America's troubles, government is the source of America's ills.

None of this has changed since Thomas Jefferson's time. There is no "new economics", there is only "new propaganda."