Economic Apocalypse! Lube Up!

The American economy is about to come to a grinding halt. You are totally fucked if you buy food, gas or anything. The U.S. economy is not just slowing down, but crashing, switching from strong positive growth to negative growth. This shit ain’t going to be pretty.

Obviously, housing prices are plummeting. Homes are sitting unsold and vacant in every neighborhood, as the grass turns brown and the plants die. Pools are turning into birth stations for mosquitoes. Many people are just walking away from their mortgages because their home is worth far less than what they owe. Thankfully, our government is bailing out the companies who made all the shady deals. It’s socialism for the rich! Yay!

You want to know how bad the housing market is....
/media/news/23215/1.jpg
Two for one houses! Oh, my God! We're fucking screwed!

Meanwhile, inflation is here and it’s a bit of an asshole. Prices on everyday products are going through the roof. Gas and milk are up to over $4 dollars a gallon. Just walking down the aisle at my local grocery story, I see product after product up around 25%. And the containers are smaller. It’s less food for more money. That’s how inflation works. But I can lose weight, so it’s pretty sweet!

The difference between this recession and past recessions is we are at a point where there is nothing left to squeeze. We’ve been experiencing inflation for years. No, not the economist bullshit technical term for inflation, but the kind you live through. Rising prices of non-traded goods, like insurance and health care, have been kicking the shit out of most Americans since the early '80s. And dollar-priced traded goods, like energy, for which we don’t have a substitute, have also been steadily rising for 10 years. Now we can expect cheap products, like the ones China sells to Wal-Mart, to shoot through the roof as the China yuan appreciates to avert domestic inflation. Suck it, America.

Now people are selling their gold jewelry, heirlooms and coins to get by.

A tough economy across much of the country is pitting memories against much-needed money. Rita Wallace, 50, has collected coins for 30 years, a hobby she inherited from her grandfather. Selling the coins as scrap gold, destined for melting, was never her intention.

Sounds fun. At the same time, there is a credit crunch. It is now harder to get loans and credit cards, because the banks fucked up and gave loans to a bunch of idiots who shouldn’t have gotten them. So, household access to credit is declining. People use credit to get through the hard times, but they are maxed out and the hard times aren’t even here yet. Seriously, they are not even here yet.

Just as Americans grow more reliant on credit cards to help pay monthly bills, they’re being hit with a one-two punch: Card companies are reducing borrowing limits for tens of thousands of consumers, which then can lead to lower credit scores.

Those facing this predicament might not even know it until they apply for a loan or another credit card, and then get denied because their credit score has dropped.

And people are losing their jobs as the economy slows. As it stands right now, the median U.S. household, if deprived of credit and income loss, has enough savings to last 18 days. That’s down from 30 days in 2001. We have been told to buy, buy, buy on credit for years. Now that incredibly moronic philosophy is coming to a quick and brutal end. That’s why people end up selling their gold watches and their children.

Where’s all that gold going? Shouldn’t the price drop if people are selling gold? Nope. The rich guys are snapping it up. Hedge funds, mutual funds, ETFs, investment banks and financial advisors, who have clients living the sweet life in the top 5% of net worth, are grabbing that gold. Since 2005, only the top 5% of American income earners have experience any real gain. It’s getting a little top heavy up in this bitch, like France 1790 top heavy. Get some scrap wood together and build a guillotine in that garage!

In the '70s, when we were in the same sort of economic situation, people lined up to buy gold and silver. They were converting their savings into gold and silver to protect it. But now, those people in the same income bracket are selling, because they don’t have savings, they have debt. So, they are buying dollars instead. At the same time, the Fed is printing money to fight the debt deflation unleashed by the housing bubble collapse, which causes the price of the dollar to drop and drop. It’s an epic disaster!

Debt deflation is a fucked up situation to live through. Here’s Dr. Steven Keen, an economist for the University of West Sydney who specializes in debt deflation, explaining what goes down.

A debt deflation is where you have an unsustainable level of debt in an economy, so a level that has already caused a crisis and therefore the types of affects we’re seeing with a credit crunch start to occur. And those are regarded as threefold. First of all people try to reduce their debt. Secondly, banks that were allowing a large rate of creation of new money are no longer willing to allow the creation to occur, certainly not at the same rate. And thirdly the banks are tempted to in turn reduce available funds for re-lending that in particular drops drastically.

So those combinations come together and you’re going to have a downturn driven by those factors of reduced credit and tightened credit plus the excessive debt level and the basic elimination of investment due to people trying to pay their debt down rather than trying to invest. If there is distress selling taking place people who are in debt are trying to move their product more rapidly to improve their cash flow and reduce their debts. You can bet they can actually cause a cascade over from falling asset prices into falling consumer prices with the impact of that, and very visibly this is what happened in America in the 1930s, this actually increases the ratio of debt to GDP because two factors of price declines and debt repayment occur simultaneously.

Uh oh. That dude said 1930.

Hey, lookey! The stock market is tanking!

This was the worst first half for the Dow Jones industrials since 1970, when the country fell into recession.

Yikes.

U.S. markets continued their descent, with the Dow Jones industrials on the brink of their worst June in 78 years.

This is a train wreck. There has never been a period in the history of the world when the people carried the amount of debt we are carrying today. The lenders just finished lending out to the bottom of the barrel Americans: The sub-prime borrowers. Now it is biting them in the asshole. (Except, of course, the government is giving them tons of cash to make up for it.) And those borrowers were the end of the line. They were the people who did not deserve and never should have received loans. The problem is, they had to be doled out, because our economy is now a credit economy. We don’t make things anymore. We make our money from finance, investment and real estate. Or we did, anyway. That shit is coming to an end.

Gas is the tipping point. The United States was not constructed for high gas prices. As a country, we quite simply cannot function with such high prices. People who drive the greatest distances are those who can least afford the rise in price. The janitor who drives 50 miles to work in his SUV is completely fucked. He can’t sell the car, or afford the gas. Public transportation you say? There is not a city in this country that can handle the load of so many people making the switch to public transportation. There aren’t enough buses or trains. And if Bush bombs Iran, well, you can kiss the America you know goodbye. Think Mexico.

Even if situation does not get worse from here on out, this current mess will not work. When the vast majority of people are suffering and the rich are getting richer, the politics change. We are now there. Just take a look at the approval polls of Republicans. A shift is coming and it will change the way predatorial finance companies do business – but it will be ugly getting there.

People are beginning to understand that they are being lied to on a daily basis. You can’t tell us the economy is humming along; when we know it is not. And it hasn’t been for years. Every president since Reagan has changed the way economic information is collected and reported – Clinton was the worst of all. So, when the reality on the ground does not match what people are seeing, they stop believing you. There has always been a disconnect between politicians and the populace, but now that disconnect is just as large between the media and the people. That is where we are now and people are angry. America is a lit fuse.

Americans are fine when they are able to just scrape by. We took the years of working long hours or two jobs to afford that 100-mile a day commute to get to our overpriced house. America listened to the news, and the bogus economic statistics for years. Something didn’t seem right, but everyone went along. Now, with the housing disaster, insane gas prices, a plunging dollar and big time inflation, people are at their breaking point. It’s going to come very, very, soon.

In a report that underscored the economy's persistent weakness, the Philadelphia Federal Reserve Bank said its business activity index dropped to minus 17.1 in June from minus 15.6 in May, well below Wall Street's forecasts around minus 10.

Prices paid soared to their highest levels since 1980.

"They are pretty bleak numbers," said David Sloan, economist at 4Cast Ltd. "There is not much to be said in favor of it."

Some analysts are hoping the weaker dollar's boost of exports could help the economy skirt recession, despite a teetering housing market and soft consumer spending. The latest figures indicated otherwise.

We're going down.

The Labor Department said producer prices over the last 12 months were up 7.2 percent in May, the eighth consecutive month prices rose more than 6 percent on a yearly basis.

The last time PPI produced this many straight months of above 6 percent year-over-year readings was the period between 1977 and 1982, a Labor Department official said.

Johnny can’t afford $1000 a month in gas. And he can’t afford the rise in food prices. And he’s got no savings. And he can’t afford health insurance. And he’s in massive debt. Who is Johnny going to get mad at? For every action there is a reaction. You can’t fuck over the poor the way this country has for 28 years without massive blowback. Time for the big boys to start watching their ass.

And that’s only the beginning. Periods of financial instability always lead to war. They always have. Wars begin because of debt. Oh, and some big country seems to be taking our oil….

web address: http://suicidegirls.com/news/politics/23215/