There is nearly $2 Trillion USD in above-board (that means, not a secret between the Fed and the Treasury) bailouts. This doesn't include what help GM/Ford will need to keep factories open.
$2 Trillion of your taxpayer dollars, which is going to try to save the economy from going. So - let's review:
We borrow tons of money to purchase consumer items from WalMart (China) or Mobil/Exxon/Chevron (Canada/Middle East). China then LENDS money to the U.S. so it can buy more stuff from China!
The U.S. Banking system collapses, and the private company that prints money (Federal Reserve) prints massive amounts of money to keep the banks LENDING you money - but they won't lend you money because all of the assets which used to be used to securitize your loans (that is - Real Estate) are collapsing.
So the US Government does taxpayer-financed bailout plans to revive the consumer/borrow economy. We all know that if the US stops buying consumer items, markets collapse. This is what's happening.
Then here's what happens - job losses mount, and these people go on social assistance (welfare, mortgage bailout plans, etc) which then adds to the deficits. These deficits all come with interest fees - and this is all fine and dandy UNLESS the U.S. GDP does not grow. And it's shrinking, and the shrinking is speeding up. Job losses are speeding up, which will add more taxpayer debt to the deficits.
Comparisons to the last Great Depression are everywhere, and I remember when I said it was coming I was pretty much the only guy saying it. It makes me sick that I'm right, but I was 100% sure it was coming. Now I see the collapse of the USD, and hyperinflation, massively higher fuel and heating costs, and energy blackouts throughout the U.S.
The President needs to bring all the troops home NOW - and to get ready to assist the freezing and the starving people.
9 comments:
gary - who isn't giving loans?
"According to monthly banking data from the Federal Reserve, consumer loans have continued to grow at close to 10% (year-to-year) during the entire recession (see bottom chart above, click to enlarge). Notice in the top chart going back to 1950 that the positive consumer loan growth during the current recession is much different than the significant declines in consumer loan growth in every of the last nine recessions except the 1982 recession.
As much as we hear about a "credit freeze" and a "credit crunch," the consumer loan data through January 2009 suggest a slightly different story."
i'd like to hear some commentary on these excerpts i keep posting.
i'm learning more and more that "people" have been talking about EVERY recession SINCE the depression as if it were going to be the "next depression".
i'm reading TONS of quotes from all of the past recessions and the people who were saying doom and gloom were all saying the same things you're saying now. i'm not saying it's NOT true, i'm just saying - you aren't the first one to say anything. it's all been said before.
how about this one:
"So what's made in the USA these days?
The U.S. sold more than $200 billion worth of aircraft, missiles and space-related equipment in 2007. And $80 billion worth of autos and auto parts. Deere & Co. sold $16.5 billion worth of farming equipment last year, much of it to the rest of the world. Then there's energy products like gas turbines for power plants made by General Electric, computer chips from Intel and fighter jets from Lockheed Martin. Household names like GE, General Motors, IBM, Boeing, Hewlett-Packard are among the largest manufacturers by revenue.
Several trends have emerged over the decades:
• America makes things that other countries can't. Today, "Made in USA" is more likely to be stamped on heavy equipment or the circuits that go inside other products than TVs, toys, clothes and other items.
• U.S. companies have shifted toward high-end manufacturing as the production of low-value goods moves overseas. This has resulted in lower prices for shoppers and higher profits for companies.
• When demand slumps, all types of manufacturing jobs are lost. Some higher-end jobs -- but not all -- return with good times. Workers who make goods more cheaply produced overseas suffer.
Once this recession runs its course, surviving manufacturers will emerge more efficient and profitable, economists say. More valuable products will be made using fewer people. About 12.7 million Americans, or 8% of the labor force, still held manufacturing jobs as of last month. Fifty years ago, 14.6 million people, or 28% of all workers, toiled in factories.
MP: Using slightly different data than the AP article, the chart above shows U.S. Manufacturing Output (Gross Value) from The Federal Reserve, and U.S. Manufacturing Payroll Employment from the BLS (via Economagic), monthly from 1972-2009. In the last 37 years, manufacturing output in real dollars has more than doubled, while manufacturing employment has dropped by more than 26%, resulting in an almost tripling of the amount of manufacturing output per manufacturing worker in the U.S., from less than $80,000 in 1972 to almost $240,000 per worker today (see chart below)."
15,000 banks failed during the great depression. Also there were no safety nets back then either.
Are you not concerned with a gold bubble due to the etf's?
And why no outrage over this stimulus program? If Bush/Paulson put this out you would be going on and on how we were getting ripped off.
Also I would not say things are getting worse at a faster rate when in fact things are still getting worse but at a much slower pace, which is a good thing which means we are closer to a bottom. Once they give all of the details of the bank program I think you will see a nice rebound. And when stocks rebound, gold is going to tumble.
Many, the majority of economist are still saying a recover will start before the end of the year.
GDP is predicted to have a 2% shrink this year, and a 6% growth in 2010, a mere 43-88 years earlier than you are predicting.
It could be worse you could live in China. 70,000 factories shut down and 23 million people are unemployed due to the US not wanting more shit they don't need. Fortuneatly I live in the USA where we invented the capitalist game and run the world. It will get worse but we'll survive and run the world as we always have.
we live in morro bay and all the banks are making people who had credit line ( for business from internet companies to Restaurant owners, change their line of credit into loans and closing them. I have heard the only bank in San Luis Obispo doing loans is Coast Hills.
Check your facts..so far Ford has not asked for any bailout money..sounds like so far they know how to manage their money.
Heard on the World News this evening that it took Obama 3 weeks to put us in at least double the debt that it took Bush 8 years to do...Ronald Reagan inherited a worse economy we have now and how did he do it? Not by putting us deeper in debt like this..
Charles -
From http://en.wikipedia.org/wiki/Ronald_Reagan
"In order to cover newly spawned federal budget deficits, the United States borrowed heavily both domestically and abroad, raising the national debt from $700 billion to $3 trillion.[111] Reagan described the new debt as the "greatest disappointment" of his presidency."
Ronnie did put us into greater debt.
Trader Bob - Fixed it for you.
"It could be worse you could live in China. 70,000 factories shut down and 23 million people are unemployed due to the US not wanting more shit they don't need. Fortuneatly I live in the USA where we invented the OLD capitalist game and run the OLD world. It will get worse but we'll survive and run the OLD world as we always have."
23 million in 1.3billion = 1.8% unemployment rate in China.
US unemployment rate = 7.6% (http://www.bls.gov/news.release/empsit.nr0.htm)
Russia has defaulted on debt owed to other countries in the past. US will do the same and China will have to eat the proverbial shit sandwich. Although, people in the US have a lot farther to fall because we've been dumb, fat, and lazy for too long. The only thing I take away from the Chinese is their saving rates.
Traderbob
http://news.bbc.co.uk/1/hi/world/asia-pacific/669238.stm
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