The pained expression on the face of Federal Reserve Chairman Ben Bernanke when he addressed a Congressional Committee last week spoke volumes about the state of the US economy. The hopeful but cautious forecasts that marked his previous announcements since the collapse of the mortgage markets could no longer be viable as possibly true. When he said that "A recession is possible in the first half of 2008", it was the best phrase he could muster on the subject. He knew, America is already in it.
Lay-offs, the final factor of a deep recession was not on the radar screen of
economic statistics since it is normally a lagging indicator; and as long as there are no reports of jobs being slashed, there was hope for a measure of growth. But the Labor Department's release last Friday of 3 consecutive months of job layoffs since January doused all hopes. A total of 232,000 jobs were shed in the first quarter (March - 80,000; February - 76,000; January - 76,000) across several sectors. The unemployment rate, covered by a separate household survey rose to 5.1%, with 434,000 Americans reporting that they were unemployed.
America's longest war (Vietnam) and costliest war (WW II) have been exceeded by the War on Terror. Iraq and Afghanistan has cost the US half a trillion dollars of borrowed money, when 2001 estimates were only at $50 billion. The budget deficit could run up to $350 billion this year including the stimulus package of $160 billion of which only 20% will return to the government by way of taxes. Yet this return will still not pay for the borrowed amount plus interest of the savings lent by other nations. America will have to create more wealth to pay for the war, the deficits, and the stimulus package; but with jobs being slashed and the non-reversal of big business strategy of outsourcing jobs abroad for higher profits - there is little it can do to increase GDP from its present 18%. It may even shrink further. Eighty two percent of what America consumes is imported.
Cuts in interest rates by the Federal Reserve spur the economy, but it is a contributing factor to a weak dollar. Sustaining the wars will drain resources and increase borrowings, further weakening the dollar. Collapse of the mortgage markets have generated losses to financial institutions whose default or deferment of loan payments to foreign banks add to the weakening of the dollar. Unemployment and job loss will generate delinquencies in payments for credit cards, auto loans, educational loans, among others, which are securities held by banks that back up their portfolios. These will also weaken the dollar. A weak dollar will raise the prices of gas, oil, energy, commodities and the 82% of items that America imports. Should Asian and Middle Eastern countries opt to dump the dollar in exchange for the Euro, the American Economy may collapse.
The recent CBS News and New York Times survey point to an increasing disenchantment of Americans with the way the country is being run. The Republicans cannot escape accountability for this one. That Bill Clinton's term should have stopped Osama bin Laden from bringing in 9/11 is a childish argument. They had the means to stop it but they failed. They had the support after, to manage the assault, but they bungled it. They raised fears so that Americans would give up some of their civil liberties,
which they abused. They lied about many aspects of the war from the most critical to the most trivial. Now, Americans may be stunned in disbelief, but hopefully not indecision.
If they had a fool for a President, they can at least prove to the world that American citizens are not insane. Unless of course they choose a leader who will pursue a crazy war.
Haaaarrrwwwwk...Twooooooph...Ting!
Lay-offs, the final factor of a deep recession was not on the radar screen of
economic statistics since it is normally a lagging indicator; and as long as there are no reports of jobs being slashed, there was hope for a measure of growth. But the Labor Department's release last Friday of 3 consecutive months of job layoffs since January doused all hopes. A total of 232,000 jobs were shed in the first quarter (March - 80,000; February - 76,000; January - 76,000) across several sectors. The unemployment rate, covered by a separate household survey rose to 5.1%, with 434,000 Americans reporting that they were unemployed.
America's longest war (Vietnam) and costliest war (WW II) have been exceeded by the War on Terror. Iraq and Afghanistan has cost the US half a trillion dollars of borrowed money, when 2001 estimates were only at $50 billion. The budget deficit could run up to $350 billion this year including the stimulus package of $160 billion of which only 20% will return to the government by way of taxes. Yet this return will still not pay for the borrowed amount plus interest of the savings lent by other nations. America will have to create more wealth to pay for the war, the deficits, and the stimulus package; but with jobs being slashed and the non-reversal of big business strategy of outsourcing jobs abroad for higher profits - there is little it can do to increase GDP from its present 18%. It may even shrink further. Eighty two percent of what America consumes is imported.
Cuts in interest rates by the Federal Reserve spur the economy, but it is a contributing factor to a weak dollar. Sustaining the wars will drain resources and increase borrowings, further weakening the dollar. Collapse of the mortgage markets have generated losses to financial institutions whose default or deferment of loan payments to foreign banks add to the weakening of the dollar. Unemployment and job loss will generate delinquencies in payments for credit cards, auto loans, educational loans, among others, which are securities held by banks that back up their portfolios. These will also weaken the dollar. A weak dollar will raise the prices of gas, oil, energy, commodities and the 82% of items that America imports. Should Asian and Middle Eastern countries opt to dump the dollar in exchange for the Euro, the American Economy may collapse.
The recent CBS News and New York Times survey point to an increasing disenchantment of Americans with the way the country is being run. The Republicans cannot escape accountability for this one. That Bill Clinton's term should have stopped Osama bin Laden from bringing in 9/11 is a childish argument. They had the means to stop it but they failed. They had the support after, to manage the assault, but they bungled it. They raised fears so that Americans would give up some of their civil liberties,
which they abused. They lied about many aspects of the war from the most critical to the most trivial. Now, Americans may be stunned in disbelief, but hopefully not indecision.If they had a fool for a President, they can at least prove to the world that American citizens are not insane. Unless of course they choose a leader who will pursue a crazy war.
Haaaarrrwwwwk...Twooooooph...Ting!
