Earthside Comments: Meanwhile back in the real world ...
To mangle Churchill's famous quotation, 'This is not the end of the beginning, this is the beginning of the beginning!' Only now are the serious consequences of the debt catastrophe beginning to seep their way into the daily lives of average Americans.
Unemployment is not near the levels it will ultimately reach and without the manufacturing base that the nation once possessed, recovery is going to take many, many, many years.
Note also the big decline in retail sales last month, that means even more job cuts in the near future. Our consumer economy -- supplied with items from China -- is wobbling on the precipice. Yet, the conventional talk among the politicians and the corporate elite is all geared toward "rescue plans" that will merely restore everything as is was ... that is a delusion.
It is delusional as the last piece of analysis below demonstrates. The central government is so deeply in debt that financing anymore borrowing is going to be increasingly difficult if not impossible.
Link: Job Losses Soar, Jobless Rate at 14-Year High | Reuters
Employers cut payrolls by a much steeper-than-expected 240,000 jobs in October as the unemployment rate shot up to its highest in more than 14 years, underscoring the economy's steep slide.
According to the Labor Department's report on Friday, last month's job cuts followed a steeply revised cut of 284,000 in September, the most severe monthly loss since November 2001 just after that year's September terror attacks. The department also revised August job cuts higher to 127,000 -- meaning a total 179,000 more jobs were cut in August and September than previously thought.
The national unemployment rate jumped to 6.5 percent from 6.1 percent in September, the highest since March 1994.
"We have entered the phase of serious recession conditions. Unfortunately we will encounter more of this going forward," said Richard DeKaser, chief economist for National City Corp. in Cleveland. "This is going to increase the urgency for another stimulus package to staunch the slide."
October job cuts were much worse than forecast by Wall Street economists, who had expected 200,000 would be cut and that the unemployment rate would be 6.3 percent.
Link: Retail Sales Take Big Dive in October | San Francisco Chronicle
Same-store sales at retail chains plunged 0.9 percent in October, the steepest such drop in nearly 40 years, as the financial crisis caused consumers to flee luxury stores and flock to discounters.
"It is unprecedented in terms of a decline for an October," said Michael Niemira, chief economist for the International Council of Shopping Centers, which has been compiling this data since 1969.
"The housing crisis, the stock market declines and the unemployment numbers are taking their toll on spending," he said.
The report measures the dollar volume of sales at existing chain stores on a year-over-year basis. Niemira said a decline in October is rare as the month generally signals the beginning of the holiday spending season.
But the financial crisis that exploded into the headlines this October caused a spending pullback that punished high-end retailers while providing a mild benefit to some discounters, he said.
Link: Who's Going to Finance the Rising US National Debt? | Andrew Hughes/Global Research
Election Fever is over and President Elect Barack Obama has until January to formulate a realistic game plan to address the unprecedented financial morass that he will shortly be inheriting. He will , no doubt, have to have the moral character to honestly inform his electorate of the true gravity of the situation they now face. Gone is the time for platitudes, electioneering and vacuous speeches. The time of "Change we can believe in" is over; now it's time for "Change we have to Go Through."
The most difficult aspect to Obama's mission will be to inform the American Public that the Party is actually over and it's time to pay the bill that has been steadily mounting out of control and is now a mathematically impossible amount for the country to actually ever pay back. The lifestyle enjoyed during these last years has been possible using the rest of the world to pick up the IOU's. With the Wall St. Nuclear Financial Strike delivered through credit default swaps, mortgage backed securities and derivative trading, the world is now reeling and stands over an abyss of enormous proportions. Despite the Wall St. Media Machine, Governments around the World have realised that they are already over the edge and falling headlong downwards with no sight of the bottom.
First on the list will be the $1 Trillion budget deficit. The Treasury has just announced that it has to borrow $550 Billion in the October - December quarter. Goldman Sachs estimates that another $2 Trillion to finance the current deficit, to buy $500 Billion in bad assets and roll over $561 Billion in Maturing Treasuries securities. This is all before Obama spends a single penny on Healthcare, Alternative Energy research, infrastructure, Medicaid or unemployment insurance. This does not address the Trillions that have been borrowed from the Social Security Fund either. So where's the money coming from? The population is already taxed to the hilt and cannot afford to pay anymore. Unemployment is rising, poverty is rising, homelessness is rising. Obama has said to the banks that they can only qualify for Taxpayer money if they "Temporarily" suspend foreclosure proceedings on these same taxpayers. Why doesn't he just give the money to the taxpayers right there, let them pay off their mortgage, keep their house and have some leeway to pay the extra taxes that Obama is going to ask them for? Treasury Notes? The rest of the world has already started to back off 10 year T Bills as witnessed by the rising yield and falling price of the latter. "There has been a real diminishing of demand from foreign investors over the last few months" said Tom Tucci, head Treasuries trader at RBC Capital Markets in New York. "We've seen them pulling back."
As the steadily worsening Real Economic data floods in to International view, foreign investors and Governments are beginning to realise that the US cannot spend it's way back to Economic stability. Something has to give. Reality has to have it's say eventually. The only, single way that the US can get out of it's current predicament is through the trust of these foreign investors and Governments, and that is fading away. Brazil, Russia, China and India have formed BRIC, a group of nations that have decided to look out for their own interests where the Dollar as the Reserve Currency is not considered beneficial to anyone anymore. In Europe we have seen a turn towards the Euro as a posssible reserve currency. The Dollar has outlived it's usefullness and the rest of the World is paying the price for it's former fealty.
These are the facts that the new President should be talking about when he promises ..."There are many who won't agree with every decision or policy I make as president, and we know that government can't solve every problem. But I will always be honest with you about the challenges we face.''
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