Thread: The strongest economy in the world

Originally Posted by Panda

It has eventually dawned on me from my experience in both USA and Thailand that politics in a democracy is more about controlling the minds of the voters than actually doing anything substantial to win votes by bettering the quality of life for the masses.

Can't speak for Thailand, but that pretty much hits it on the head for the USA.

I just recently saw a documentary based on Howard Zinn's book The People's History of the USA. Basically the working class history of the US from the working man's POV. Much in there about class warfare, strikes, and popular uprisings that don't make it into the common history portrayed in text books. It looks like the kind of counter-view that Americans need, but don't look for anything to change soon. Look for things to get worse.

^One of the main currents pushing "things to get worse" is the tendency to discount democracy as little more than a technique for "mind-control".

Originally Posted by Panda

It has eventually dawned on me from my experience in both USA and Thailand that politics in a democracy is more about controlling the minds of the voters than actually doing anything substantial to win votes by bettering the quality of life for the masses.

While that unfortunately is true in the places mentioned and a few more, democracy do thrive quite well in other places where there are no traditions for this fierce patriotism, and where education and a deep interest in the goings on in the outside world, makes it virtually impossible for politicians to pull a stunt like that, everybody is bilingual and news from foreign sources is just as important as home news, the Internet have greatly enhanced that.
I feel sorry for the American people, if only they could shake those chains they have an enormous potential for maybe becoming the greatest democracy in the World for real.

Food stamps. Folks, yes, the economy is this bad. Food stamps are not rare, but now more mainstream. Something is happening.

Midnight in the food-stamp economy

Nicole Maestri and Lisa Baertlein
Fri Dec 18, 2009













< 1 / 4 >

View Full Size












SAN FRANCISCO/LOS ANGELES (Reuters) - At 11 p.m. on the last day of the month, shoppers flock to the nearest Walmart. They load their carts with food and household items and wait for the midnight hour. That's when food stamp credits are loaded on their electronic benefits transfer cards.
U.S.
"Once the clock strikes midnight and EBT cards are charged, you can see our results start to tick up," says Tom Schoewe, Wal-Mart Stores Inc's chief financial officer.
As food stamps become an increasingly common currency in a struggling U.S. economy, they are dictating changes in how even the biggest retailers do business.


From Costco to Wal-Mart, store chains are rethinking years of strategy as they watch prized customers lose jobs and turn to this benefit, the stigma of which is disappearing not just in society, but in corporate America.


Besides staffing up for the spike in shoppers on the first day of the month, retailers are adjusting when and what they stock, updating point-of-sale systems to accept food stamps and shifting expansion plans to focus on lower-income shoppers.
Take Costco Wholesale Corp, a warehouse club operator that caters to middle income Americans who must pay $50 a year to shop in its stores. Nudged along by New York Attorney General Andrew Cuomo, who threatened legal action, Costco began accepting food stamps at a few New York stores in May. It now plans to clear the payments in all of its 413 locations in the United States and Puerto Rico.
"Our view was ... we would not get a lot of food stamps because our member on average is a little more upscale," Costco Chief Financial Officer Richard Galanti said in October. "Well, I think that was probably a little bit arrogant on our part."


As of September, a record of more than 37 million people were enrolled for the government benefit, federal officials told Reuters, an increase of nearly 35 percent since the U.S. slid into recession at the end of 2007.


An estimated one in eight Americans depends on the benefit to buy food. With the nation's unemployment in double digits, more people are expected to enroll. By some government estimates, up to 16 million people who are not receiving food stamps today could qualify.
For a graphic on growing food stamp use, click on link.reuters.com/huq47g
What's more, unemployed Americans are finding that it takes longer and longer to get work. This suggests that food stamps will play a bigger role over the next few years, not just for people, but for stores in need of customers, according to interviews with retail executives, economists, federal and state officials and benefit recipients.
"It is a very important and increasingly important source of revenue for the ... supermarkets and stores that have been approved across the country to process those benefits," Kevin Concannon, U.S. undersecretary of agriculture, said in an interview this month.


Stores have little choice but to respond. And they are.


In the fiscal year that ended in September, 193,753 U.S. retailers accepted food stamps, 17 percent more than the same period two years earlier. "For some chains... it's 10 to 12 percent of their revenues," Concannon said. "Depending on how poor the area may be, it may even be higher."


Tellingly, electronic benefits transfer (EBT) transactions processed by retailers jumped 53 percent this year on a same-store sales basis on Black Friday, the kickoff to the U.S. holiday shopping season, payments processor First Data told Reuters.


EBT includes food stamps and other government benefits like temporary cash assistance for needy families and food assistance for new and expecting mothers.
THE NEW FOOD STAMP SHOPPER


Thelma Zambrano wants to keep shopping at Costco, but can't afford to renew her membership since losing her customer service job at a bank. Now, she takes monthly food stamp benefits of about $300 and helps others do the same at the Community Action Partnership of Orange County, California, a nonprofit that helps poor people and where she now works.


"Before we made anywhere from $55,000 to $65,000, and right now... I'm lucky if I make $15,000 or $20,000," said Zambrano, a 26-year-old mother of two from Santa Ana. She and her husband have cut spending to the bone and moved in with relatives.


Most food stamp recipients subsist on earnings below the poverty line -- roughly $22,000 annually for a family of four -- and many new users are from the ranks of the working poor.


Zambrano's experience illustrates how the recession also has sent many middle-income families into economic freefall. Their circumstances have, in turn, served as a wake-up call for food retailers that never thought their clientele would depend on public assistance.

Link & Entire: Midnight in the food-stamp economy | Reuters

It's filtering into the middle-class, and isn't just restricted to the working poor, as we know. Mortgages are expensive debt. And people will be foreclosing, as noted:

Jobless Middle-Class New Yorkers Struggle to Get By

High Unemployment Takes Toll on Once-Thriving Neighborhoods, Where Foreclosures Are Up and Recovery Is Elusive


By SUZANNE SATALINE

High unemployment is spreading in New York City beyond the poorest neighborhoods to once-secure middle-class enclaves, where some residents are falling behind on rent and mortgage payments.

Among the hardest-hit spots are the northern Bronx and southeastern Queens. Both areas have seen unemployment double since the third quarter of 2007, according to the Fiscal Policy Institute, a nonpartisan think tank.

"The recovery in the labor market is a long way off and it will be a long time coming to middle-income neighborhoods," said James Parrott, the institute's deputy director and chief economist.

Close to half of all New Yorkers work for small and medium-size businesses, Mr. Parrot said, "and they don't readily recover in a downturn."
New York City Unemployment Rates




See estimated jobless rates in the third quarter of 2009 for New York City by geographic area

New York City has shed 144,000 jobs since August 2008, leaving it with an unemployment rate of 10% as of November, on par with the national average. But some pockets are much worse, including neighborhoods that haven't typically experienced such severe joblessness.

The Bronx, with its big public-housing complexes, lower education levels and large unskilled population, long has had the highest unemployment rate in the city.

In the third quarter, the Bronx's jobless rate was 13%, the institute said. But in the northernmost stretch, populated by middle- and working-class families, bordering Westchester County suburbs, unemployment was 12.2% in the third quarter, more than double the rate of two years earlier, the institute found.

Link & Entire: Jobless Middle-Class New Yorkers Struggle to Get By - WSJ.com

Marc Faber interview, December 15, 2009.

He says there will be another crash, and that the US is done. Not histrionic. He's just stating some facts and what he believes.

I agree with him, based on my layman's knowledge.

Small businesses in CA being decimated.

Small-business bankruptcies rise 81% in California

With credit tight and consumers still pinching their pennies, many business owners find they can't go on.

By Nathan Olivarez-Giles December 22, 2009The Obama administration's new plan to give a boost to small businesses reflects continued trouble in that sector, which is facing new failures even as much of the nation's economy is stabilizing.

As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.

"While bankruptcies are up, overall, small-business closures are up even more," Headd said.

Link: Small-business bankruptcies rise 81% in California -- latimes.com

Erm, wasn't this thread originally called the "Strongest Economy in the World?"

This is frightening to me, especially being an expat that will likely return someday, in the future.

A decade of high unemployment is looming

‘New abnormal:’ Some think 10 years won’t be enough to replace losses

Dec. 27, 2009

WASHINGTON - Call it the Terrible Teens.

The decade ahead could be a brutal one for America's unemployed — and for people with jobs hoping for pay raises.

At best, it could take until the middle of the decade for the nation to generate enough jobs to drive down the unemployment rate to a normal 5 or 6 percent and keep it there. At worst, that won't happen until much later — perhaps not until the next decade.

The deepest and most enduring recession since the 1930s has battered America's work force.

The unemployed number 15.4 million. The jobless rate is 10 percent. More than 7 million jobs have vanished. People out of work at least six months number a record 5.9 million. And household income, adjusted for inflation, has shrunk in the past decade.

Most economists say it could take at least until 2015 for the unemployment rate to drop down to a historically more normal 5.5 percent. And with the job market likely to stay weak, some also foresee another decade of wage stagnation.

Even though the economy will likely keep growing, the pace is expected to be plodding. That will make employers reluctant to hire. Further contributing to high unemployment is the likelihood of more people competing for jobs, baby boomers delaying retirement and interest rates edging higher.

All this would come after a decade that created relatively few jobs: a net total of just 464,000. By contrast, 21.7 million new jobs were generated between 1989 and 1999.

Economist David Levy, chairman of the Jerome Levy Forecasting Center, says the country faces a new era of chronically high unemployment, averaging 8 percent or more over the next decade.

The "New Abnormal," he calls it.

Link & Entire: A decade of high unemployment is looming - Outlook 2010- msnbc.com

Hey, it was better than last year. This year, only 8 out of 10 think it stinks.

8 in 10 say U.S. economy in poor shape

December 22, 2009: 1:49 PM ET


WASHINGTON (CNN) -- Eight in ten Americans say that the economy is in poor shape, but that's an improvement from a year ago, according to a new national poll.

And.....

The CNN/Opinion Research Corporation survey's Tuesday release comes as the government reports that economic growth in the third quarter was much weaker than previously estimated.

According to the poll, 80% of Americans say economic conditions are poor. As bad as that sounds, it's a 13 point decline from last December. 20% of the people questioned in the survey say economic conditions are good, up 12 points from a year ago.

Link & Entire

Despite poor economic conditions, Americans are optimistic - Dec. 22, 2009

Please watch this. Especially at the 4:00 minute mark when the new mortage chart is for Alt-A and Prime, and Option-Arm mortgages.

When the ARM rates adjust on these mortgages, that's when the current 25% of folks under water on their mortgages will go tits up...

Originally Posted by Muadib

When the ARM rates adjust on these mortgages, that's when the current 25% of folks under water on their mortgages will go tits up...

Yes, and this will being in earnest in February of 2010 - next month. And the rise (see chart) will be in May.

More news about this to come.....and it will be bad.

Max Keiser interviews Dr. Bruce E. Levine.

Interesting how Max Keiser is not on the American MSM:

https://www.youtube.com/user/maxkeisertv?blend=1&ob=4

Originally Posted by Milkman

SS and Medicare with 77 million boomers hitting the rolls, that started in '08

Definitely needs to be fixed. Sacred cows that have been ignored far too long by a Congress afraid to face the problem for political reasons.

Originally Posted by Milkman

National Debt at all-time high

As a percent GDP, was much higher during and shortly after WW2 and higher in the late 1920s.

Originally Posted by Milkman

rising taxes

Tax rises are going to happen. We cannot erase the deficit with increase in revenue as GDP growth won't get us there. Should be noted tax rates for median income family were 12% in 1980. They are now about 5.5%

Originally Posted by Milkman

state budgets that are broken

No different than in previous economic downturns. Always will happen when states base long term spending commitments on economies (revenues) which are growing.

Originally Posted by Milkman

the coming Alt-A and Option-Arm mortgage resets + high unemployment

Sorry don't understand this one.

Originally Posted by Norton

the doomsayers get their predictions heard by millions.

Misery loves company, isn't that what they say?

A little while back I mentioned that the recession in USA was coming to an end, it was a call based on the massive influx of coin coming from the Fed and various one off government stimulus programs. That call seem to be justified with the GDP numbers that were released 6 weeks or so ago. However, I'm gonna stick my neck out and say that right now, I don't see how positive GDP numbers can be sustained based on data I'm reading everyday.

The next release for info on GDP is January 29th, should be interesting reading and probably not what the markets are looking for.

[quote=Norton;1282928]

Originally Posted by Milkman

Originally Posted by Milkman

the coming Alt-A and Option-Arm mortgage resets + high unemployment

Sorry don't understand this one.

The Next Mortgage foreclosure wave begin in about 3-4 weeks, with an uptick in May. Alt-A and Option Arm resets will cause many upper end homes to foreclose. Add the high unemployment rate, and longer periods of unemployed and this will add to the foreclosures.

The next mortgage foreclosure wave will be by those with good credit and homes with higher than average value.

It will last for 2 full years: 2010 and 2011

Originally Posted by Milkman

It will last for 2 full years: 2010 and 2011

OK, thanks for the explanation.

The housing and mortgage problem will end as the market dictates. When real estate prices are at a level folks can afford to buy, banks will lend to qualified buyers. Until the market stabilizes, there will be negative economic implications.

Might take 2 years more or less as you say but doubt it will destroy the overall US economy.

But the analysts (some of them) say it will be as large as the sub-prime disaster Norton, and that brought the whole world into crisis, now all rescue options have been used up, how are they going to manage their way out of a new collapse just as big ??

They said Gold would go to $2,000 an ounce and more, they said the US was doomed, they said there would be blood on the streets, drone drone drone.

The US is almost certainly out of recession, and the doomsayers may have sold plenty of Emag subscriptions but they have missed a rather large surge in the stockmarket. Never listen to doom merchants- the smart investor knows to make the opposite bet.

Originally Posted by sabang

They said Gold would go to $2,000 an ounce and more, they said the US was doomed, they said there would be blood on the streets, drone drone drone.

The US is almost certainly out of recession, and the doomsayers may have sold plenty of Emag subscriptions but they have missed a rather large surge in the stockmarket. Never listen to doom merchants- the smart investor knows to make the opposite bet.

Yes, a lot of $$$ was made off of the "Doom merchants:" books sold, newsletters sold, 'how to ride it out' etc.

I am not buying Schiff, Roger, Roubini, Mish, and Keiser and Faber, completely:

BUT....and this is a big, "but." They all seem to agree.

Also, I do not think the US is out of the "recession" by any means.

Those pundits that say this in the media, are pegging the "recovery" to GDP growth.

There will continue to be:

Higher unemployment
more foreclosures
lower consumer spending
lower standard of living as the "good" job that left may never come back.

So basically, to be honest: I am a DOOMER.

^ Credit Default Swaps....sinister.

Jobs are still not being created, and more and more workers are being added to the labor market.

Job growth returns -- then fades

By Chris Isidore, senior writerJanuary 8, 2010: 11:31 AM ET


NEW YORK (CNNMoney.com) -- Employers once again slashed a substantial number jobs off their payrolls in December, according to adisappointing report from the government Friday. But there was a small glimmer of hope as well.
The payroll number for November was revised to a net gain of 4,000 jobs. That's the first increase in jobs in nearly two years. The government had previously indicated that 11,000 jobs were lost in November.

Link & Entire: Jobs report: A gain in November but 85,000 lost in December - Jan. 8, 2010