Isn’t it obvious from these facts that the economy is getting worse?
In March of 2009, the famous “green shoots” phrase was used by Ben Bernanke. Less than 60 days later, I was calling BS on that, and continued to call out the error in predicting any kind of recovery.
So to beat a dead horse even further, let’s take a look at some economic data points from today, and see if when you put them together, it equals recovery or continued Great Depression II.
A report uncovered the fact that 40 out of 50 states have run out of money to pay unemployment benefits. “Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.” Rep. David Niezgodski (D), addressed the gaps in Indiana’s unemployment program. “Our system was absolutely broke.” “The troubles the state programs face can be traced to a failure during the economic boom to properly prepare for a downturn, experts said.”" “The benefits haven’t grown — that’s not the problem,” said Richard Hobbie, director of the National Association of State Workforce Agencies.”
If this crisis has already hit even before the expense of higher unemployment rates have hit the funds, it will only get worse when the millions of unemployed start really putting a drain on the budgets.
Nobel Prize-winning economist Joseph Stiglitz warned there’s a “significant” chance the U.S. economy will contract in the second half of next year. “If you don’t prepare now, and the economy turns out to be as weak as I think it’s likely to be, then you’ll be in a very difficult position,” he said.
Mortgage delinquencies shot up 20% in the past few months. If anyone is still looking for a housing recovery, I would hope this information helps you form a more realistic opinion. “Serious delinquencies among U.S. prime mortgages rose nearly 20 percent in the third quarter from the prior quarter, indicating that the country’s housing financial market remains in trouble, according to a report released by U.S. banking regulators on Monday.” “The report found that serious delinquencies among prime mortgages, the largest category of mortgages, at the end of the third quarter increased to 3.6 percent of prime mortgages, up almost 20 percent from the previous quarter and more than double a year ago.” This means that on top of the already looming shadow inventory, there is an avalanche of prime mortgages now going into delinquency.
Forbes magazine alerts us to another looming crisis, no surprise to Aware Brain readers. Debt overhang is the biggest underlying problem facing the future of the United States, as I have pointed out. It appears that mainstream economists are coming out of the closet on this subject. ” Forbes research Rob Arnott says that the total public debt is now at 141% of GDP. That puts the United States in some elite company–only Japan, Lebanon and Zimbabwe are higher. That’s only the start. Add household debt (highest in the world at 99% of GDP) and corporate debt (highest in the world at 317% of GDP, not even counting off-balance-sheet swaps and derivatives) and our total debt is 557% of GDP.” Add the unfunded portion of entitlement programs and we’re at 840% of GDP.” (Remember, this does not count the massive derivatives exposure mentioned last week) Forbes goes on to say that “It assures a period of economic devastation. In a last, desperate attempt, politicians at the federal and local levels will raise taxes to astronomical heights to raise revenues. And that only assures destruction of the economy.” The writer goes on to tell us we should expect 25 years or more of a depressed economy.
Warnings of an impending crash are becoming more frequent, and from a larger number of sources. “Moody’s warned that future tax rises and spending cuts could trigger social unrest in a range of countries from the developing to the developed world.” The U.S. Army War College warned that the military must be prepared, the document warned, for a “violent, strategic dislocation inside the United States,” which could be provoked by “unforeseen economic collapse,” “purposeful domestic resistance,” “pervasive public health emergencies” or “loss of functioning political and legal order.” The “widespread civil violence,” the document said, “would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.”
Are there actually any arguments that can be made for why the economy would get better anytime soon? Arguments that are based on sound expectations, and which can withstand a realistic debate of their merits? In February I wrote an article titled “What makes it stop?” which makes the point that we should stop asking WHEN the economy recovers, but first figure out WHY it would recover in the first place.
even a blind person can see that things are getting worse each day.just had a friend that had a very good position with a local paving company ( company car with all the trimmings). but he was spending all that he made and then some. got laid off last week and is flat broke this week
[...] The problem is accelerating in cities nationwide, as citizens are seeing disappearing services in this “worst of times.” “ “From Augusta, Maine, to Seattle, from Bossier City, La., to San Francisco, city leaders are scrambling to address unprecedented shortfalls, according to a new survey conducted by the National League of Cities. Furloughs, cuts in services and layoffs are the norm now from city to city, large, small and in between. Baltimore already has eliminated more than 500 positions and is facing another round of layoffs and furloughs. Bossier City has cut 117 of 897 positions, including 80 police and fire. Boston has laid off more than 500 employees. East Providence, R.I., has cut 55 positions, including 16 police and 28 fire. As cities continue reducing staff and delaying or canceling projects, the cumulative effect could end up being “devastating impacts on the employment level in local communities” and “a deep and lasting impact on the national economy.” The report suggests the worst is yet to come. In the past, local governments have been able to tap state funds to keep operations going. State budgets are now in as bad, or worse shape than local municipalities, so this cash source is dried up. Towns across New Jersey are on the defensive in advance of the state budget rollout, which will leave largely them on their own. “Municipal officials throughout the region fear potential state aid cuts as they prepare budgets amid declining tax revenues. “We’re not expecting or planning for an increase in state aid,” Hamilton Township Business Administrator Ed Sasdelli said.” To make up the difference, most local governments are looking to new taxes on citizens to cover the deficiency. In Rhode Island, The Times warns: The budge is due: Guard Your Wallet. Put one hand on your wallet, property tax payers, Gov. Donald Carcieri is going to unveil his 2011 budget on Tuesday and is likely do double down on the damage he proposes to do in the supplemental budget by eliminating half of the reimbursement to cities and towns for thephase out of the automobile excise tax by eliminating the whole thing next year. The deterioration of municipal budgets will get worse, since most local government revenue is ties to property tax assessments. As property values continue to decline, and more foreclosures are on the horizon, even this years severe cuts may seem tame in a few years. At the same time, local governments are often large employers in their areas, and their layoffs will add to the already severe unemployment, accelerating the spiral of decline. [...]