Papering Over Disaster
Main Street depression being ignored and made worse.
by Stephen Lendman
Fall 2007 began the onset of America's greatest Depression. Europe's in deep trouble. Reckoning day's delayed by bailing out insolvent banks and throwing money at markets like confetti.
What can't go on forever, won't. Progressive Radio News Hour guest Bob Chapman warned investors for years. It's just a matter of time. Houses built on sand collapse. American and European economies are no exception. They're sick and getting sicker.
Another Greek crisis approaches, Chapman warns, whether "via austerity, demonstrations, military coup," or perhaps the worst of all three if public rage erupts in violence.
Ireland, Portugal, Belgium, Spain and italy are next. BRIC giants China, India and Brazil are weakening. Pyrrhic victories conceal core meltdown trouble. Are policy makers "dumb enough to believe that austerity, lower wages and higher taxes bring prosperity?" What's happening in Europe and America looks "surreal." Recovery's an illusion.
Another dirty secret is that France, Britain, and other EU countries also show weakness. "These problems are going to go on and on and on," says Chapman.
Economist David Rosenberg also warns of trouble. Disturbing signs are everywhere. In America alone, consumer spending stagnated. Core capex shipments are down. The trade deficit's widening. Mortgage applications are falling. Mortgage refinancing activity collapsed. Gas prices are heading for $4 a gallon on their way perhaps to 5.
In February, hiring announcements were down 85% year-over-year. Pink slips are rising. JOLTS (Job Openings and Labor Turnover Survey) data showed job openings down 81,000 in January. They've posted declines in three of the past four months. JOLTS hiring numbers also fell 30,000, and dropped in three of the past four months.
Savers are taxed, borrowers rewarded. A rigged system favoring Wall Street punishes most others.
The latest housing numbers are awful. Economist Robert Shiller believes "we will never in our lifetime see a rebound in" suburban home prices. He predicts "perpetual sluggish(ness)." Expect America to have a "Japan-like slump that will go on for years and years."
Rosenberg says "headwinds are so acute that despite" zero interest rate policy for over three years, "trippling the Fed's balance sheet, and four years of trillion-dollar-plus fiscal deficits," a deepening mess remains. Inflation's far higher than official figures. Poverty's at record levels.
Recovery? What recovery! America's 1% never had it so good. Another 10% or so are OK. Most others face harder than ever hard times with no end of misery in sight. Expect no change post-November, no matter who's elected president or controls Congress. Washington's criminal class is bipartisan.
Economist Paul Craig Roberts calls America's economy "dead." Consumer confidence is far below decade ago levels. Housing's on its back. Retail sales are lower than January 2000. So is industrial production. Only markets and rigged GDP numbers are up.
Roberts stresses often that recovery's impossible because troubled consumers account for over two-thirds of the economy. Middle class jobs moved offshore. Trillions are thrown at Wall Street and wasted on imperial wars while domestic needs go begging.