Busted: Bankers and The Global Economy

May 12, 2011

Dangerous Inflation is on the Way

Filed under: economy, inflation, recession, stagflation — Tags: , , , — digitaleconomy @ 12:01 pm

I’ve written about false inflation figures for years. The U.S. government continues to pretend that Americans won’t be facing dangerous inflation by 2012. The facts show otherwise.

The Producer Price Index (PPI) increased 0.7% last month. This equates to 8.4% annual wholesale inflation in America! Prices are rising much faster than wages by any means.  April wholesale inflation data reflects an ever-accelerating cost of living in 2011.

Can official government statistics be trusted? Not according to John Williams at Shadowstats.com, whose alternative inflation index shows costs rising four times higher than “official” rates. Since 1980, the Bureau of Labor Statistics (BLS) has changed the way it calculates the Consumer Price Index (CPI) in order to account for the substitution of products, improvements in quality and other things.

“Near-term circumstances generally have continued to deteriorate,” says Williams. “Though not yet commonly recognized, there is both an intensifying double-dip recession and a rapidly escalating inflation problem.”

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February 14, 2011

Scary Facts About Getting a Job in America

Filed under: business, economy, money, recession, stagflation — Tags: , , , , — digitaleconomy @ 12:23 pm

Business Insider published “19 Scary Facts About Getting a Job in America.”

This recession is not another run-of-the-mill post-war recession, nor is it simply what globalism looks like. The recession in the U.S.A.  is a prolonged structural unemployment caused by multinational corporations fleeing high-cost labor markets to exploit low-cost labor markets. The impacts are real and devastating:

1) If you lose your job today, there’s a 70 percent chance you won’t find a job in the next month.

2) If you’ve been unemployed for a year, there’s a 91 percent chance you won’t find a job in the next month.

3) Two million people have exhausted 99 weeks of unemployment benefits. Another four million will do so in 2011.

4) There was zero job growth in the past decade, the worst 10 years on record.

5) In the most optimistic scenarios, payrolls won’t return to 2008 levels until 2013. In that time, the population will grow by 5 percent.

6) More than one in four jobs added to the economy last year were temporary.

7) At 2000 levels of labor force participation, the unemployment rate would be 13 percent.

8) When you count the unemployed, underemployed and discouraged workers, only 47 percent of the work force is fully employed.

9) The number of workers over 55 has increased nearly 8 percent in three years. No retirement means no hiring.

10) Four out of 10 baby boomers said they will have to “work until they drop.”

11) The average length of unemployment is 22 weeks.

12) For workers over 55, the average length of unemployment is 43 weeks.

13) In one of the hardest cities to find a job, Las Vegas, there are nine applicants for every job opening.

14) No jobs crash since the Great Depression of the 1930s even compares to what’s happening now, in terms of the number of jobs lost by the economy as a whole.

15) A 1 percent increase in unemployment leads roughly to a 1 percent increase in suicides.

16) More than 3 million manufacturing jobs have been lost since 1998.

17) The number of motor vehicle manufacturing jobs will decline by 20 percent in the next decade.

18) The number of apparel manufacturing jobs will drop by 57 percent over the next decade.

19) Here is the competition: A network engineer in Bangladesh makes $6,000 a year, while a CEO earns $30,000 on the average.

The Business Insider report concluded with the following observation: “Getting a job today means going up against terrifying odds.”

November 5, 2010

USA Economy: Bernanke Gets ‘Creative’

The Federal Reserve has been mandated by Congress to reduce unemployment while holding their interest rate near zero.  They plan to buy $600 billion in Treasury securities to keep prices from falling and reduce further the long-term borrowing costs, even as 8,000 commercial banks are being locked out of the money flow that could be used to begin financial healing on Main Street.

Bernanke plans to use the tools created during the recession to pump life into the USA economy. They have been projecting that the USA economy has been expanding for 15 months, but not to their satisfaction. They want the USA economy to grow at a larger rate. The reaction of the market has caused the dollar to fall and stocks to rise, as if Wall Street is a true measure of the USA economy. The focus is on Wall Street. Main Street be damned.

Bernanke hopes that he can encourage Wall Street investors to take more risks without risking inflation or encouraging price bubbles of assets by pushing the unemployment rate, which has been above 9 percent since June 2009.

Allen Sinai, the chief global economist at Decision Economics Inc. in New York claims that the Federal Reserve is not working up to standard. He criticized that they are paid to do the job more effectively, but their work is not up to standard. The fact remains that no human institution is truly equipped to deal with the crisis. We are in new economic territory with a global currency at stake, currently propped up by Wall Street as a distraction from the truth.

To push the rate of unemployment down, the central bank wants to spur the rate of US economic growth above a 2.5 annual growth rate.

July 26, 2010

Plague of Home Foreclosures in U.S. Continues

The miraculous recovery that has been proffered by the Banking Elite hasn’t happened. Central Bankers and Wall Street profiteers believed that they could continue to operate with wild speculation while reaping the results and encouraging more of the same. The financial wizards have not proved their financial literacy. Their speculative downfall started with bundling speculative instruments tied to U.S. housing debt that never should have happened to begin with. Hundreds of thousands, maybe millions, of Americans bought homes that never really qualified. The hot market was bolstered until the superheated financial bubble burst, leaving a worldwide recession based on what amounts to Wall Street gambling on highly leveraged contracts that have bankrupted the system. The reality is that the problem isn’t with foreclosures themselves, but with the bundled securities and expected profits that are tied to the failing mortgages. No doubt, these securities have been packaged and sold dozens of times even though they are worth nothing now.

More than three years into a U.S. housing crisis that started a worldwide recession, home foreclosures continue to further the devaluation of the U.S. economy. The waves of foreclosures no longer come from sub-prime loans that have defaulted. Foreclosures come from formerly respectable borrowers that have lost their jobs in an impoverished and drained economy that no functions to support a nation of hard-working Americans, but functions only to serve the Banking Elite.

In the first half of 2010, more than 1.6 million U.S. properties are in the midst of foreclosure filings, which include bank repossessions, default notices and auction sale notices. This is an 8 percent increase from the first half of 2009 which puts the United States on target to reach 3 million filings this year. These numbers show the fragile state of housing and real estate investment, which has been decimated. Government programs have been ineffective at stopping the national hemorrhage. Little has changed except that more Americans are living in rentals, with friends and family, in tents or on the streets, depending on their financial fortunes.

The U.S. government and banking profiteers built a house of cards on the idea that the cost of housing would always rise and that the profits would never cease. After massive bailouts, they are still stuck without a financial course to chart and exploit, beyond tapping government bailouts. The Federal Reserve holds trillions in useless notes and obligations in the hope that someday they will be worth more than the paper they are printed on. The economy continues to spiral downward despite limited attempts by big money multinationals to bolster the market.

Corporate multinationals and banking bigshots aren’t here as charities. They demand to make money for shareholders. For decades they have profited from U.S. tax law and from the backs of manufacturing slaves in the third-world. Now they seek to hold the bottom line and to keep their organizations alive. Now they are cannibalizing inept governments to sustain themselves. Stagnation is preferable to loss as the United States becomes the new third-world in their great plan to level the national playing field through globalization. Welcome to the brave new world of globalism, where everyone is equal except for the corporate oligarchy.

It isn’t pretty, but is pretty much as advertised.

July 24, 2010

U.S. Worries Over Deflation

The nation has a nasty case of stagnation, fueled by significant employment issues and rising defaults. Prices are falling while most consumers resist buying. When deflation begins and prices fall, it seems like a good thing. Then, lower prices cut into business profits which results in trimming payrolls. This further undermines buying power, which leads to lower profits, fewer jobs and lower wages. All this results in economic contraction.

With all the cutbacks, buyers that have the funds wait for better deals through even lower prices, which magnifies deflation. As a result, the nation plunges into a downward economic spiral that is hard to escape. This is exactly what the United States faces.

The nation’s capital is feeling the guilt as they look at other in dismay about the rising deficit and inflation, even though they advertise to the world that inflation doesn’t exist here. Economists around the world see great potential for deflation of the dollar, which already would be the case, were it not for declining currencies across the globe.

The statistics say it all. Consumer prices have declined each month for the last three months, putting inflation above last year. They claim that the core inflation rate is at a 44 year low at less than one percent. So why are they worried? The Federal Reserve likes to see an inflation rate of 3% because this puts more money in their corporate pockets.

Private economists and financial experts are more concerned. Some of them see the possibility of deflation at more than fifty percent. This is compounded by unemployment, lack of production and lower spending.

Should deflation occur, the central bank has the tools to reverse it according to Ben Bernanke, even though the Federal Reserve has interest rates at historical lows and has pumped trillions into the financial system. The books have been cooked baby, to the loss of the United States. Bernanke claims the U.S. economy is more vibrant and productive than Japan’s was in the 90s. The difference is supposed to be that Japan’s labor face was actually declining, while the States has plenty of labor.

In my words, there are plenty of financially-broken and impoverished Americans to take advantage of, with the hope of restoring the economy on their collective backs. Wall Street and multinationals aren’t suffering beyond the losses of jobs they incurred during the recession. Let’s face facts, they didn’t suffer much at all. Their employees did. That’s the way it is.

The little guy at the bottom, so far, is the one that has truly paid for the recession and the remainder of its fallout. They are ones that will continue to pay.

June 27, 2010

Jobs & G20: Budget Slashing Fever & Fantasy

To hear the G-20 proclaim it, the U.S. and other “prime economies” had better slash their budget deficits before the world comes to an end. The U.S. Senate quashes continued aid for the unemployed. Wall Street investment firms and banking succeeds in watering down financial reform. The fantasy continues while economists and politicians worry behind the scenes.  Even VP Joe Biden openly admitted that the United States will not regain the jobs that were lost in the “Great Recession.”

The official jobless rate, projected at below 10%, is pure fiction and must treated as such by those that seek the truth. It doesn’t consider many unemployed people that have dropped off the charts into oblivion. Underemployment is a national plague that the Labor Bureau of Statistics has revealed. Many are the discouraged job seekers and those that have settled for part-time work. The U.S. Labor Department shows that there are 79 million men in America between the ages of 25 and 65. Nearly 18 million of them, a record 22%, are out of work. This doesn’t include the underemployed. The impact is larger in African-American men.

The financial markets, like the government lawmakers, could care less about the deficit. Perhaps they should. As a result, investment rates in bonds is down. Almost all of them ignore engineered inflation which pays off central bankers to the tune of about 10% yearly, the real loss in buying power for the nation. In the meantime, the official inflation rate is a “convenient” 3% most years. Powers that be project an inflation rate 2.3% yearly for the next 30 years. Dreamland. Because of what is really a stagflation economy, falling prices and deflation of the dollar are more likely.

Wall Street and multinational capitalism seems to be in robust condition, to the cost of everyone but them. Corporate profit margins have reached record levels at 36% as the average American is short circuited entirely. These profits have never been so high since record keeping began. These figures are much the same as they were in the Reagan administration.

More than half of the national budget funds defense (don’t forget the wars), national debt interest and Social Security/Medicare. Politicians are eyeballing cuts on the latter, often silent as a senior political voice fades away. Don’t kid yourself. You’ll pay for seniors and the disabled one way or the other. Don’t kid yourself about the other major expenses either. Meanwhile, the national budget has climbed steadily for decades in the 6% to 10% range, much higher than the professed inflation rate.

There are no easy answers beyond beginning to live within our means as a nation. For years, Americans had forgotten about this necessity, encouraged by the system to spend endlessly, until the recession hit us between the eyes. Only bankers, multinationals and Wall Street have profited in their own economic bubble. Government has forgotten what economic balance and locally productive jobs mean, threatening to destroy their own system of weights and balances with unfettered spending and wars overseas, designed to keep terrorist attacks overseas and out of America. We have created our own reality. Are we willing to change?

June 4, 2010

Why We’re Falling Into a Double-Dip Recession

Filed under: business, corporatism, credit, economy, government, inflation, money, recession, stagflation — Tags: , , — digitaleconomy @ 5:12 pm

The only reason the economy isn’t in a double-dip recession already is because of three temporary boosts: the federal stimulus (of which 75 percent has been spent), near-zero interest rates (which can’t continue much longer without igniting speculative bubbles), and replacements (consumers have had to replace worn-out cars and appliances, and businesses had to replace worn-down inventories). Oh, and, yes, all those Census workers (who will be out on their ears in a month or so).

~ Robert Reich

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