Monday, August 17, 2009

Stormy Weather Coming

The FDIC closed a total of five banks Friday including the sixth largest ever, this caused a downturn on global financial markets that was reflected in the US markets today. The back to school sales have been characterized as a train wreck and this does not bode well for the Christmas retail season. It is very likely however that many retailers won’t be around for that debacle.

Retail sales are being driven down by declining income on several fronts. Major cities and even state governments across the country are giving workers unpaid days off and cutting pay as well. Some governments are to the point of scheduling 16 days unpaid for the coming fiscal year and should really be measuring the time off in weeks. This compounds the income already lost to vanished factory jobs and expired unemployment benefits. The inevitable loss of retail jobs will accelerate the decline of the economy still further and as retail sales decline, tax revenue will drop since Republicans have insisted on the regressive sales tax to fund local and state government.
The spiraling unemployment will also push more prime loans into foreclosure and spike the number of people who no longer get health insurance burdening still further public health assistance. The decline in property values is expected to cause fully half of mortgages to be underwater by the end of the year putting anybody who is out of work or experiences an income loss in a desperate position. Selling or refinancing becomes impossible and bankruptcy only provides marginal relief since the Republicans blocked the courts from rewriting middle class home mortgages reserving that for corporations and the rich.

If something isn’t done soon the speed of the collapse could exceed the ability of government to stop it. With garbage beginning to pile up in the streets and the nuts beginning to carry guns to political rallies things are getting to the point where some unforeseen crisis could put us over the edge. Hurricane season is suddenly picking up as the upper level winds are no longer cutting the tops off of tropical storms. A couple major hurricanes could devastate the oil refineries. China is becoming less and less concerned about the consequences of cutting us off and moving to assume control of our former trading partners. Saudi Arabia is in the middle of a banking crisis that could destabilize the monarchy and other middle-east countries are having currency problems brought on by a real-estate collapse. The list things that could cause a cascade of unfortunate events goes on and on.

Why can’t the corporate crooks stop after they get theirs? As well a the psychopathology there is a fundamental Ponzi dilemma. They didn’t get to the point of a 9 figure salary by being a get along choir boy. There are people up and down the food chain that are expecting to continue to get their millions too. They can’t just stop because they "have theirs", there are too many memos and tapes and alternate sets of books in various safes. Then their are the politicians who expect to continue getting paid off to keep them out of prison and on and on. Once put in motion these "on going criminal conspiracies" can’t stop.

2 comments:

Anonymous said...

We have been conned so long to think that what is good for Wall Street is good for Main Street and Mockingbird Lane. What is good for Wall Street has been poison for the rest of the country for over thirty years (Reaganomics=BS or does Reaganomics=con job?). The Middle Class shrinks, the lower income classes gets bigger even using the scam figures that the government uses and the rich get richer and Wall Street goes ballistic until the poor (in more than one meaning) saps have to bail them out and bail out their bonuses out. Plenty of "Socialized" money for Wall Street but little to get people in higher education or better roads or even health care...Only in America?

Might have to look back to Germany in the 1920s to early 1930s to see a group of people using lies and BS to keep a populace pissed off and we are seeing some of the same lies and some of the same types of people (rich bastards using a fake populist movement(manipulating a not too bright but very upset group that feels picked upon in that they are losing some of what they feel are their traditional privileges) to enrich themselves and to stop any change and maybe even overthrow a government).

The sky just might actually be falling.

William_Shatner said...

What we need to do is to create local networks to provide services to each other.

A lot of people can't be bothered to set up "smart communities" or share their lawn mowers right now -- but how about when most non-essential service workers are unemployed, have no money, and the HMO captive doctor is offered a healthy Chicken in payment? In a few months -- they may accept it.

But nothing is set up in our system to deal with the end of the Dollar. However, as we cling to the old ways, the only people left with enough cash to endure the drought will be those very same Robber Barons.

When the CDS and offmarket fantasy collapsed in November of 2008 -- you remember that Quadrillion dollar market right? I think that all the wealthy people in the Ponzi scheme had to go along with the fiction, or become paupers.

So quietly, all the inside players got paid off with printed dollars -- guaranteed by the taxpayer.

But when the taxpayer is broke, and all they have is debt -- who is going to work for the dollars that are only in the hands of the robbers? You see, a big chunk of the market is services and selling to the middle class. So that shuts down. Then you are left with Business to business -- but who is going to invest in AT&T when they make their money off of mass markets? OK, so money leaves the Businesses that cater to main street. Well, what about the B2B's that cater to businesses that cater to main street? There goes CISCO.

After the dominos go down, the only thing left will be TV propaganda, and shoe shine boys on Madison avenue. Rush Limbaugh will be on the air but he can only dine now at $200 a plate restaurants -- because McDonalds will be closed.


See, all those people, who don't think that they are connected to our fates, are going to need LOTS of security guards.

>> But again, when you and I only use dollars to pay off mortgages that are in default, and have no job,... what happens?

Well, we will have food lines. Probably an emergency freeze on mortgage payments (if there is sanity left), and the same with rent. If there is any crisis management -- there will have to be public works projects on a massive scale.

The problem is, unlike the Last Great Depression, we don't have a farm-based economy, we are in debt, and we don't export -- or even own much of the infrastructure. Last time the Republicans did this -- they didn't sell the roads and the water supplies to foreign countries -- the equivalent of burning the deck chairs on the Titanic to keep the engines running hot while we are sinking under water.

>> Meantime, I have lots of ideas for self-organizing networks we average Joes can be setting up. It's just going to require creativity and abandoning paper.

We are also depending that someone in charge wakes up that the Status Quo won't cut it. But the way Obama seems to trade a good hand for a bad one when he has all the cards on health care -- doesn't bode well. He's negotiating with a failed and criminal conspiracy masquerading as a philosophy; Conservative ideology. Maybe he is still believing the media spin -- but the reality is, that most Americans are sick of Reaganomics and Conservatives. However, those close-ups and interviews of the 2 dozen Rascal Rally idiots screaming at town halls seems to have everyone convinced they are 50% of the country.