Here are more themes, predictions and today’s assessments of what I wrote in December and early January for my almanac of Predictions for 2009
Economic Recovery or a new Bubble?
“A new president and administration in America must find a global solution that isn’t karma from the past running over our economic dogma projections about how to go back to bubble economies in the future. Sooner or later, Obama and his team will have to deliver novel and revolutionary ideas. Jump-starting the economy isn’t a new idea. It does not address the core cancers, the tumors of our bad business practices and habits that will bring on terminal depression in two years.
Vast sums of money go a-trillion-ing into the financial banks and businesses, starting with Bush and continuing in a greater flood with the new President Obama to the tune of the national deficit reaching 1.8 Trillion dollars as we approach the end of the fiscal year in mid-September. Reports claim that the Obama administration and Federal Reserve spent around 130 billion bucks just in early August to at best slow down the bleeding. With such an ongoing spending spree it takes no Nostradamus to wager that by mid-September, the Obama administration will crash through the two trillion ceiling. What has been done to reform the bad practices turning back the clock to government oversight in the financial and housing markets? Next to nothing, as was predicted. The core cancers and tumors in the system are still there and so is the inflationary depression timeline ticking off unto late 2010 if we stay this dangerous course.
Economic Recovery did not come in the first six months of 2009
“The consumption based economy will remain consumptive with TB (trade bust) for more than half the year and not what the experts who didn’t see this thing coming are hoping, that a turnaround is six months away.”
Do not let bear market rallies fool you. Do not start playing Happy Days are Here Again CDs because some of your financial “CDs” are showing a modest improvement. Do not think that bankers paying back some of the stimulus are stimulating the economy with loans to small businesses that are making a real difference yet. Do not buy the bull market bunk that says modest growth in retail of a few percentiles is some turning of the tide; or, that unemployment requests going down a bit means people are going back to work. It means that their unemployment funds have maxed out in most cases and they are dropping off the ledgers.
Pundits want to put lipstick on the pig of a quarter million people losing their jobs in July being a sign that good times are coming because the bleed was a little less than expected. Heck! This is summer and summer time jobs make good lipstick statistics for this unique brand of recession. Wait until summertime ends and the lifeguards are out of a job. If this were a car, we could celebrate that the impetus of the crash through one wall after another is slowing down but the wreck has not come to a halt, let alone steering into turnaround. The housing market that started to freeze the brakes on the global economy is still dismal and in the next two years, half of all US homeowners will be drowning in debt payments higher than the original value of their houses for Christ and for-”closures” sake!
There is no turnaround in the first six months of 2009. Only the bleeding is slowing down. We may not see jobs, the real marker for recovery, reach a zero unemployment bleeding point for another year coming.
A dozen State Governments asking for Federal Handouts and outright Bailouts
“A new breadline is lining up at the Capitol building of bankers, CEOs of credit card companies, automobile moguls flying down from heaven in Lear jets begging for bailouts. Next will come the governors of American states by the dozens.”
The Center on Budget and Policy Priorities (CBPP) reports that up to 41 states are facing severe budget shortfalls for 2009. The governors of California and Florida may be at the head of the line holding out the largest hats panhandling the Feds for $31.7 billion (California) or $5.1 billion (Florida) but behind them are 39 more state governors trying to beg off their total $71.9 billion budget shortfall. Back three months ago, the CBPP reported the line of governors only at a “mere” 29. Then the state shortfalls were “only” $48 billion. Now 41 out of 50 US state governors are beseeching Washington for some money to cover what is now nearly a $72-billion budget shortfall and there is still a lot of 2009 left for more to join the bread line.
With that said, I posted the following for the book in December 2008:
2009–The Year of Bankruptcies
“The year 2009 will be remembered as the year of state chapter 11 bankruptcies. Moreover, it is from your pocket, Mr. and Mrs. American taxpayer that daddy government’s hand will pilfer.”
California, they say, leads in all trends. Where the fifth largest economy in the world goes, can the fates of lesser US states be far behind? After California, comes Florida, Michigan, Illinois and many other states facing bankruptcy protection in their near future, which, of course leads to:
A Plague of State Tax schemes
“Read my lips, many new taxes to stop state government yard sales.”
In my own State of Washington, where Governor Gregoire is forced to grovel in Washington for funds to cover a $6 billion deficit shortfall, the state government gets creative with traffic infractions, an increase in the liquor tax, and talk of other back door taxation schemes. I am sure there is a taxing story in all the other 49 states my readers could share.
A new dysfunctional Relationship between Frat Pac Economists bailed out by Taxpayers
“The Bush administration leaves behind a government and economy ensnared in a co-dependent relationship that resembles his own behavior. The former frat brat kid famous for party binging, wrecking cars and bankrupting three oil research and drilling companies, always at the last hour got bailed out by his millionaire dad and daddy’s influential cronies appointed to high places. He leaves America with a frat brat kid economy gambling on speculation and spending well beyond its means, letting go the wheel of a crashing American auto industry, allowing the oil industries to overcharge then see prices collapse el Busto! through the floor.
“Hey! What me worry? Here comes my big daddy government with deep pockets full of taxpayer’s money ready to throw the brat a line of entitlement credit that kid economy takes for granted. The rakish brat economy knows it can progress to excess without consequence or oversight in the blind faith that when he squeals, big daddy government will bail him out.”
The brats are bankers and Auto GM CEOs, and share holders and we the taxpayers must endure, to warp John Donne’s poem a bit, the “AIG-gues and tyrannies” of those elites at the top who when it comes to bailouts enjoy the following upgrade of Donne’s famous revelation at taxpayer’s expense:
No CEO is an Island, entirely unto himself,
Every investment banking man
Wants a piece of the big “con”-intent,
A slice from the federal fund main line,
Any man’s debt diminishes “thee”,
Because I am involved in bailing myself out.
And therefore never send to know for whom
The deficit tolls; it tolls for thee, taxpayer, not “me.”
Find out more about how we get out of this mess:
(31 August 2009)