Depression Signs Emerge - Thanks to Bush etc. (Mike Whitney)

[autorank]

The Money Party

"The Remorseless Algebra of a Deflationary Death Spiral"

ECONOMIC COLLAPSE?

The next administration---whether it's McCain or Obama---will be forced
to restore the Resolution Trust Corp., which was created in 1989 to dispose of
assets of insolvent savings and loan banks.

By Mike Whitney June 5, 2008

Look around. The evidence of a withering economy is everywhere. In "good times" consumers shun the canned meat aisle altogether, but no more. Today, Spam sales are soaring; grocery stores can't keep it on the shelves. Everyone is looking for cheaper ways to feed their families. The Labor Dept. assures us that core-inflation is only 4 per cent, but everybody knows it's load of malarkey. Food prices are going through the roof. White bread is up 13 percent, bacon is up 7 percent and peanut butter is up 9 percent. Inflation is rampant and there's no end in sight. The dollar is closing in on the peso and working people are struggling just to get by. The bottom line is that more and more people in "the richest country on earth" are now surviving on processed pig-meat. That says it all.

Snip

The pundits on the business channel are telling us that the "worst is over"; that the Force 5 hurricane in the financial markets has weakened to a squall. Don't believe it. The corporate bond market is still frozen, housing is in free fall, and the banking system is buckling from the overload of bad investments. The FDIC is even trying to lure former employees out of retirement to deal with the tsunami of bank failures set to touch down later in 2008. Corporate defaults are on the rise and and commercial real estate is crashing.

Snip

In California, sales are not only down by roughly 50 per cent, but 40 per cent of new sales are sales of foreclosed homes. The pool of potential buyers has dried up. Now the vultures are circling and picking up homes for $.50 on the dollar. The losses are enormous. If the downward trend continues, (as many now expect) and housing prices drop 30 per cent nationwide; the market will shed $6.5 trillion in aggregate value and lower household spending by $300 billion. That means GDP will shrink at least another full percentage point.

The Money Party

[Ichingcarpenter]

1. Americans lost$1.7 trillion in the first quarter

Americans $1.7 trillion poorer

Source: CNN

NEW YORK (CNNMoney.com) -- Americans saw their net worth decline by $1.7 trillion in the first quarter - the biggest drop since 2002 - as declines in home values and the stock market ravaged their holdings.

Meanwhile, the amount of equity people have in their homes fell to 46.2%, the lowest level ever.

The net worth of U.S. households fell 3% to $56 trillion at the end of March, according to the Federal Reserve's flow of funds report, which was released Thursday.

Not surprisingly, plummeting home values and stock prices contributed heavily to the drop. The value of real estate assets owned by households and non-profits declined by $305 billion, while financial assets fell by $1.3 trillion, led mainly by a $556 billion drop in corporate equities and a $400 billion decline in mutual funds.


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3340155

[autorank]

2. Yep and there are $516 Trillion in derivatives (public trades)

sitting out there.

What the heck is going on?

[truedelphi]

4. The people need to get their legislators to stop it!

By stop it, I mean, STOP BAILING OUT the big boys and girls who should be as liable for their losses as for their gains.

Otherwise, the dollar will be so devalued that our nation will hold a record for devalued!

[Me.]

3. Rotten On The Inside

Collapsing in, on itself, from the outside

[truedelphi]

5. K & R'd n/t

[reprehensor]

6. Strap in tight.

It's going to be a rough ride.

[autorank]

18. How about another bubble - "The Blogger Bubble"

We could do it with cyber money - you're name would be on the "C note"
:toast:

[1776Forever]

7. It is getting scary here in Florida - We may be moving out of our home in a few months

Bleak outlook ahead! Glad we have family in Ohio to move back up to. I know Ohio isn't any better but we will have family and that means a lot!

[Rosemary2205]

15. My family saved my noodles bigtime

We had a nearly fatal car accident in 2000. My sister and her husband wanted to bail on Detroit and came to Atlanta, lived in my house, paid my extra cheap mortgage (in the house for over 20 years and the entire cost of living in this little house is under $600 a month average) for 6 years and helped get me and the husband what we needed medically. If it wasn't for them I shudder at the thought of what would have become of us.

Consider yourself hugged and good luck in Ohio.

[shanti]

20. that's what family is for

n/t

[1776Forever]

26. Hugs!! Thank you!

:pals:

[MadMaddie]

8. Well when you have an incompetent administration who

kept sweeping the sand over the sink hole and then add all of the other economic hits we are taking and you have yourself a path to a Depression.

When our nominee becomes President and he puts Auditors into every Government agency we will experience something that will boggle the mind...I can almost guarantee that the records are so poorly kept that it will be a monumental task to figure out the mess.

The banking industry is heading for something really bad...

[KoKo]

9. Thanks...giving this a big K&R!

[autorank]

23. Can you believe this nonsense... It's so artificial

Check this out. It was posted her a few days ago. It's not in concrete, as the author says,
but it sure makes sense to me.

http://electionfraudnews.com/MoneyParty/MikeWhitney.htm

[truedelphi]

24. So we let the Feds or whoever bail out the financial institutions that are failing

And prop up things like the Bear Stearns sale to JP Morgan, and as that is done, the dollar devalues, AND TO TOP IT OFF, the banks are driving up the prices of oil and other commodities with the help of the moolah they have gotten from the Treasury that belongs to WE THE PEOPLE.

And since much of our oil comes from foreign places, and is based on Euros, the more our dollar devalues in comparison with the Euro the more the oil costs. Then more businesses start to fail, etc.

This is all designed so that our heads spin so fast we can hardly figure it out.

[MedleyMisty]

10. It came up at the Memorial Day family get together

And I'm definitely the only one who hangs out on the net all day getting non-propaganda news. But then I do share genes with them. ;)

My mother's boyfriend shared his stories of his childhood - hearing his mother cry because she didn't have any food to give her kids and curling his fist into his stomach at night to stop the pain enough so he could sleep.

I suppose that's the silver lining of coming from poverty - when you find yourself back there you know how to survive it.

If it comes to another Depression, I can go home and be all right. My mother is a survivor and I can learn the physical bits from her - she already taught me the emotional and mental bits by example.

[ihavenobias]

11. K & R

[DCKit]

12. Anyone have any hard data on how much the RTC recovered for the taxpayers...

or how many people went to prison?

Since Poppy Bush was in the WH during the majority of time the RTC was in existence and his ***REALLY*** wild son, Neil Bush, was up to his hairline in "questionable" loans and other activities at Silverado Savings and Loan, the choice not to investigate the son of a sitting President was a no-brainer for the politically appointed toadies at the RTC.

Since they couldn't go after the most visible criminal of the bunch without generating even more attention, finger pointing and accusations of privilege, the RTC did next to nothing.

I would assume that anyone they did go after directly was either a Democrat or an out-of-favor Republican, but how many of them we're allowed into the club in those days?

[autorank]

27. I'd say you could count them on both hands;)

Regardless of the fingers present. Not many, certainly not any relatives of "made men."

[bluesmail]

13. K&R The planned collapse of America.

:scared:

[Rosemary2205]

14. I use the Starbucks economic forecast meter myself.

when starbucks can't survive anymore then we know we are screwn beyond all reason. I have no idea why, but it seems people will give up the house before they give up the latte.

Economically, this seems to be code yellow. When the Malls and strip malls have more than 50% empties we will be at code orange. And code red is the demise of Starbucks.

[autorank]

22. But what will we do for coffee;)

Yep, if those puppies start closing, we re in deep trouble.

You ought to come up with an interactive graph or something.

Total Starbucks(if it's flat or goes down, bad news)

Closed Starbucks ("the horror")

Please, save the :donut:

[LiberalEsto]

30. I saw a line of gas hogs at the drive-in Starbucks today

With gas over $4 a gallon, you'd think people would park their gigantic 4-speeds and minivans and walk into the drive-in Starbucks in Gaithersburg, MD. But no-o-o-o.

There were at least 5, maybe 6 vehicles on the line this morning, and I couldn't believe it. All were huge gas guzzlers. OK, so this is Montgomery County in the DC suburbs,one of the more affluent areas of the country. Maybe our area hasn't gotten hit as badly, yet. But I'm sure it's coming.

[roamer65]

16. If inflation is going through the roof...

how can it be a "deflationary death spiral"? It will not be a deflationary depression, it will be a hyperinflationary one. The Federal Reserve, unlike 1929-1933, is not shackled by a gold standard. It can and will create as much money as it thinks it needs to "fix" the crisis. Massive M3 money supply growth will bring on this inflationary depression, mark my words.

[anigbrowl]

21. While prices are going up, wages aren't - it's CPI rather than core inflation

Usually economists refer to core inflation, which excludes rises in the price of food and energy. This might seem horrible since we all need to eat and have electricity, but they're generally left out because those things are commodities and commodity markets have their own rules.

Core inflation refers to the cost of maintaining a productive economy - wages, plant and machinery, and so on - which is where the big capital investments must be made. It's 'core inflation' insofar as it affects productivity investment rather than consumption.

I suggest we're more likely to wind up with stagflation than hyperinflation if we don't fix our problems in the short and medium term. I'm not disagreeing with your outlook, but don't get carried away by the trend line - it can be deceiving. I don't agree with you about the gold standard. M3 will certainly increase, but as long as interest rates remain low (or sink further) then that will have a braking effect.

In short, worry but don't freak out.

[roamer65]

35. M3 is increasing at the fastest rate since August, 1971.

When we left the gold exchange standard under Tricky Dick. The old 1980 style of inflation measurement has it just under 12%.

http://www.shadowstats.com

I concur with John Williams. A hyperinflationary depression beginning somewhere around 2010.

[truedelphi]

32. The value of the money is depressed

The cost of goods (Since most are now produced outside the country and those that aren't are commodities the traders are taking thru the roof) is escalating.

In the 1929 through 1941 Depression, there was no money. The costs of goods, since produced here (oil wells in Texas and Oklahoma churning out more oil than a non-war economy could use) and all the textile mills, auto factories etc - stayed stable or declined.

The oil men and the manufacturers all were producing goods here for sale to the American consumer using the dollar.

Now the American public has to buy things that are produced elsewhere, as Our oil (65% of it) is produced somewhere other than in the USA. Ditto the auto factories, auto accessories, and the textiles.

That works great as long as the dollar has value, but when the Chinese currency, and even the Mexican Peso goes stronger against our currency than expected, serious problems, like what occurred today in the stock market, will erupt.

[tsuki]

17. Everything is honky-dorey, as per George Will. You guys stop it. nt

[autorank]

28. Will's writers must have told him that

He's the Andy Warhol of writers except without talent and popularity;)

Just kidding. Here's a :toast: to not so curious George...

[tsuki]

29. Did you see this?

http://www.huffingtonpost.com/charlie-rose/my-conversation-with-geor_b_105195.html

Talk about condescending and elitist? Made me :puke:

[autorank]

33. I'll watch it. w/out sound now;)

But I can fill in the blanks. We're bad, we being anyone who thinks, because we don't have the common touch and being smart is a crime.

Of course it is George! Smart people, i.e., most Americans, know that your con-job politics stink and serve only the rich.

So, how's that;)

[truedelphi]

31. Boy do I hope he took his own advice and invested in the market he proclaims

George Will is always good for standing by something just before it tanks.

he wrote the definitive article on the safety of nuclear power. The article came out just days before Three Mile Island attempted to go into the China Syndrome!

When George says something is A-Okay, I say run for your life!!

[lonestarnot]

19. Sheet! Another wave come'n and it will be a biggie.

[autorank]

25. You mean Miss Sue Nami;);

:hi:

[lonestarnot]

34. That would be her.

[El Pinko]

36. Why would people buy spam?

It's no cheaper than chicken breasts and a lot more gross.

I don't really get that anecdote...