Back in the middle of September, when the Wall Street model of investment banking collapsed into the dustbin of history Stirling Newberry wrote a series of articles laying out the underlying realities of the financial crises, and re-framing the issue as a Constitutional crisis because of the existence of a reactionary faction in American politics that is as yet unwilling to move from the existing means of storing wealth – the development of land, i.e., suburban sprawl – to a new store of wealth that would allow us to begin building a workable future. The Constitutional crisis arises because the present monetary configuration of the United States rests on the valuation of mortgages, the values of which are supposed to keep increasing as more land is developed:
The November payrolls number just came out, blowing away almost all estimates at a loss of 533,000 jobs in one month! The services sector, which had been holding up until only a couple of months ago, shed over half of those jobs.
September was also revised down to 403,000 job losses, and October was revised to 320,000 job losses, for a total of job losses in just 3 months of 1,250,000 jobs!
My buddy Bonddad occasionally posts items invariably entitled, We're Nowhere near a Bottom in Housing. I agree with that, but there are signs that change is afoot.
As I have previously described, Prof. Edward Leamer has studied all of the post WW2 recessions, and has noted that society needs only so many new houses and vehicles in any given year. Expansions typically end at a point where there has been overproduction of both. The recession ends and the next expansion begins only after that excess has been sopped up by a long and/or deep enough period of underproduction. Needless to say, there was wild overbuilding of houses in the first part of this decade. In fact, the graphs which appear below suggest overbuilding began ever so slightly over 10 years ago.
The Economic Policy Institute has a new report out today about the economic impact of an auto industry collapse. A previous report by the Center for Automotive Research (CAR)estimated that a total collapse of the big 3 would result in the loss of almost 3 million jobs, and $554.6 billion(4% of US GDP) in economic losses. What was missing was a state by state breakout.
Some executives in the group of 130 recipients will get more than $500,000 to stay through 2009, about 200 percent of their salaries.
The awards may equal 100 percent to 300 percent of an executive’s annual salary, and as much as 100 percent for the next round of payments for lower-paid employees, the person said. The retention payments are several times larger than year- end bonuses, which most of the 130 executives will still get in March, the person said.
Well, America has yet another thing to be proud of, a record number of Americans are on food stamps.
Food stamps, the main U.S. antihunger program which helps the needy buy food, set a record in September as more than 31.5 million Americans used the program -- up 17 percent from a year ago.
The financial markets have collapsed. The real estate market has collapsed. The auto industry is collapsing. We are already in the longest and deepest recession in nearly 30 years, and there is no end in sight. The entire world is suffering financial turmoil at least as bad as America, if not worse.
Something this big didn't fall from the sky unexpectedly. There were plenty of people who predicted it.
Hell, even I predicted it three years ago and I have little formal training in economics.
There is plenty of evidence to suggest that the political and financial leaders knew that something like this was coming, and yet no one did anything to prevent it. It's concrete proof of a complete failure of leadership across the globe, but especially in America.
It's also evidence of a more systemic problem in our society.
A bit of micro economic data I'm just reporting on from my (Catholic) Knights of Columbus Men's Club meeting last night. I find it pretty telling that the recession is beginning to hit main street.
Our St. Vincent De Paul food bank served 256 families in July, 358 families in August, 425 families in September, 468 families in October, and 458 families in November. In the first 3 days of December, we served 100 families already.
The Financial Times reported UN team warns of hard landing for dollar where the article white washes what the report really says, the United States is at risk for a dollar collapse in 2009:
Who am I talking about? Why the United States Auto Manufacturers of course.
America, you've got it all backwards. The outrage should be directed at the financial bail out, not at the automobile manufacturers.
A poll says 61% of Americans oppose the bail out of the auto industry and Senate Majority Leader Harry Reid says the Auto Bail Out bill is dead, they don't have the votes.
More interesting in the poll, people do not believe the collapse of the auto industry will affect them. Well, I have news for you, it will affect you, probably more than you can imagine.
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