Busted: Bankers and The Global Economy

May 14, 2010

Big Business & Consequence of Economic Recovery

Because of the way that the United States economy is structured, every article of good news is almost always balanced by an equally troubling fact of economic life. Despite the prospects of a growing recovery in the eyes of many, we are now confronted with the latest trade deficit statistics.

As the economy improves, established business and some people are spending more money. The unhappy news is that the nation is spending more on imported goods than the rest of the world is spending on U.S. goods.

The latest statistics show that U.S. exports rose 3.2 percent during the month. Authorities equate this to a seasonally adjusted $147.9 billion. Imports increased by almost the same percentage, rising to $188.3 billion, resulting in a trade deficit of $40.4 billion for the month of March. This an increase of 2.5 percent compared to the prior month, the highest trade imbalance in dollars in 15 months.

Much of the trade imbalance is due to the cost of  addictive imported oil, which points to the need for more effective national energy policy. The recent gulf oil spill has put a bit of a monkey wrench into what government says are short-term plans.

The largest winners in this trade process are the Middle East, followed by China. While consumers ultimately decide what they will buy, the big decision makers in all this hocus-pocus is Big Business, either through Corporate America, Multinational Corporations and large retailers like Wal-Mart. Responsibility doesn’t stop there. Even small mall shops bear a burden in supporting cheap foreign goods. In fact, no business is free from supporting cheap foreign goods over American goods. That die was cast in the 1990s. Even now, corporations are constantly trying to lower their bottom line and increase profits exponentially. Most of the time, they don’t care how they do it.  As a result the nation spends more than ever on foreign goods to support the desire for cheap stuff. Unhappily, because of corporations, much of that cheap stuff isn’t really cheap. It is being marked up by Big Business, made more desirable through glitzy advertising. As a result, quality of goods is often being reduced as well.

Corporations are not being encouraged to use goods produced in the United States. In fact, there is little incentive to produce goods in the U.S. when insanely cheap manufacturing sources can be found overseas. Politics is often involved with the notion of “saving America.” Any economic sustainability for this nation must involve corporations and businesses that do business in America.

It has been posited by many that consumers must demonstrate more discipline. While consumers do vote with their dollars, they often have little choice in the matter, especially in this decade. It isn’t simply about tightening spending and buying American goods. Corporations that do business in America must comply as well for the nation to succeed in putting down a continued national trade imbalance. Any other approach is simply magical thinking.

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January 29, 2009

Unemployment Chills U.S. Economy

Filed under: banking — Tags: , , , , , , , , , — digitaleconomy @ 10:06 pm

unemployedInitial claims for state unemployment insurance benefits increased to a seasonally adjusted 588,000. That number is actually larger and growing by the day. For example, an assortment of companies across various industries announced more than 100,000 job cuts. Media publicity is calling the job losses the worst since 1945. Last year, the U.S. lost more than 2.6 million jobs. This year, Digital Economy is projecting at least 4 million in U.S. job losses based on current evaluation of the economic crisis and the inability to stem the tide of the recession.

More and more Americans are continuing to draw unemployment instead of finding employment. The curtailing of basic economic activity has great repercussions as the swath of unemployment grows. “If people aren’t coming to work, then they aren’t buying gas, they’re not stopping by the store or the pharmacy and they aren’t going to local eateries,” stated Tennessee Chamber of Commerce board member Susan Meece.

Wall Street firms like Standard and Poors long for the appearance of economic healing so that Wall Street can get on with the business of continuing to loot the economy and reaping corporate and investor profits. You always hear a mindlessly optimistic edge from their economists, who are little more than profiteering cheerleaders that hope to ignite a flurry of economic activity and profitaking on Wall Street in the name of business expedience. Right now, the reality is otherwise.

unemployment3What is worse, many are settling for underemployment or part-time work in an effort to make ends meet. This doesn’t account for fixed expenses like house payments, auto payments and child support. To make matters worse, many states are far behind on processing the unemployment payments, resulting in additional risk of the recipients losing what assets they have including housing. Some states are reported to be experiencing a backlog of more than 3 weeks waiting time before the first check is received. This reality place heavy stress on an already stressful situation, especially where other family members like children are concerned.

Because of record energy costs last year, energy rates in most states are at record levels without hope of reprieve for the average citizen. Electric companies have been granted record rate increases and are now enjoying a bonanza during a time when other energy costs have dropped and stabilized. Still, no effort is being made to adjust electric rates. Instead, federal grants are being made to municipalities to help citizens keep their electricity on.

unemployment4The recent government stimulus is designed to cover the intensive needs of federal and state government now. Jobs and promotion of economic activity is not the priority of recent legislation. A band-aid approach is preferred. Apparently, economic stimulus is now considered to be government giveaways and federal programs. While covering those in need is commendable, it does little to directly assist the ailing economy beyond supporting the current safety net for displaced workers and the disadvantaged. ~ E. Manning

January 11, 2009

Unemployment: Is Obama’s Stimulus Enough?

unemployment-officeBarack Obama has projected that his future economic stimulus plan will create nearly 3.7 million jobs by the end of 2010, mainly in construction, leisure services and manufacturing. His plan is supposed to lower the unemployment rate by 1.8% by 2010. Yet, most intelligent Americans and experts alike see plenty of hard times ahead.
read complete article at TNTalk!

Unemployment: Jiggering with Accounting

July 27, 2008

Expanding Inflation Risks U.S. Economy

The debate has been on since the United States has seen an alarming increase in the costs of essentials across the board. For years, the Federal Reserve has ignored the impact of energy and food prices in its computations for inflation. As a result of recent events, the Fed has been forced to retool its thinking, even though the Fed body of thought insists on using the same computations.

The Fed remains skeptical that high commodity prices will ripple through the economy, leading to broad price hikes and big wage increases. Why the Fed assumes that wage increases are even in the cards is beyond most economist thinking. The fact is that the United States is in the midst or very close to what the Federal Reserve and economists hate the most: the evil of stagflation. There won’t be appreciable increases in income, only hikes in cost, loss of jobs and the devaluation of the monetary system.

The myth is that the Federal Reserve can control (more…)

July 22, 2008

Batten the Hatches, Reverse Course on Inflation

The Federal Reserve is unhappy. Inflation is not on course. Prices are not stable. Charles Plosser, president of the Philadelphia Fed, expects the Federal Reserve to take action before any signs of recovery are seen. While this may seem to be news, the Fed has already expected this turn of events in their policy.

The Fed’s is concerned that (more…)

July 3, 2008

Inflationary Fears Explode in EU

The European Central Bank is fearful of an inflationary explosion. Political pressure has been to ease credit pressures and lower interest rates. The central bank explains that if the bank is not “resolute”, inflation will explode. Jean-Claude Trichet believes that the economic situation can be mastered. Apparently, the central bank believes by exercising discipline, inflation can be tackled. What central banks around the world, including the Bank of England and the Fed, fail to realize is that printing money or issuing monetary credit to bankrupted banking institutions or for politically expedient funding is driving up inflation.

In the past thirty years, central bankers have conveniently refused to acknowledge the cost of food and energy into their economic calculations for inflation. Recently, the high cost of these commodities have forced them to admit rising and uncontrolled inflation as well as revising their mathematical formulas.

Apparently, the global economic community wants to believe that high oil prices are driving inflation up. While market speculation looks like the cause for rising energy costs, what is really going on behind the scenes? Is it possible that runaway inflation is driving oil prices up? That is food for thought.

May 7, 2008

Central Bankers Sound Alarm Over Food Prices

Soaring food prices are helping to push up inflation all around the world, say central bankers. They urge more market competition and free trade to even out prices.

Which came first: the chicken or the egg? In this case, central bankers are not admitting that high food prices are not only caused by tighter supplies but higher inflation is caused by the central bankers themselves. Central bankers, by nature are quiet animals that never point at themselves. In this instance, global inflation has been boosted by the excessive printing of money and overextension of bank credit coupled with the inflation and devaluation of the dollar, which still operates as the tour de force of the global economy.

Global rises in food, energy and other commodity prices (more…)

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