You know, in many posts over the last couple of years, I have commented repeatedly on the causes of the initial housing crash, the reasons this recession would become a depression, and the trends I see in the marketplace and government.
I have received a lot of feedback; most from people who see the same things I do, and are equally worried.
Well, I'm upgrading from worried.
I will explain.
First, let's start off with the language we're using.
Lots of times you hear people throw around terms like "recession" or "depression," when discussing the economy.
Those words have meanings. A recession is a blanket term describing an economic slowdown or contraction. It may be short, it may be long, but generally to be a "recession," the contraction or slowdown has to be three sustained quarters of negative GDP growth.
What does that mean?
The GDP - Gross Domestic Product - is the sum total of all business conducted this year, in this country; basically, it's all the money we, as a nation, earned.
Negative growth means that it not only didn't get bigger, it got smaller.
Way back when, before the housing crash, I said repeatedly that we weren't in a recession, because we hadn't had that yet, and there was at the time no obvious reason that there should be one.
I was both right and wrong - we HADN'T had ANY sustained quarters of negative GDP growth, so it wasn't a recession. Employment was high; the GDP was at its highest, well, ever; things looked rosy. But I was wrong in thinking that the signs weren't there, signaling the coming disaster; in fact, I simply wasn't aware of them, because many of the "confidential" documents at the major investment banks, and the Senate hearings with Fannie Mae and Freddie Mac were just that: confidential. They weren't made available without more digging than I knew I needed to do, until everything had already gone in the pot.
Right.
Now, the government is loudly touting an economic recovery.
I don't think so.
I think we are headed into a depression that will literally change the face of this nation forever.
A depression, rounding out my discussion of terminology, is a type of recession in which there is either severe negative GDP growth (-10%, let's say,) or a lengthy period of recession (like, say, three years.)
So why am I so terrified, when everyone says that just over the next hill, we'll be coming up roses?
Lots and lots of factors; I will give you some of them, with enough description so you know what I'm talking about and can look for yourself.
First, unemployment remains high. Despite our government spending cash like...
...Well, I can't say drunken sailors; they stop when they're broke...
...Like they had an unlimited supply, specifically - or at least so they told us - for the purposes of putting jobs together for all those millions of unemployed Americans, unemployment stubbornly keeps growing; it's now 2 full points higher than the highest the government claimed it would go if we went along with Stimulus 2: Electric Boogaloo.
To put that in perspective, that means that six million, six hundred thousand Americans are out of work who weren't supposed to be.
Obama loudly touts the "successes" of the stimulus plan, but look where the jobs are being added: government. The overwhelming result of the stimulus plan has been to create a "jobs" program for government workers.
But the private sector - you know, the people whose tax dollars pay for all the government jobs in existence - is still shedding jobs like water.
Now, Obama wants to change the metrics to claim success, despite the blatantly obvious fact that his Keynesian spending has failed, and failed hard.
So he claims the economy has added or saved jobs, despite having new unemployment claims that vastly outnumber the jobs he claims we gained. In recent weeks, he's been publicly cheering for "job gains," when in reality they are totally overshadowed by the staggering number of unemployment claims coming in.
Going off the Bureau of Labor Statistics, here's what things actually look like.
Unemployed less than 5 weeks: 2, 682, 000.
Unemployed 5-14 weeks: 2, 991, 000.
Unemployed more than 15 weeks: 8, 969, 000.
To put that in perspective, even if we ignore the unemployment claims and pretend that the 290, 000 jobs he claims we gained last month - despite the 805,000 people who had been dropped from the unemployment rolls (thus not being counted in my numbers above) and ignoring the fact that almost all of those "jobs" are government work - it would take us 4 years to get those jobs back even if we continued to gain jobs at the rate he's claiming we are, instead of by the actual rate at which we're losing them.
That's a net loss, folks; that means that despite all the rhetoric and false positivity from the government, in fact the economy's still getting weaker.
But there are other sharks circling in the water.
The EU is getting shaky, with their debt burden beginning to finally totally overwhelm their ability to tax their citizens to pay for it all, and our government has already made moves suggesting that, rather than let the EU simply collapse, we will attempt to prop up their debt structure with our taxpayer funds as well; Obama already sent Greece $50 billion to contribute to the massive bailout they needed last week - which early signs are already showing, has failed.
It just doesn't show as quickly on us when Keynesian economics fails, because our scale is larger and thus moves more slowly.
How easily will our economy be able to recover if we're trying to prop up foreign governments as well?
Banks have continued to cut back on lending; some think this is because of the bailouts, and the conditions they put on the banks. Forbes Magazine is among those holding that theory.
Small businesses will be the only engine that drives a true economic recovery; and small businesses cannot function without banks that lend money.
So while the banks are being tight with credit, the primary driver of a recovery cannot happen; the bailout of the giant investment banks has resulted in crippling, long-term, the primary driver of economic recovery.
But there are more sharks circling in the water.
Something that's starting to be whispered about is that the stock market is being openly manipulated.
Jesi did a fantastic article on this a while back; tipping the hat to her, with current conditions, this is getting truly frightening.
See, with massive unemployment, tight credit policy, banks going under like Leonardo DiCaprio in Titanic, and increasing inflation, the stock market ought to be in the toilet.
And I'm not the only one terrified by this, either.
Richard Russell, a long-time market investment guru and author of the highly-regarded Dow Theory Letters, said this week that we should sell everything liquid and buy gold - and that we will not recognize this nation by the end of the year.
That's scary.
Even scarier is that Sears and Kmart are taking his advice.
What makes it worse is that the government, and the media, are going to great lengths to disregard the - still further - sharks in the water, and pretending we're all in Care Bear Country.
Like the second, impending mortgage crash, now that a huge number of those rescued from foreclosure the first time around are defaulting again, (SEVENTY PERCENT, y'all) presumably to be - again - bailed out by the taxpayers.
Like the massive wave of debt that's causing state governments - I'm looking at you, California - to go bankrupt, then presumably to be bailed out by the taxpayers.
Like the massive overruns the states' unemployment funds are suffering, which will shortly be resulting in all those folks currently riding their unemployment benefits as far as they can go abruptly coming to a crashing halt, presumably to be bailed out by the taxpayers.
Like the credit card and auto loan companies' impending crash, when all those suddenly broke individuals declare en masse bankruptcy, and leave those companies holding the bag, presumably to be bailed out by the taxpayers.
Time bombs litter our economy, and they are all fast approaching detonation; their effects, presumably, will be bailed out by the taxpayers.
Margaret Thatcher once said, of socialism, that the problem with it was that sooner or later you run out of other people's money.
The same is true of Keynesian economics.
And since we're applying both at once, in this country, the impact of that sharp stop at the bottom will be far worse.
And the purse is getting very, very thin indeed.
I am frankly goddamn terrified for the future of our nation; in its present form, as far as I can see, it doesn't have one.
