I should not toot my horn on this one, yet, my prediction came to pass: The U.S. Economy has fallen into a Great Recession, heading toward Depression, unless these policies of Obama can turn around a Titanic ship of economic failure.
On March 14, 2008, I wrote: The Bear is Yet to Come: The U.S. Economy will fall into a Depression. I was looking at the markers in the economy then:
- Commodity Prices were unreasonably high
- Oil Prices (and energy) were sapping our spending dollar
- Weakness in the U.S. currency
- Unemployment losses were starting to mount (nothing like the last 5 months)
- Mortgage crisis finally hitting home
- Zero GDP growth
- Inflation
The last was a complete error – it was occuring at the moment in commodities and staples – however, the mortgage and used car markets would reflect large DEFLATION, and a much larger piece of the puzzle.
Today, the Fed reported the largest loss in family wealth on record. Since its peak in June 2007 we have loss nearly $13 Trillion in personal wealth. From Yahoo! Finance:
Family net worth had hit an all-time high of $64.36 trillion in the April-June quarter of 2007 but has fallen in every quarter since that time.
The record 9 percent drop in the fourth quarter pushed total net worth down to $51.48 trillion, a level that is 20 percent below the third quarter 2007 peak.
Meanwhile, the U.S. stock market capitalization has lost nearly 1/2 of its value which stood at $15.34 Trillion in May 2007. So, all total, approximately $20 Trillion dollars in lost value, twice the National Debt of the United States.
We are in unprecedented waters with a monster cyclone churning over us. The Great Depression did not have the National Debt problems we currently have – the government had room to allow for deficit spending – and so, pumping money into the system made sense and worked to bring us at least back to the same point we were at in 3-4 years. (1929 the Depression started, 1933 it bottomed, 1937 we were back to 1929 values…WWII brought us to a better point, oddly enough.)
We also did not have a medical crisis – retirees, health concerns, and Social Security claims – piling up on our balance sheet. This made it doable to start such programs back in the 1930’s. Which is why we need a major overhaul of the system else we fall into a quagmire of unimaginable depths.
We had a still growing and developing America. Land was still open; manufacturing still growing; grand infrastructure projects still on the horizon. We are now locked into a complacent viewpoint that we should not redevelop, tear down bad ideas and systems, and unlock the innovative and unique spirit that drove us to the position we still hold as the richest country on the Earth. This is paramount to not slipping further down the slope of economic woe.
We are in these uncharted waters due to poor planning, ideological shifts and the blaming of common folk (that made their mistakes) for the elitist and greediest amongst the Wall Street and Washington power gangs. The latter have the power; the connections; the education; and the we know what is best attitude that comes from their MBAs, Ph.Ds., J.Ds., and billions made off the common rabble making their daily bread.
A History of Worst Days on Wall Street
So, it is up to common folk to make opportunity where little seems to exist. To batten down the hatches, set a new course, and make a new discoveries during an Economic Perfect Storm.
They’re will be likely worst days on this choppy, tsunamic-laden horizon – predictions like mine were made during a bad stretch – however, we Americans have to be better than our educated, snooty and self-absorbed elite. And their predictions of all is well in a free-market, free-for-all but those that ultimately pay for their misguided attempts to casino the market daily.
And let us hope our President sides with us more than the morons of money in our desire to change the path and make a new America that can weather any of the self-induced problems of the Gangs of New York Finance made.
The clouds are dark, but we can weather through the storm.
