Archive for March 4th, 2011
You Call This An Economic Recovery? 44 Million Americans On Food Stamps and 10 Other Reasons Why The Economy Is Simply Not Getting Better
When Barack Obama, the Federal Reserve and the mainstream media tell us that we are in the middle of an economic recovery, is that supposed to be some kind of sick joke? According to newly released numbers, over 44 million Americans are now on food stamps. That is a new all-time record and that number is 13.1% higher than it was just one year ago. So how many Americans have to go on food stamps before we can all finally agree that the U.S. economy is dying? 50 million? 60 million? All of us? The food stamp program is the modern equivalent of the old bread lines. More than one out of every seven Americans now depends on the federal government for food. Oh, but haven’t you heard? The economy is showing dramatic improvement. Corporate profits are up. The stock market is soaring. Happy days are here again.
It just seems inconceivable that anyone can claim that the economy is improving when the number of Americans on food stamps continues to set a brand new record every single month. But the food stamp program is not the only indicator that the economy is still having massive problems. The following are 10 more reasons why the U.S. economy is simply not getting any better….
#1 Some recent statistics actually indicate that the number of unemployed Americans is still going up. According to Gallup, unemployment in the United States rose to 10.3% at the end of February. That is the highest number Gallup has reported since early last year.
#2 The housing industry is still a complete and total disaster. In fact, new home sales in the U.S. in January were 11.2% lower than they were in December. Not only that, the number of new home sales in January was 18.6% lower than the number of new home sales in January 2010. That is not a sign of improvement.
#3 There wouldn’t even be much of a housing industry at all at this point if it was not for the U.S. government. Right now the U.S. government is either writing or guaranteeing well over 90 percent of all mortgages in the United States. So what would the housing market look like in 2011 if the government was not in the picture?
#4 In 2010, more than a million U.S. families lost their homes to foreclosure for the first time ever, and that number is expected to go even higher in 2011.
#5 Due to rampant economic decay and record numbers of foreclosures there are areas in most of our major cities that now look like “war zones”. For example, the Huffington Post is reporting that there are now approximately 15,000 vacant buildings in the city of Chicago and there are approximately 60,000 vacant houses and apartments in the city of Las Vegas.
#6 According to the Oil Price Information Service, U.S. drivers spent an average of $347 on gasoline during the month of February, which was 30 percent more than a year earlier. This represented 8.5% of median monthly income. So what is going to happen when gas prices go even higher? Sadly, the average price of gasoline in the U.S. has risen another 4 cents since yesterday and it is likely to go much higher from here.
#7 The U.S. trade deficit continues to grow. The trade deficit was about 33 percent larger in 2010 than it was in 2009, and the 2011 trade deficit is expected to be even bigger.
#8 The CredAbility Consumer Distress Index, which measures the average financial condition of U.S. households, declined in every single quarter in 2010.
#9 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.
#10 The U.S. national debt is growing faster than ever. The Obama administration is projecting that the federal budget deficit for this fiscal year will be a new all-time record 1.65 trillion dollars. It is hard to even imagine how much money that is. If you went out today and started spending one dollar every single second, it would take you over 31,000 years to spend one trillion dollars. Long ago the U.S. government should have been getting these deficits under control, but instead they are just getting even larger.
So in light of the statistics above, can anyone really claim that we are in the middle of an economic recovery?
The truth is that there is no sign that any of the long-term trends that are destroying the U.S. economy are even slowing down.
Millions of jobs continue to be shipped overseas.
The U.S. dollar continues to be devalued.
The federal government continues to go into more debt.
State and local governments continue to go into more debt.
Our trade deficit continues to grow.
Our cities continue to be transformed into wastelands as they are being systematically deindustrialized.
The number of Americans that are dependent on the government continues to soar.
The U.S. middle class continues to shrink.
I know that I harp on these themes over and over, but it is vitally important that everyone understands that the mainstream media is lying to us.
The U.S. economy is dying a very painful death and there is no hope on the horizon.
Things are not going to be getting better. Well, they may get a bit better for the boys down on Wall Street, but for the rest of us our standards of living are going to continue to decline.
The best days for the U.S. economy are already behind us. What lies ahead is a whole lot of pain.
We are going to pay the price for decades of corruption and incompetence.
An economic collapse is coming and you had better get ready.
A rising stock market buys near-universal complicity.
How can the Status Quo bail out pension funds without having to give them cash? It’s easy–goose the stock market ever higher. Since pension funds are heavily invested in the stock and bond markets, the presto-magico way to inject hundreds of billions of dollars into the pension system was to generate an 80% leap in stocks and lower interest rates to zero, effectively goosing bondholders’ equity as bonds rose in value.
No politically messy bailouts are needed–all you need is a permanently rising stock market. If the Federal Reserve can just goose the S&P 500 from 1,300 to 2,000, underwater pension plans will be “saved” without any visible sacrifice.
Thus is complicity bought and paid for.
Corporate management loves a rising stock market–it’s the ideal setting for dumping one’s stock options.
Politicians love a rising stock market–since the vast majority of one’s campaign contributions flow from wealthy people who own stocks, then the “wealth effect” of a rising market makes one’s contributors happy and fattens their contributions.
And as a bonus, this “wealth effect” is great PR for the unwashed masses who don’t get much of a direct benefit because they own at best a few thousand bucks of mutual funds in an IRA. But hey, that warm fuzzy feeling of a rising market makes everyone feel like “good times are here again,” even if they’re only marginally attached to the trillions of dollars in “new wealth” being generated.
Government employees love a rising stock market, too, because it means they won’t have to contribute much to their own pensions. What every employee wants is a return to 1995-1999, when the stock market enabled a quantum leap up in their “sweetened” benefits packages.
The financial media loves a rising stock market, because it helps generate positive buzz and more readership and advert sales.
Wall Street loves a rising stock market, because it masks the entire panoply of fraud and embezzlement that is the beating heart of Wall Street, from high-frequency skimming to the “never have a losing day” trading desks.
The Fed loves a rising stock market, of course, because it makes the Fed look successful and omnipotent.
The President and his administration love a rising stock market, too, because it offers up a welcome sheen of economic “growth” that extends the promise of the mythical “self-sustaining recovery” just around the corner.
Politicos also love a rising market because the capital gains generate rising tax receipts. If there was ever financial magic, it’s tax receipts increasing even while the real economy tanks. You just gotta love that permanently rising market!
Everybody benefits from a permanently rising stock market, and as a result they don’t really care how it is engineered or at what eventual cost. The Fed has a free hand as long as it’s enriching pension funds, insurance companies, politicos, corporate management, the media–what’s not to like?
Thus is complicity bought and paid for.
But there are signs that this skyscraper rising to the stratosphere is built on swampy muck. The stock market looks impressively robust as it rises toward the outer atmosphere, but that strength and power may be masking vulnerabilities that are rising side by side with the market.
The game of driving down the dollar to goose stocks seems to be running out of oxygen. Despite the best efforts of the Fed to keep it heading to zero, the dollar is tracing out a long-term uptrend.
Then there’s that massive double-top in the market’s star performer, the NASDAQ:
If the Fed can’t blast through that resistance to a new high soon, that could signal the end of the entire “everybody loves a permanent rally” project.
The problem is that this project is a one-time deal: once faith in the Fed’s ability to permanently game the stock market is lost, the Fed will have used up its three wishes. And when that brittle delusion of Fed omnipotence expires, it will do so with breathtaking speed.
So today, two bits of news came out: Unemployment declined to 8.9% last February, as the U.S. economy added 192,000 jobs; and the Federal Reserve signalled that it is definitely-definitely-definitely ending Quantitative Easing 2 (QE-2) in June, as originally scheduled, on the assumption that the economy is improving, and therefore no further extension of QE-2 will be necessary.
|Portrait of the author,
chewing over what it all means.
On its face, this would seem to be . . . not good news, but at the least encouraging news: The economy seems to be improving, albeit anæmically.
Those who have read my work for a while know that I strongly support environmental and wage-parity tariffs. I do not consider this “protectionism”, but rather leveling the playing field for those nations that corporations intentionally exploit through both near-slave labor conditions and the ability to dump pollutants into the air and water (not to mention poisoning their workers) as a means of “competing” with US workers and manufacturing. They then export their products back here and claim to be geniuses.
This is the evidence for my position.
This chart shows the annualized (that is, seasonality removed) change in employment adjusted for population change.
One must always look at employment ex population changes. If you add 1 million people of working age to the population then you must subtract them out of the employed figures to figure out whether your workforce, as a percentage of the total working-age population, is growing or shrinking. This is essential since those who are not working but of working age are a huge net drain on the government and economy.
The claims that we are “net beneficiaries” of off-shoring, that H1B Visas make us “more competitive” in our corporations, and that we’re “doing ok” in regard to our employment situation when one ignores the recession we just went through are proved utterly fallacious by this chart.
In point of fact even during the “boom times” of the most-recent recovery – from 2003-2007 – we managed to barely improve actual employment, and even then, only on a sporadic basis!
This came despite the allegedly-strong economy.
In short, there was no “strong economy” in point of fact. The claims were false. They were predicated on a lie – that expanding credit in fact is expanding wealth.
The employment base, when one looks at it ex-population, never expanded to any material degree at all even in 2000, which was the top of the market. It also never recovered any material number of jobs from 2003-2007.
We cannot recover until we address this. And we cannot address this so long as we continue to allow corporations to offshore jobs and import cheap workers on the H1B program.
We must impose tariffs that level the playing field for American production and shut off importing foreign workers who come here with subsidized educations while our graduates are coming into the workforce with six-figure debts, requiring salaries $18,000/year and more in excess of what that foreign worker can do the same job for.
If we don’t stop this, right now, we’re not going to recover.
We cannot force another credit-driven expansion. It will not work.
The numbers are what they are.
If we do not act now when the folly of the intended credit-driven expansion becomes realized both the stock market and government funding capacity will collapse, and the 2007-2008 downturn will look like a cakewalk.
Costa Mesa to Lay Off 43% of City Workforce, Outsource Services; Nearly Half-Way There; The Ideal Number of Public Employees is Zero
The City of Costa Mesa, with a population over 100,000, is about to become 43% closer to the idealized goal of no city workers.
In a massive step in the right direction, Costa Mesa to lay off nearly half of city workforce, outsource services.
The city of Costa Mesa plans to lay off more than 200 employees and outsource 18 city services by the fall.
The layoffs would cut the city’s municipal workforce by 43%. The City Council approved the layoffs in a 4-1 vote late Tuesday night, despite nearly unanimous opposition from the audience.
City officials said pink slips will go out in the next six months. The mayor blamed years of missteps by city staff and rising pension costs.
Almost half of city work force gets pink slips
The Daily Pilot has more details in Almost half of city work force gets pink slips
About 203 city employees will be receiving the six-month notice in the City Council effort to correct the budget.
City officials have crunched the numbers and determined that more than 200 Costa Mesa employees — or 43% of Costa Mesa’s municipal workforce — could be laid off through outsourcing.
Of the 472 full-time positions, 203 city employees, give or take one or two, will get pink slips notifying them that they could be laid off in six months, said Administrative Services Director Steve Mandoki.
Tuesday’s move is part of a dramatic restructuring of a city that faces potentially skyrocketing pension costs in the coming years.
Costa Mesa’s own projections show that in the next few years, it will be expected to pay more into the state’s public pension fund, CalPERS. It’s a situation being replayed up and down the state: When the CalPERS pension fund was flush in the early 2000s, Costa Mesa did not have to pay much to the state to cover its employees’ retirement costs. Now that CalPERS investments are hurting, cities have to cover the difference.
That pattern looks to continue for at least the next five years, city officials project.
Laying off hundreds of employees and their accumulating pensions by the fall would help to balance the city’s budget in years to come, council members reason.
“We’re going to run out of money sometime this year if nothing changes,” said Councilman Eric Bever.
Costa Mesa Half-Way There
The best way to deal with public employees and their overly generous pension contracts is to not have public employees at all.
I commend Costa Mesa for a huge but incomplete step in the right direction.
Other than a small number of elected officials and a few administrative assistants, the correct number of public employees is zero.
Mike “Mish” Shedlock
Global Economic Analysis