|
THE COMING BUSH RECESSION
Recessions begin when consumers suddenly discover they can no longer keep pace with their bills. And this one has already begun : Stephen Pizzo
The coming Bush recession has already begun but we are just at the leading edge. The stock market is definitely a leading indicator and it is now slowly eroding along with consumer confidence ~ and it's not because of the hurricanes or the war on terror.
Let's use the July jobs report of 207,000 jobs as an indication of how soft our economic underpinings are ~ courtesy of Bureau of Labor Statistics’ July payroll jobs release.
Of the new 207,000 jobs, 26,000 (about 13%) were tax-supported government jobs. That leaves 181,000 private sector jobs. Of these private sector jobs, 177,000, or 98%, were in the domestic service sector.
Here is the breakdown of the major categories:
• 30,000 food servers and bar tenders;
• 28,000 health care and social assistance:
• 12,000 real estate;
• 6,000 credit intermediation;
• 8,000 transit and ground passenger transportation;
• 50,000 retail trade; and
• 8,000 wholesale trade.
Not a single one of these jobs produces a tradeable good or service that can be exported or serve as an import substitute to help reduce the massive and growing US trade deficit.
In other words, The US economy is employing people to sell things, to move people around, and to serve them fast food and alcoholic beverages. The items may have an American brand name, but they are mainly made off shore. For example, 70% of Wal-Mart’s goods are made in China.
Our massive American trade and budget deficits are covered by the willingness of Asian countries, principally Japan and China, to hold US government bonds and to continue to acquire ownership of America’s real assets in exchange for their penetration of US markets. This very shakey financial arrangement has only delayed the inevitable correction for our financial excesses.
Only the hectic housing bubble, fueled by low interest rates, has held this recession at bay but the dikes are now beginning to break as interest rates rise and housing prices cool.
Stephen Pizzo, News for Real, says this will be a Doozie of a Recession and blames it on " Bush's flawed economic policies and the "borrow and spend" lifestyle he sparked, not only within government, but consumers as well."
Allen L Roland
A Doozie of a Recession
Of course George W. Bush will blame it all on the war and two hurricanes. In fact, it's a direct result of his own flawed economic policies and the "borrow and spend" lifestyle he sparked, not only within government, but consumers as well.
I am referring to the looming recession. It's going to be a doozie. And it has begun, as it always does, when consumers suddenly discover they can no longer keep pace with their bills.
That would have happened a couple of years ago already, had it not been for the housing bubble. Like all bubbles it was ordinary folk who eagerly fueled the Ponzi, an inverted pyramid sure to topple once it became top-heavy. As with all previous bubbles, everyone crushed by that inevitable collapse figured they were too smart to get caught by it. They figured they'd be well out of Dodge with the booty long before that happened.
So they bought homes bigger than they needed, and each time rates dropped or prices jumped in their area they refinanced, pulling a bit more booty out each time; for a pool, landscaping, or a new car. They had time. The economists said there was no bubble, prices were going up because of natural demand, not speculation. And so they stayed in Dodge. They let it ride, they let it all ride on successive spins of the wheel of fortune.
But now the hot housing market has begun to cool. Prices in the hottest markets have flattened. Houses listed for sale have grown as those who waited too long rush to cash in. Days on the market are marching upward as buyers become increasingly scarce.
That's only one indication that the end is near for George W. Bush's phony recovery -- a "recovery" bought with tax cuts he cannot repeat, and with consumer spending fueled by borrowed money, which is no longer available. Hell, consumers may not even be able to make good on the money they've already borrowed. The indicators indicate that is so:
The percentage of overdue US credit card accounts jumped to a record in the second quarter as gasoline prices surged, the American Bankers Association said. Consumers had more trouble making payments on personal, auto and home-equity loans during the three-month span, the bankers group said. Delinquencies on these loans, collectively, rose to 2.22 percent from a revised 2.03 percent in the prior quarter, the group said. Delinquencies on home-equity loans increased to 2.75 percent of all such loans, up from a revised 2.61 percent. Delinquency rates for indirect auto loans, which are made by auto dealers and held by banks, increased to 2.08 percent from 1.87 percent the previous quarter. Those for direct auto loans gained to 2.07 percent from 2.04 percent.
This is a particularly bad time for consumers to be tapped out. It comes at the beginning of the holiday spending season which can account for nearly half of many retailers income for the year. It comes just as gasoline prices reach European levels, hitting low-wage workers hardest, especially if they have to commute to work. It comes just as the first chills of winter begin spreading south from Canada and as heating oil and natural gas prices spiral to unheard-of highs.
Here's where it starts:
Credit Card Minimum Payments on the Rise
San Diego, CA (PRWEB) October 4, 2005 -- The minimum payments that credit card companies charge on a monthly basis are increasing. For credit card customers that either pay their bill in full every month or those that can afford substantially more than the minimum, this isn't going to be an issue and could even be benefit to them. For the approximately 40 million people that only pay the minimum, however, this could be devastating.
When the recession can no longer be denied, the President will blame it on 9/11, the war he started, the hurricanes and the disruption in energy production they caused. Like Michael Brown, he will blame everyone and everything, but himself.
But we know.
Stephen Pizzo is the author of numerous books, including "Inside Job: The Looting of America's Savings and Loans," which was nominated for a Pulitzer.
Catch me on the first Monday of every month
7 AM and 4PM PST
TRUTHTALK
on Conscious Talk Radio with Brenda Michaels &
Rob Spears
|
