America Facing Depression and Bankruptcy - by Stephen Lendman
Long-time economic, political and market analyst Bob Chapman publishes the International Forecaster, offering incisive analysis absent through mainstream sources, especially important now given America's deepening economic crisis getting harder to conceal as evidence mounts.
His August 25 issue says the following:
"Twenty countries (including America) are headed into bankruptcy and more will follow. That brings up the subject of state debt in the US. America has been in an inflationary depression for 18 months. States have been cutting back for two years," but still face huge budget gaps required to be closed....2011 will be a terrible year (with) 80% of states expect(ing) deficits of more than $200 billion. 2012 looks even worse." Most worrisome, "there is no recovery and there never has been....the US economy and financial system is comatose." The worst is yet to come and will hit hard on arrival.
On August 24, economist David Rosenberg said, "Now (I'll) tell you why this is a depression, and not just some garden-variety recession," what he's been repeating for months unlike few others, corporate analysts claiming the fall 2007 downturn "ended sometime last year." Not so, it's deepened, growing evidence providing more clarity.
Offering a historical perspective, Rosenberg said the Great Depression wasn't marked by declining GDP each quarter. The 1929 - 33 recession lasted four years, followed by recovery and another "deep downturn" in 1937 - 38.
During the first one, "there were no fewer than six - six! - quarterly bounces in GDP data," averaging 8% at an annual rate, accompanied by sharp market increases, then declines confirming false positives. So "guess what? We may be reliving history (now). If you're keeping score, we have recorded four quarterly advances in real GDP," averaging only 3%. The late 1930s reversal showed "how fragile the post-bubble recovery really was," a faux one again repeated in a weaker economy now than then, one headed for serious trouble ahead, harming millions more Americans as a result.
The Fed cut interest rates to near zero with no effect, at best buying time, resolving nothing. "Then the Fed tripled the size of its balance sheet - again with little sustained impetus to a broken financial system."
Weeks back, then confirmed with new data, Rosenberg stressed weakness, numerous indicators turning down, including production, retail sales, consumer confidence, and housing, a bellwether industry impacting the entire economy. New reports show it's collapsing, some readings to record lows, others disturbingly weak throughout the country.
July existing home sales dropped 25.5%, the largest monthly decline since records began in 1968, bringing annualized sales back to 1995 levels, and signaling worse trouble ahead. Other housing data confirm the malaise, including new home sales, housing starts and permits.
As worrisome were increasing layoffs and first-time unemployment claims hitting 500,000, flashing red for trouble nearly three years after the initial downturn, combined with a near-22% unemployment rate, not the bogus 9.5% headline number, the 1980 calculation reengineered to conceal weakness like all other fake economic data, putting lipstick on an economy, increasingly looking and smelling more like a pig, a sick one.
According to Rosenberg, "You know you are in a depression when:
-- "Congress (extends) jobless benefits seven times (in the past two years) when almost half (of those) unemployed have been looking for at least a half year;"
-- the adult male unemployment rate (25 - 54 years) "hit a post-WW II (high and still tops) the 1982 peak," the worst then since the Great Depression;
-- "youth unemployment is stuck near 25%," and for inner-city black youths it's 80% or higher; "these developments will have profound long-term consequences - social, economic and political;"
-- the depression's fiscal costs keep mounting, the federal deficit soaring with no end to it in sight;