REALITY CHECK: The True State of This Economy

One has to hand it to the IMF for being creative with its announcement that it expects a 1 per cent uptick in the world economy next year (for the entire year), while reality hits closer to home for those unemployed in the U.S., Europe, and Japan. In fact, it is interesting that the only method in which major industries have been able to secure modest growth levels is by the tried and true method of cutting back on labor, and production while its top CEOs, CFOs, and CIOs continue to reap the lion's share of its capital gains. Companies are laying people off. One has to ask, "Where will these companies find a market for its products when the people who would purchase them have no means of doing so because they are out of work? Of course, to the executives strategizing these cutbacks, the only thing that is real to them are numbers and next quarter's profits reflections for their stockholders. And they know that if the company folds, they will leave with more money than most of the people who work for them will ever earn in their lifetime. This is obscene, immoral, and unjust

And while Congress debates Obama Care, this debate is putting critical help families can get from an extension to their extended benefits on the back burner, and the bill takes a back seat to Obama Care (see http://www.washingtontimes.com/news/2009/oct/05/jobless-benefits-lose-out-to-health-care//print/). And while another, 400,000 out-of-work Americans collected their last check in September, and between 1.3 to 1.6 million more Americans will run out of benefits by the end of this year, the US Senate remains obsessed with Obama Care, as its Democratic members are feeling heat from this White House to ratify something, anything before the end of this year. But in the midst of this 9.8% of our population remains unable to find work, since there are at least six job seekers for every job, and large corporations are continuing to hemmorage jobs and outsource them overseas. The so-called official unemployment figure does not factor in the long term unemployed who have fallen off of the radar and have exhausted all of their benefits, or those who have given up looking for work. If these are factored in, the figure for those unemployed in the United States is a staggering 17 or 18%. These figures are not signs of recovery, but of stagflation; of less than single digit growth or zero growth.

The signs of a full fledged mini-depression are all there, high unemployment, zero growth in four to five quarters, etc. A recovery entails growth not only capital outlays, but also in labor. We are not seeing in that. In fact, what we are seeing is its opposite. A so-called "jobless recovery is no recovery at all, because a true recovery entails purchasing power which spurs growth and investment. In a so-called jobless recovery you have neither. While the unemployed may have a temporary purchasing power, it is a greatly diminished purchasing power due to other obligations brought to bear on the pittance they receive from their state unemployment offices, and it is only as good as the length of time they continue receiving their unemployment insurance or extensions on these. Once it runs out, as it did early last month on over 400,000 people across the nation, the diminished purchasing power they previously had disappears (see the following link http://www.washingtontimes.com/news/2009/oct/05/customer-service-reigns-when-business-fades//print/).

We are told by the Commerce Department and some others, including Barak Obama that we are beginning to see the beginning "sputtering" and "fits" of a "recovery," yet the signs of such recovery are not evident. These pronouncements are nothing more than political window dressing to keep Obama's waning popularity from continuing to fall. Amongst even his ardent supporters, there are pockets of people who are hurting, and are not seeing any turn around as their president claims. All they know is that they cannot find work, their unemployment extensions ran out, Obama Care is holding up key legislation that would extend their unemployment benefits for another 13 weeks, in some cases 17 weeks, and their bills are piling up and they can't pay them. In the meantime, they see the man they voted for travelling overseas and living high and big as the nation suffers, as they suffer. They see their congressman and senator obsessed (as Obama is) with passing a health care bill they don't want and don't need. They need to pay their bills, buy groceries, put food on the table, and keep from being evicted. While the current bill won't do all of this entirely (it is simply too small and the period of 13 or 17 weeks is nothing more than a brief band aid), it will allay their sufferings to an extent.

States like California have run out of money (see the following article at http://www.guardian.co.uk/world/2009/oct/04/california-failing-state-debt, and http://apnews.myway.com/article/20091001/D9B29KL80.html), while magazines are closing (see http://www.nypost.com/p/news/business/bloodbath_at_conde_nast_mags_axed_0E28iBTko2radgEPVFPUWP), and country has seen 98 banks have failed since the start of this year. And if one looks at the FDIC's list of failed banks since the start of this Great Recession/Depression in 1976 (See http://cricketdiane.wordpress.com/2009/07/24/fdic-failed-banks-list-how-many-banks-in-the-united-states-have-failed-since-2007-october-entry-into-recession-depression-macroeconomics-of-failed-regulations-and-so-banks-take-peoples-s/), more banks have failed this year alone since the start of this Depression which began with a Great Recession in 2007. This does not bode well of an economy that is already in tatters, it is a sign of continued and accelerated contraction, and contraction even as the Federal Reserve has continued to pump more money (inflation) to keep liquidity at what it believes are sustainable levels. You cannot paper over a depression, because at one point the money supply will be so great and the currency so inflated that collapse will inevitably ensue due to the result of hyper inflation of the type the nation saw during the Carter years, when inflation was at 11.3% and unemployment at 5.9% (see http://www.huppi.com/kangaroo/L-carterreagan.htm). Perhaps the best definition of inflation is contained in the following site, http://dictionary.reference.com/search?q=inflation where it states the following:

"A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money, caused by an increase in available currency and credit beyond the proportion of available goods
and services."

Current inflation and unemployment numbers far exceed those of the worst of the Carter years; his last year in office. The Consumer Price Index, which has been used in to gauge inflation, is nothing more than a "doctored" statistic, because it no longer gauges the purchase of good and services in general, but specific goods and services; no a true metric to measure the rate of inflation and its devastating impact on the average American who is hit with the brunt of its affects without the resources to weather it possessed by his/her more affluent counterpart. Have you noticed that the item which only weeks ago cost $4.35 is now priced at $6.75? That is your best gauge to where inflation actually is at. Why? Because you are feeling in a very real manner its affects upon the purchasing power of you money. If your money is inflated by the Federal Reserve Bank to provide this government the liquidity it needs to meet the demands of increased spending (10 trillion projected under Obama), then increased supply of money will force its value to be diminished because the ratio of supply to demand will have been affected. Let me simplify this: increased money supply=inflation=higher prices for goods and services=decreased purchasing power=lower standard of living. Additionally to this, the more the government spends, the more it has to raise taxes, inflate the currency to keep money available to meet the demands of increased spending, and the more it will have to borrow. When it has to borrow more to meet the demands of its spending, it crowds out the small business seeking capital to meet its TCO (Total Cost of Ownership) within its Overhead. If the small business cannot obtain the loan it needs for investing, because the government is crowding the credit market, it cannot grow, and if it cannot grow, it cuts back its Overhead, and the first casualty is its labor - it reduces its workforce by laying its workers off.

There is a double whammy here on the average American because of job loss, because the government, through its increased spending, is now the very cause of job loss by beating the small business in competition for the same money the bank is lending the government (secured by the government through US, the tax payer), and forcing it to reduce its Overhead through massive layoffs. It is a domino affect which feeds on itself. Then the government raises its taxes on the small business who in order to stay in business if forced to pass this on to the consumer through price increases. And the inflated money supply is insidious because it is a hidden tax that devastates the already decimated laborer. Remember, the business owner keeps his profit at a specific level by passing the increased cost of production on to the consumer through higher prices. So the average American - employed or unemployed - pays the brunt of the cost and is squeezed by government policy from one end and industry from the other end. One wonders who many politicians who earn six figures and live lives insulated from the day to day grind of the average tax payer, truly appreciates this reality. Not many, since their profligate spending habits make it evident that they neither care or are aware of the implications of their actions on the very people whose interests they were entrusted to represent.

The only people who are truly benefitting from the current financial climate are the CEOs, CFOs, CIOs and the highest strata of our society who possess enough holdings and diverse investments, as well as command obscene salaries not in proportion for the work they put out, but from the output of cheap labor whose fate they decide when they arbitrate who will be cut and who's salary will be kept at a certain level for the foreseeable and uncertain future. You understand, while they command multi-million salaries, and their perks alone is more than thirty employees make in a year, they haggle with people's fate without taking a cut themselves on their own largesse. This is both obscene and amoral. It is not capitalism, it is an aberrations sin and blight of the human condition. These are the people who are making out like bandits in this economy. These are the people who were taken care of first at tax payer's expense the House of Representatives and the Senate voted for the first TARP of $870 billion dollars late last year just prior to the disastrous presidential elections. Don't get me wrong on this, the elections would also have been just as disastrous with a John McCain win. But it can be claimed that McCain would not have attempted to change our way of government as Obama has and continues to do.

They're calling this the Great Recession. And we were told just a few short weeks ago, and some still posit; a recovery is not expected until the very earliest of 2011, there are some who for political reasons are making claims which are not based on reality, but are as mentioned above, nothing more than political window dressing for the president's supporters, and to shut his critics up. The media is complicit in this also, as it has become an adjunct of the Obama Administration. No. This is not a recovery, this is a depression, as business but back on labor creating more of the workforce on the unemployment lines, and a diminished purchasing power, as the newly and long term unemployed curtail spending to meet the responsibility of monthly expenses such a mortgages, utilities, food, etc.. This is not a recovery, this is nothing more than a big business realignment of its capital and resources to meet the overhead of this quarter and the projections of the next (see the following story http://apnews.myway.com/article/20091001/D9B2A9FG1.html and http://apnews.myway.com/article/20091001/D9B29OOG1.html).

There is nothing worst than to see your elected officials, beginning with your president, attempt to mislead and lie to you while you suffer as he and they live high off of the fruits of the labor you once provided which they taxed generously, as he and they and their political allies in industry, the media, and academia; continue to live lives completely insulated from the rest of US. If you think that they are doing you good, or that they are out for your good, then you are self deluded, and if that is the case, then Goethe's saying applies most aptly to you:

"There is nothing more frightening than active ignorance." - Goethe

Are we beginning to see the unraveling of the American Republic, and is it time for America to undergo judgment? (please read the article at this link: http://www.worldviewtimes.com/article.php/articleid-5388/Brannon-Howse) And if so, can it be averted? Or is it too late? This is a question that every American and every individual must ask within themselves and then seek the G-d of heaven about. Our nation's sins must be expiated, but it begins with each and every one of US. We must turn from electing politicians who serve themselves, cost US more in taxes, and present legislation that throws G-d out of our society, and try to regulate our behavior as it seeks to take the place that only the Almighty deserves.