The top 2 quintiles of income earners earned over $91,000, which was 77%, in 2006. The 2 mid-quintiles earned between $36,000 to $57,000. The lowest quintile earners earned $19,000 or lower. A quintile equals 20% of a given amount.
The Chinese middle class population has 100 million to 247 million people. There exports dropped 25.7% in February YoY, for the fourth straight month as the world demand began to shrink. The Chinese imported less, as well. They bought 24.1% less stuff. Professor Michael Pettis reported on his blog, an article printed in the Financial Times quoting the Commerce Minister Chen Deming that “China will reduce export taxes to zero and give more financial support to exporters as it tries to increase its share of global trade in the current crisis.” It went on to say that China would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” Chen Deming went on to say, “We should increase our share of the global market…We must transform ourselves from a big export nation to a strong export nation.” So, how come President Obama is not saying the same thing? Oh, I forgot, he is saying that about zombie banks.
Professor Pettis wrote the following, “It’s probably not a good idea to announce a drive to increase China’s share of the global market, especially since for the last several months, while the world has suffered a collapse in demand, China’s share of exports has risen dramatically, but this may have been said primarily for domestic consumption.” Mr. Chen realizes that China is facing tough times ahead with their foreign trade business. This will mean that China may likely find their trade surplus falling quickly to a reported amount of $4.8B. We haven’t seen a trade surplus for a very long time. Professor Pettis stated that there are many who feel that the days of massive monthly trade surpluses are over.
President Obama and you Knights of the Roundtable, if massive trade surpluses are likely to come to an end, then which countries will continue to fund our budget deficits? Professor Pettis sends out a warning. “There is a real need for an adjustment consumption in the U.S, and I don’t think it makes sense for the U.S. to attempt to replace excess household consumption with excess government consumption. One way or the other the U.S, along with China and most other countries that have contributed to one side or the other of the global imbalances, is going to have to accept a demand contraction….Trade friction is an issue that will not easily go away.” He concludes his intelligent and insightful writing with this, “…China would be able to keep its growth at about 8 percent this year, a growth rate long believed to be minimum to create enough jobs and maintain social stability….China’s economy accounted for only five percent of the world’s total.” China alone cannot revive the world.”
U.S. manufacturing has declined over the last 12 consecutive months. And, these top ten red state hypocrites received the most per dollar spent in federal spending:
New Mexico=$2.03, Mississippi=$2.02; Alaska=$1.84; Louisiana=$1.78, West Virginia=$1.76, North Dakota=$1.68, Alabama=$1.53; South Dakota=$1.53, Kentucky=$1.51, Virginia=$1.51. So much for rejecting socialism!
President Obama and Team, what amount of growth does the U.S. need to create enough jobs and maintain social stability? It seems you are more concerned in stabilizing the balance sheets of the uber-richest people, and banksta thieves. Is the People’s Republic of China on to something we are missing in the home of the brave and land of the free?
One in five homeowners are underwater, which means that the value of the home is more than what the home actually is. This means that the home is not as valuable as the mortgage and the house is not worth what the owner is paying for the mortgage. This is when the owner might actually consider walking away from what might be considered a lost cause. Such homeowners are typically those who are able to pay on their overpriced mortgage, but instead, might think of packing up and walking away from it. If an unfortunate life situation occurs that would cause economic pressures to bear down on their expenses creating undue financial stresses, the owner might just give the keys over to the bank.
If your house is worth more than your mortgage, you can often refinance, but it won’t work the other way around. When the mortgage is worth more than the current value and the payments, the payments are not paying the house off. This is called negative equity. Often the homeowner is paying on a mortgage in excess of the value of the house and is not paying anything on the house and not getting closer to any ownership of the house.
When the mortgage is bigger than the house value no bank will refinance. It locks the owners into their own home without ever getting a chance to sell at a break-even or profit price.
1 in 10 homeowners are in default or in foreclosure. 10,000 Americans enter foreclosure everyday. 2.3 million homeowners were in foreclosure in 2008.
42,000 companies closed in 2008, up 45% from 2007. It is predicted that 62,000 companies will close in 2009. So what happens? Workers lose their jobs. Then they realize they can no longer keep paying on their mortgages, credit cards, cars, or whatever else, and walk away from those specific debt burdens, since the government is not helping them, but only the mega-banks with $11T in commitments. For example, Citi, which is only worth $5.4B has been given $75B in taxpayer bailouts. AIG, which has a total market value of only $1B, has been given $180B in taxpayer bailout funds. Yet the taxpayer is left hanging to blow in the wind!
The FDIC placed 20 banks into receivership in 2009.
When one looks at unemployment, underemployment, those no longer looking for work, no longer in the data bases, and working a part-time job instead of a full-time job, or a part-time job that pays less than the last one they lost, the figure is 15-19% un/underemployed. This number rises to over 22 million people. During the Great Depression, at its peak we had 20-25% unemployment.
50 million jobs have been lost worldwide just in 2009. We are shedding jobs at a rate of 23,000 jobs everyday! 4.4 million jobs have been lost since the crisis began last year, and 6.8 million underemployed. The recession began in 2007, and already has stolen over 4.4 million jobs away from the real economy and sent 12.5 million in search of work. The economy contracted at 6.2% in the final three months of 2008, and the worst we have seen in the last 25 years. The economy will see further contraction throughout this year, possibly at the same rate.
In the world of banking, and found in the article by Bill Dedman, 3-17-09, MSNBC.com, U.S. Banks Suffer 149% Rise In Bad Loans, “Out of 8,198 banks for which we have two years of data, 5,784—or 71%--had a higher troubled asset ratio at the end of 2008 than a year earlier”. “The picture was worse for the largest 100 banks: 90 showed declining strength. Only seven improved, and one maintained the same ratio.” Data taken by the American University group that had created the website, Bank Tracker.
On March 23, 2009, the DOW climbed back up to its January 2009 level—7775, which was the lowest it had ever been prior to that same all-time 5-year low back in October-November 2008. Prior to that it was 2002-03, then prior to that was 1997-98, which was the all-time high up to that point in time.
U.S. bank’s toxic assets, the ugly stuff that needed to be removed from the bank balance sheets before the economy can recover, amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50-60 cents on the dollar. Translation: as much as another $2T taxpayer bailout, was written by Mike Whitney, Counterpunch.org, “Time for Geithner and Bernanke to Go”. Mr. Whitney also quoted from the Financial Times, “The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their collateral debt obligations, although market value was only 47 cents on the dollar.” He went on to report that around March 3, 2009, “Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2% of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.” So much for helping the struggling working American.
$314 billion has been handed out to foreign central banks, while $600 billion was transferred to those same banks in December 2008. Bernanke and Geithner are printing up $2T for the latest scam called TALF, or Term Asset-Backed Loan Facility, in order to create more loans from auto, student, credit card loans, and business and corporate loans.
Since Reagan, US growth has only been 3% or less per year! Once the Commodity Futures Trading Corporation was put into play, in 2000, $62T in derivative trading grew by 2008.
It is said, with all the government obligations and debts, it is $60T in debt. Zbignew Brzezinski, former national security advisor under President Carter, told Joe Scarborough (Economic Crisis=USA Riots, 3-10-09, Ampedstatus.com) that there is the possibility of class warfare in the United States. “I was worrying about it because we’re going to have millions and millions of unemployed people in dire straits. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America…”
One in 50 children are homeless! California, the 10th largest population in the United States had nearly 300,000 two years before the last stock market high in 2007. Sacramento leadership is now talking about government controlled and legal tent cities where the homeless can be taken and held. It is estimated that there are 1.5 million homeless children across the country. California ranked 40 out of 50 states with Texas being number 50, The State That Breeds Presidents. They don’t call it Lone Star for nothin’!!!!!! Is this the type of nation we want to pass on to future generations?
Yet we continue to spend $500B in the Middle East wars, and more billions in maintaining military domination with our 1000 worldwide bases in 200 countries. This military budget is more than the world’s entire military budgets put together! Yet, we have watched 23,000 jobs disappear everyday, and homelessness gather momentum. Is this the kind of nation YOU want? Is the type of country YOU want to pass on to others? Are YOU proud of this?
U.S. air cargo declined 21.3% in January 2009. In the March 6, 2009 online version of The Journal of Commerce, it was written that cargo traffic for U.S. airlines fell at the steepest rate since 9-01, in January. Carriers saw their worst month for cargo in nearly seven years. Domestic business tumbled 16.6% in January 2009 compared to a year ago. “The 838.3 million cargo ton miles the airlines reported was the lightest monthly domestic traffic measure since September 2001, and before that since February 1995.”
The Journal of Commerce-online continued to indicate that KLM air cargo business fell 18% from a year ago. British Air’s air cargo fell 20.7%. Asia/Pacific shipments dropped 17.7%. U.S. air traffic dropped 13.9% in February 2009.
Asian air cargo slumped 23.6% in January, and passenger numbers fell 7.8% as was reported in the Association of Asia Pacific Airlines, said on 3-6-09.
Container port traffic for February, found on bomlat.blogspot.com, stated that the traffic was down for another month. The February Chinese trade surplus was only $4.84B, which was 25% lower than the same period in 2008, and even lower than January, 2009 surplus. “The containerized exports in February were down 27.6% in Los Angeles, and 37% in Long Beach. The decline in imports was even greater, 35.3% in L.A. and 43.3% in Long Beach.” “The First Container Terminal in St. Petersburg, Russia’s biggest box terminal, reported traffic in February plunged 27.3 percent from a year ago as imports collapsed.” “Dutch foreign trade was hit hard in the global economic crisis with exports tumbling 21 percent in January from a year earlier, the biggest drop since the records were kept in 1990, the Dutch central statistics bureau (CBS) said on Friday. The value of goods exports fell to 24.4 billion euros (31.5 billion U.S. dollars), the CBS said. The volume of exports fell 14percent, according to figures corrected for working days. Imports also plummeted 22 percent to 21.6 billion euros, while the volume of imports decreased 14 percent.”
From what I have read the Truck Mileage Index of the U.S., in January 2009, has declined by more than 10%, as well as the truck inventory by 50%, which means that the investment in trucks has dropped.
73,000 retail enterprises have closed in 2009. 237,000 are projected to fail.
These numbers indicate that there is a worldwide consumer slowdown, so why are stock market numbers going up? It is all a head-fake!!!
Professor Joseph Stiglitz, Nobel Laureate in Economics, wrote in the Nation magazine, in his piece titled “A Bank Bailout That Works”, said that the banks are $2-3 trillion or more undercapitalized!
The IMF stated in a BBC report “there is now $2.2 trillion of toxic bank debt worldwide, and $500 billion more than it was estimated a few months ago.”
When workers lose their jobs, they cannot repay their debts, or afford to borrow, and when underemployed, their debts may exceed their income and/or assets. Also, the debt interest rates or borrowing costs on the debts could be too high making the payment process non-payable.
The vicious downward spiral begins. When workers lose jobs, businesses downsize and might have trouble paying their own debts. When workers lose jobs, they stop being consumers, then more businesses close and Pink Slip workers. Strip malls lose tenants, and close up. Developers seek bankruptcy protection. The economy slips further into its black hole toward depression. It ends up that all the money thrown at the mega-monopoly financial institutions, which are already insolvent, cannot issue credit. Credit becomes a moot point because there are fewer borrowers, yet these banks are filled with taxpayer dollars jacking up their “liquided-up” balance sheets. Yet these insolvent institutions continue to look the other way at their toxic debt-assets burning up all that we taxpayers have given them. Yet Citi claimed a profit, while not factoring in all their toxic debt into the supposed profit, as well as the fact that the taxpayer owns 80% of their stock. It is all a bad joke played on Americans!!! And, the administration is not calling them out.
Matt Taibbi, wrote in Rollingstone.com, in “The Big Takeover”, “In the final three months of last year, the company [AIG] lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street…” (This article will explain the financial Ponzi scheme.)
The “Big Mistake” ends up glaring in the face of President Obama and the angry Americans that the bailout went to the wrong places, and the wrong people. Instead of rescuing mortgages, retirement funds, and jobs stabilizing the economy and easing troubled minds, we got a failed top down bailout plan. Does this look to you a little bit like Reagan’s failed trickle down economics theory, which delivered us into this economic tsunami?
thanks for reading, jerry
Postscript: This article can also be read at Economicrot, as well, thanks to Randy posting there!
Bill Moyers speaks with William Black, economist and former regulator about the banking fraud beginning back to Reagan. Mr. Black speaks about the current fraud, the cover-up, and that Geithner and Summers are deep within the fraud and cover-up. Watch it.