Looming Economic Realities
Serious economic trouble coming.
by Stephen Lendman
Conditions show weakness, not improvement. Soft-land enthusiasts face rude awakening challenges. Later in 2012 and especially 2013, expect tougher times to reshape their outlook. They're always notoriously behind the curve.
Bad policy begets bad results. Force-fed austerity promises hard times getting nasty. In fall 2007, residential housing's reversal shaped events going forward.
Real estate kept overvalued markets safe. For most US households, it's their main discretionary income source. Its trajectory went straight up for years. Doing so formed a classic bubble. Eventually they all burst.
Real estate crashed and went straight down. Recovery is nowhere in sight. Hard times remain protracted. Main Street's been in Depression since 2008. Stability and economic growth are distant. Household and small business balance sheets contracted noticeably for over four years.
Belt-tightening reduced overall household debt to disposable income modestly from 135% in 2007 to 120% now. What happens going forward as economic weakness increases? Bipartisan support for $4 trillion in largely domestic cuts kicks in post-November when conditions can least tolerate them.
Obama administration policies have been spectacularly wrongheaded. Planned late year austerity when stimulus is needed will be disastrous. Inflation is much higher than reported. So is unemployment, growing poverty, and public pain.