From the very beginning, mainstream media and government officials have down-played the economic crisis. In 2007, when the crisis started in the midst of the Presidential election, John McCain and other republicans actually refused to talk about it. It was not until the banking and mortgage crisis became apparent in late 2008 that McCain called for a suspension of his Presidential campaign so that he and then candidate Obama could return to Washington to save the American economy. A crisis that had taken many years and tens of trillions of dollars in leverage to create would be resolved, if you believed Congress, within a matter of a couple weeks through the passage of an $800 billion dollar “bailout.”
It was serious enough for Congressman Brad Sherman to tell us Congress had been warned about the possibility of martial law and tanks in the streets, but not serious enough to warrant any significant changes to how regulatory agencies investigate financial fraud or legislation that would make it easier for Americans to start and grow their businesses. Backed by 24 by 7 media propaganda, the crisis was quickly marginalized and within few months the stock market came roaring back.
The nomenclature used by the best and brightest on Wall Street and in the fourth estate has attempted, from the get go, to coerce Americans into believing that things on Wall Street and Main Street were business as usual. While alternative media and contrarian economists warned Americans about impending doom in financial markets, the economy and geo-political happenings around the world, media pundits downplayed the possibility, referring to it only as a “double dip.” This, of course, conjures up images from our childhood. A double dip isn’t all that bad – it can’t be bad – it usually comes with whip cream and a cherry on top.
They – meaning the state sponsored media machine – is very adept at the language they use, how they use it, and how often they repeat it. It’s so effective, that 80% of Americans have no clue that the United States is insolvent and on the brink of bankruptcy, that nearly one in five Americans are out of work, and that the negative economic feedback loop is in full swing. And of those that do have a clue, the majority believe it’s a temporary misstep soon to be resolved by policies of borrow and spend.
It’s just a double dip. Close your eyes, take a bite, enjoy the creamy sweetness. Everything’s yummy and it’ll all be okay – you’ll see.
This from the same people who in 2007 had not an inkling that the economy was about to fall into the worst recession in nearly a hundred years.
Those very same people who didn’t see it coming, refused to explain what was really happening after it came, and continue to act shocked and surprised as the economic and fiscal situation in the U.S. deteriorates, will never give you the bad news – unless it suits their financial goals and power structure.
As we’ve highlighted for over two years now, things are most certainly not as they seem.
We’re literally tens of trillions of dollars deeper in the hole now than we were in 2007. There’s as much, if not more, leverage in the system today as there was then. Wall Street, it turns out, is now more corrupt than ever as failing institutions were merged with too-big-to-fails. There is no regulation to be had. There have been no significant criminal prosecutions. Main Street has gotten nothing but platitudes. And the worst of it is that the US government is enabling the entire thing. Double dip cones for everyone!
The reality is, that our economic system is not experiencing a double dip. Looking at the latest data, it should be clear that we have been double tapped, and we’re falling quickly into another recession within the Greatest Depression.
A quick breakdown of some key economic data points from the last two weeks should make in abundantly clear that the end of the party is nigh.
- Unemployment Is Rising: Economists expected the economy to create 150,000 jobs this month. We created 40,000 fewer jobs than expected for a whopping 9.1% U-3 unemployment rate. Counting discouraged and part-time workers looking for full time work, we’re at about 17%. Then, of course, there’s the matter of the folks who have fallen off the unemployment rolls. They number in the millions, but they don’t count anymore – apparently they’re enjoying double dips at the local ice cream shop. Incidentally, in response to today’s report of a 9.1% unemployment rate, the White House’s chief economist said that these are just “bumps on the road to recovery.” So, now that we are back in the double dip, we can expect the marketing message to change – it’s just a bump.
- Housing is Toast: It’s happening just as we forecast two years ago. The second wave is in full effect and no $8,000 new buyer tax credit is going to stop it. A 3.6% drop year over year, and we can expect, at a minimum, another 20% from here. We’ve said it before, and we’ll say it again, from top to bottom this real estate market will see declines of between 50% to 75%. It’s a long way to go before real estate stabilizes in real value terms (Fed printing might keep prices seemingly within the range of where they were in the mid 2000′s, but that means the cost of everything else will be rising as well, significantly outpacing the housing market).
- Greece, beware of EU member who bear gifts: Europe is a disaster. It may not seem important to us here in the US, and our leading economists certainly rarely, if ever, mention it. But it is important to note that one of the key reasons for why the Great Depression of the 1930′s happened was because of European defaults. Guess what? It will happen again. Less than a year ago they told us Greece had to be saved- and that they had a plan. The EU and IMF would lend them a bunch of money that they couldn’t pay back, and that would resolve the problem. Woops – it turns out that borrow and spend didn’t work so good for Greece. They’re in serious trouble again, their bonds are collapsing, and they are in more debt now than last year. New plan: lend them more money, and this time, double dips for everyone!
- Consumer’s Aren’t So Confident Anymore: What is America without a confident consumer base? In a depression, that’s what. And right now, our consumer confidence numbers are collapsing. It might have something to do with the weather, as is often claimed by mainstream media. It’s the heat. It’s the snow. It’s the tornadoes. Or maybe, just maybe, it’s that everyone is broke, the banks aren’t lending to consumers (unless you’re going to college) and people are terrified that next week they’re going to get a pink slip. We’ll let out astute readers make up their own minds on this one.
- Manufacturing is collapsing: Turns out that when consumers stop buying stuff, the people who produce that stuff don’t get orders from the companies that sell it. The end result is collapsing manufacturing sector, which is exactly what we saw happen earlier this week with the ISM manufacturing index.
- Food Stamps For Everyone! Putting all other economic indicators aside, you can look to the food stamp participation rate to get a real idea of what this crisis feels like on Main Street. 44.2 million people require assistance from the government to eat. To eat! We’ve projected this is going to 50 million within another 12 to 18 months. Now we’re learning that Congress may actually be looking to cut food stamp programs. Bad news considering that commodity prices will continue to rise over coming years, effectively reducing those food stamp benefits through dollar depreciation. Riots in the streets won’t be far behind.
We leave it to our readers to believe what they will about the current state of our economy. But we have a hard time believing this is anything but a further decline on our way to complete economic collapse.
We can expect, of course, that as soon as stock markets respond with declines, The Federal Reserve will begin the next phase in the destruction of the US dollar. Treasury will spend even more money to prevent tanks on the streets of America. Mainstream media will tell us that even if there is a depression there are effective pharmaceuticals that can help. And, President Obama will play another round of golf and give us his top picks for the upcoming NFL season.
It’s all good. Take the kids to Disneyland. Borrow money to get there from anyone who’ll lend it to you if necessary. And most importantly – don’t forget to enjoy a yummy ice cream cone – double dip if you’ve got the cash to cover it.