False recovery?

Doesn’t anyone see that if “financial services” accounts for 40% of our GDP that it means we are kidding ourselves? THAT only means we are trading from the left pocket into the right pocket into the back pocket and around again — and counting it as GDP. Our real GDP is far lower than anything reported.
Editor’s Note: The U.S. economy depends largely on the the state of the housing market. The housing market is a large factor in determining consumer confidence and consumer spending. Consumer spending accounts for the vast majority of transactions coutned in our gross domestic product, although health-care is certainly on track to over take consumer spending within 5-10 years.
Look around you. Have you noticed that home building is far from dead. Even though millions are homes are vacant and millions more will be vacant, the building continues. Why? Who in their right mind would be building homes in a market like this where the supply of new and existing homes so vastly outstrips demand?
It can only be the result of increasing demand for what they are building — shoddier, lower cost housing.
That is because the housing market is like a glass bowl on the edge of a shaky table. You know it is going to fall (again). It cannot recover because there appears to be serious motivation in the private banking and building sectors to see the housing situation worsen. Just follow the money. Wall Street and builders are set to make a ton of money while the rest of us go down the tubes. Then economic indicators are all there for anyone to see. It’s about time that Mr. Obama abandons conciliation and adopts the arm twisting aggressive tactics of Lyndon Johnson.
It is unfair to compare Obama with FDR’s situation. By the time FDR came to office in 1933, the depression was already 4 years old and there were hardly any Republicans left. This time the crisis was handed to Obama in midstream and now the republicans are working hard to pin the recession on Obama in the minds of gullible citizens who don’t have the time to inquire or research any of these issues.
I’m no fan of Johnson — but when it came to health care and civil rights he pushed it through over the vehement objections of vested special interests.And for all their venting, I don’t see anyone turning in their medicare card and very few people are left who want to go back to when women couldn’t vote (still less than 100 years ago) and minority races were prevented from voting or participating in the economy.
Each day we wait the situation gets worse and harder to reverse. Each foreclosure and each eviction, each time a homeowner leaves the keys on the kitchen counter in search of alternative, less expensive housing, the banks are laughing all the way off-shore where they are parking trillions of dollars in false untaxed profits, threatening the stability of our currency, the viability of our government financial structure and the confidence in our ability to actually start producing goods and services that people want.
We keep moving in the direction of vapor. False demand and dubious supply of things that nobody should be required to buy, much less need or want. Somehow, whether it is the tea party, the coffee party or something else must gain traction to break the death grip big business and Wall Street has on our government.
Doesn’t anyone see that if “financial services” accounts for 40% of our GDP that it means we are kidding ourselves? THAT only means we are trading from the left pocket into the right pocket into the back pocket and around again — and counting it as GDP. Our real GDP is far lower than anything reported.

Right now, our only hope is to convince one Judge at a time to listen to the facts and decide cases on the merits instead of presumptions.
March 3, 2010
Economic Scene

In Tracking Recovery, Jagged Lines

Could the economy be at risk of a double dip?

We’re now in the midst of the worst run of economic news in almost a year. Home sales have dropped. So has consumer confidence. Stocks peaked on Jan. 19.

This Friday may well bring the darkest piece of news yet, at least on the surface. Forecasters are predicting that the Labor Department will report that job losses accelerated in February, perhaps back above 100,000. The main reason will be the temporary hit from the big snowstorms last month. Yet there is reason to wonder if the economy also has bigger problems.

The weekly data on jobless benefits are narrower and less consistent than the monthly jobs report, but they have the advantage of being more current. From early January to late February, the number of workers filing new claims for jobless benefits rose 15 percent. Over the previous nine months, this number was generally falling.

Economies rarely move in a straight line, and — as the better-than-expected numbers on Tuesday on vehicle sales suggested — the recent run of bad data is probably overstating the troubles. But whatever you thought at the start of the year about the recovery — strong, moderate, fragile — you probably need to be more pessimistic today.

“The strength of data we saw at the end of last year exaggerated the strength of the underlying economy,” Richard Berner of Morgan Stanley, says. “And now we’re seeing some pullback.”

This is especially troubling because the economy is still such a long way from being healthy. Lawrence Katz, the Harvard labor economist, estimates that 10.6 million jobs would need to materialize immediately to return the job market to its condition when the Great Recession began. For it to get there four years from now, the economy would have to add 316,000 jobs a month. That pace would be faster than in any four-year stretch of the 1990s boom.

The economy’s biggest problem has not changed. When bubbles pop, they wreak enormous, lasting damage. Credit stays hard to get for years because banks need to rebuild their balance sheets. Families and businesses, whose net worth isn’t what they thought it was, have debts to pay off.

Over the last two years, households have been paying down their debts at a fairly good pace. But they aren’t yet close to being finished.

The average household still has debt that eats up roughly 17.5 percent of its disposable income — in mortgage payments, minimum credit card payments and the like. That’s down from a peak of 18.9 percent in 2008. It is still above the 1980-95 average of about 16.6 percent, according to the Federal Reserve. So debt payments will continue to hold down spending in the months ahead.

The economy did so well late last year in large part because companies began building up inventories they had whittled when they cut production during the recession. What worries some forecasters is that this buildup won’t last. Consumer spending, they say, will remain too weak to get companies to keep increasing production and to begin adding workers. “Not too long from now,” says Joshua Shapiro of MFR, a research firm in New York, “you’re going to need other demand to kick in.”

The second problem is that the stimulus program and the Fed’s emergency programs are in the early stages of slowing down.

These programs have done tremendous good, as I’ve written before. The bubbles in housing and stocks over the last decade were far larger than an average bubble, and yet the resulting bust is on pace to be shorter and less severe than the typical one in the wake of a financial crisis. That’s not an accident. It’s a result of an incredibly aggressive response by the Fed, Congress, the Bush administration and the Obama administration.

Just consider home sales. The stimulus bill last year included a tax credit for first-time home buyers that originally expired on Dec. 1. Like clockwork, home sales fell 16 percent in December. From March to November, sales rose 36 percent.

The credit has since been extended, but if you combine the other fading parts of the stimulus with household debt burdens, you can see why some economists are concerned. Mr. Shapiro predicts monthly job growth will be only 50,000 to 75,000 by the end of this year. To keep up with population growth — to keep unemployment from rising — the economy needs to add more than 100,000 jobs a month.

Recent events in Congress, however, have offered some cause for optimism. Last week, the Senate passed a small-bore $15 billion jobs bill, focused on road building and employer tax credits. But on Monday, Democratic leaders announced a proposal that would do more: a $150 billion bill to extend jobless benefits, Medicaid payments to states and some tax cuts.

Some of the extensions last through the end of the year, rather than for just a few months, as is typical. Senator Jack Reed, Democrat of Rhode Island, told me the bill was meant to prevent what he called the “Perils of Pauline” problem — referring to the silent movie serial that placed its heroine in repeated danger.

The most recent extension of jobless benefits expired on Sunday. The Senate voted Tuesday night to extend the benefits for 30 more days after Senator Jim Bunning, Republican of Kentucky, dropped his opposition to the measure.

If Congress passes a longer-term extension and adds some measures — like more aid to struggling states, maybe the single most effective form of stimulus — it can offset the winding down of other government programs. (Yes, these efforts to prop up the economy will have to end sometime soon, and debt reduction will have to begin. But the main historical lesson of financial crises is that governments are too timid and too quick to step back.)

It’s also possible that Mr. Shapiro and his fellow pessimists are being a bit too dire about the private sector. Inventories are still quite lean, and some restocking is likely to continue. Banks are becoming more willing to lend, Fed surveys show. Strong growth in China and other emerging markets will help American exporters like General Motors and Cargill. To my mind, these forces make a true double dip unlikely.

Still, the jobs number on Friday will be ugly. Macroeconomic Advisers, a research firm, estimates that the snow kept 150,000 to 220,000 people off a payroll when the government conducted its jobs survey in early February. But most of those jobs will reappear in March — the month when many economists think job growth will, at long last, resume.

Here’s the thing, though. Even the optimists are not very optimistic. Morgan Stanley expects average monthly job growth of just 110,000 this year. The great jobs deficit — 10.6 million and counting — will be with us for years.

So no matter when the recent run of bad news comes to an end, the economy is still going to need help.

E-mail: leonhardt@nytimes.com

10 Responses

  1. Michael hawk& companies Inc. Merger stillman hillman James white , James hEllman . James allen . That a make world companies incorporation . Ogeltree& walker bank merger the stage coach bank .

  2. Michael rockefella – first american financial corp – first american bank , on the hot all fraud list as well .where is brenda anderson , at my wachovia bank , she the vice president , and where is dianne c hunter over at my chase bank vice president , bank of america kenneth d lewis riggins , ok step up to plate , and respond too all of this fraud . Fleet finance inc , the white taker mortgage , hsbc bank aka us bank ,fremont inc ,united americas bank , monarch bank holding llc,synovus bank , come foward on all this fraud , head man in charge . Is asking yall so . Ok . Norwest bank , bank one , .shy bank .

  3. The irs no the real owner of bank of america and the fraudulent 1 too , u have to show I’d to the irs .

  4. Hi,
    Need an Attorney who “gets it” in southern california urgently. Thank you.

  5. One of the fundamental problems is that we have given away most all our manufacturing and have become a consumer country.

    There is even outsourcing of accounting and legal work (by corporations and smaller companies) to countries such as India and China.

    We cannot continue to be consumers only.


    I am convinced that the banking and governmental interests are moving to turn most Americans into Renters, so as to maintain their outgoing ‘housing payment’ as rent, with the hyperinflation they of all parties, have caused over the last 40+ years.

    In other words, a peaceful revolution against these excesses will be a lot harder, when they get an appeals court like the 9th Circuit to someday carbon-copy Arizona’s US District Court adverse rulings against us all, at least in the Western states over here. Wait till the US Supreme Court gives it blessing to one of these ‘rulings’.

    That is why the Treasury and the Federal Reserve are ‘buying’ all of these M.B.S.s; so we are really fighting them, while the servicer/agent pretender lenders do the illegal dirty work. Keep that payment flowing…. From a new property-less ‘renter’.

    In other words Americans without home equity, and without a home, will be a lot easier to control, and they know it.

    This is what was planned in the depression of 1934:

    “Capital must protect itself in every way, through combination and through legislation. Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law, applied by the central power of wealth, under control of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal men now engaged in forming an imperialism of capital to govern the world. By dividing the people, we can get them to expand their energies in fighting over questions of no importance to us except as teachers of the common herd. Thus by discreet action we can secure for ourselves what has been generally planned and successfully accomplished.”

    This actual quote is from the Bankers Manifest, the “Civil Servants Year Book” – “The Organizer” of January 1934, and generally attributed to J. P. Morgan.

    Wall Street, the government, and the Federal Reserve are desperate that we keep sending monthly inflation-proof payments to them over the next 40 years, to cover up their financial lies and messes.

    Rent is generally inflation proof…. as all those 2005 Adjustable-Rate loans were originally intended to be.

    We are actually fighting the corrupt Federal Reserve when we fight securitized M.B.S., and their pretender ‘rescued’ bank agents. J. P. Morgan was and is one of the ‘investors’ in the Federal Reserve.

    This will never resolve when the Federal Reserve continues to try to enforce its M.B.S.s.

    Instead, all $9.5 Trillion in residential mortgage should be canceled for fraud. NOW.

    The alternative is perpetual ‘Rent’ for most Americans and their grandchildren.

  7. Also see WSJ article -which is an outrage!

    * MARCH 8, 2010

    Defaulted Loans May Haunt Seniors

  8. Excellent synopsis of the economy by Mr. Garfield.

    Do not want to repeat myself, as I posted the NYT article elsewhere on this blog, but it appears that the administration believes that “fighting” foreclosures is standing in the way of economic recovery.

    Quote from March 7th NYT article:
    Program Will Pay Homeowners to Sell at a Loss
    Published: March 7, 2010

    “This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

    For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.”

    Me speaking. According to the media, this administration, and Dems and Reps alike, we caused the crisis – by “buying too much house” and we are delaying “tentative recovery” by foreclosures. They want to give us a “little cash to speed them (us) on their way”!!!!????
    They have got to be kidding.
    The poor US economy has been in the works for sometime – and Congress is to blame for catering to the whims of every corporate CEO them comes before them for help in securing profit manipulations at the cost and expense of the future of America. It will take decades, if ever, to restore America to the once great country it was.

    To Libra 99 – I feel for you and others alike. We are simply the “casualties” of a misdirected Congress, which does not know how to correct it’s own mistakes.

  9. I think the first sentence of your post hits it right on the head. So much of our hard-earned income is now going to non-productive interest, fees, penalties, and services we don’t need (and don’t even know we’re getting, in many cases).

    On the other hand, I can’t say that the trend toward lower-cost housing is all bad. I built a cheaper, smaller house while trying to sell my over-mortaged one (which eventually fell to a non-judicial foreclosure–still working on that one), and I am much happier without the big mortgage and the big house to care for.

    Having less debt and spending less on things we don’t actually need might not help the economy on a macro scale, but on a micro- or even nano-economic scale it might give us, as individuals, a safe haven from the hard times ahead.

  10. The sad reality is that in the long run we’re all screwed. I’ve seen many people I know, myself included, go down the tubes. Some of them have just sort of dried up and blown away like dust in the wind, never to be heard from again. Welcome my friends to the new America; it’s here to stay.

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