News of the Day: Black Friday Starting Before Thanksgiving Ends
If you are one who desires to simplify your life and lead a life less driven by consumerism, avoid television the week of Thanksgiving! I have been amazed at how obsessed the news media is concerning “black Friday.” It is so bad that Thanksgiving has become nothing more than an unavoidable bump in the road to the Christmas shopping season.
Folks, we need to take a step back and realize that there is more to life than shopping. Still, listen to our political leaders, and they will try to convince you that from an economic perspective there is so much riding on the holiday shopping season that everyone needs shop, shop, shop in order to support the economy. Am I the only one who thinks this is warped?
Earlier this week, the Congress failed to agree on spending cuts equalling $1.2 Trillion. No one wants to deal with the difficult reality that this nation is broke. Leaders should be encouraging our people to be frugal this Christmas season and seek out ways to celebrate Christmas without spending themselves into debt. Instead, it’s the opposite. No one wants to deal with the unpleasant reality of financial bankruptcy. As a country, we continually kick the can a little further down the road hoping that somehow, everything will fix itself before the entire house comes crashing down on top of us. Sooner or later, we must draw a line in the sand and say enough. America has become a consumer-oriented economy, and the consumers are broke.
What would happen if the majority (the 99 percent) agreed to shop only with cash this Christmas season? What would happen if the 99 percent agreed to give $1 to missions or a charity for every $1 spent on Christmas gifts? What would happen if the 99 percent agreed to invest one hour in real time with friends and family for every hour they spend shopping or planning to shop?
What ideas do you have to curb the compulsion to shop?
The Debt Crisis Debate - A Call for Courage [Opinion]
The debt ceiling crisis continues to confound the USA's politicians. News shows are in a 24-hour spin cycle as the two parties in Washington play a deadly game of chicken with each other. What is certain (to me) is that whether it is within the next week or the next year, American will face a financial reckoning because of its incredible debt load. The politicians continue to scratch at any option they can in an effort to try and find one more free lunch. Sooner or later, however, we will all realize there are no more freebies.
What is at the center of the current crisis is the inability to compromise. Both sides are going to have to agree to some unpopular budget cuts and tax increases in order to begin the slow process of correcting American's financial imbalance. Therein lies the problem: our political leaders have one eye on the problem and another eye on re-election. Could it be that the greater financial problems cannot be solved without jeopardizing their political futures? If so, this reflects a much deeper issue for the American citizen.
On the July 24 edition of Meet the Press, former Sen. Chuck Hagel (R-NE) made this point well:
... politics just reflects society. And what we are seeing today, I believe, is a new emerging governing coalition being built in this country, a new political center of gravity.... We are living at a time when society is the most complicated, interconnected, immediate we've ever seen. That also reflects on a world order that is being rebuilt. We haven't seen a world order being rebuilt since World War II. So, obviously, what's happening in Washington is going to reflect what's happening across this country and the world. The emergence of the tea party, for example, whatever that is, a philosophy about government, that was born out of frustration, disappointment, high expectations in your leaders. To Doris' point, you're supposed to come to Washington to help govern, find solutions, solve problems. We're not seeing that. This just didn't start, by the way, with this president. I saw this in the Senate emerging over the last 12 years. Both parties are to blame. We have, I think, a vacuum of some leadership, some courage. Courage has never been an abundant commodity in Washington. And the last point I'd make, look at the last three elections in this country. We're not a republic that swings wildly. Last three elections, back to back, threw parties out of power in those elections. What does that tell you? That tells you that the board of directors, the people who own the country, the citizen, the voter is going to take action.
Question: are we seeing a new world order being built, or are we still witnessing the destruction of the old world order that began at the end of World War II? I think the latter. Look at what happened between 1914 and 1945 - the center of gravity shifted in the world from Western Europe with Great Britain, Germany, France, and Italy the former great powers, to the United States and the Soviet Union as the new super powers. By 1945, the sun was setting on the British Empire, Germany lie in ruins and divided, France was defeated by Germany in the war and had lost its international prestige, and Italy was defeated. A generation later, the Soviet Union is gone and the United States is under the heavy weight of trillions of dollars in debt.
What do you think? Are we witnessing the passing of an American-dominated world order or will the United States find a way to regain its financial foundation and begin rebuilding its economic strength?
Related articles
- Policy mistakes of historical magnitude (business.financialpost.com)
- Pawlenty: Obama not showing courage in debt crisis (seattletimes.nwsource.com)
US Economy: Safe Landing or Crash Landing?
I'm starting to think we will know the politicians in Washington are getting close to real budget/debt solutions when everyone is unhappy. Is it possible the only "winning" solution is a lose-lose scenario where we raise taxes (a lot) and cut spending (a lot)? Yes, I know, that will probably destroy the economy, but are there any other solutions?
Remember the crash of the United Airlines flight in Sioux City, IA? It was an ugly crash, people died, but some people lived. Most importantly, the pilots didn't have a choice. Is that what is happening to the US economy? The politicians are trying to find a nice, safe landing when that simply isn't possible? What do you think?
2010: "The Year of Severe Economic Contraction"
by Mike Whitney | December 15, 2009 | Global Research
Upbeat reports in the financial media, belie the effects of the ongoing credit contraction. Massive injections of central bank liquidity have prevented the collapse of financial markets, but have done little to ease the deleveraging of households or stimulate activity the broader economy. The crisis has stripped $13 trillion in equity from working families who now find their access to credit either cut off or severely curtailed by the same banks that received hefty taxpayer-funded bailouts. The fiscal strangulation of the millions of people who are no longer considered "creditworthy" is progressively weakening demand and spreading pessimism across all income levels. Growing public desperation was the focus of a special weekend report by Bloomberg News:
"Americans have grown gloomier about both the economy and the nation’s direction over the past three months even as the U.S. shows signs of moving from recession to recovery. Almost half the people now feel less financially secure than when President Barack Obama took office in January, a Bloomberg National Poll shows.
The economy is the country’s top concern, with persistently high unemployment the greatest threat the public sees. Eight of 10 Americans rate joblessness a high risk to the economy in the next two years, outranking the federal budget deficit, which is cited by 7 of 10. An increase in taxes is named as a high risk by almost 6 of 10.
Fewer than 1 in 3 Americans think the economy will improve in the next six months....Only 32 percent of poll respondents believe the country is headed in the right direction, down from 40 percent who said so in September." (Bloomberg)
The near-delirious optimism that followed the 2008 presidential election has fizzled in less than 12 months. While the policies of the Obama administration have improved Wall Street's prospects for record profits and lavish bonuses, ordinary working people continue to fight to keep their jobs and maintain their standard of living. Recent data show that household debt which surged during the boom years is being pared back at a historic pace. Household debt to disposable income has plummeted from 136 percent to 122 percent in a little more than a year, leaving many families with little to spend at the malls or shopping centers.
Severe retrenchment has triggered a shift towards personal thriftiness which is reducing economic activity and strengthening deflationary pressures. 2010 is likely to be even worse, as mushrooming foreclosures and commercial real estate defaults force banks to slash lending accelerating the rate of decline. This is from Bloomberg:
"Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said. This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market...
Foreclosure filings exceeded 300,000 for the ninth straight month in November, RealtyTrac said today. A weak labor market and tight credit are "formidable headwinds" for the economy, Federal Reserve Chairman Ben S. Bernanke said in a Dec. 7 speech in Washington. The 7.2 million jobs lost since the recession began in December 2007 are the most of any postwar economic slump, Labor Department data show. Unemployment, at 10 percent last month, won’t peak until the first quarter, Quigley said." (Bloomberg)
The Obama administration's $787 billion stimulus pushed GDP into positive territory for the first time in more than a year, but the maximum impact has already been felt. President Obama--under advice from his chief advisors-- has shifted his focus from soaring unemployment to long-term deficits. Additional stimulus will be no more than $200 billion, of which, a mere $50 billion will go towards jobs initiatives. At the same time, Fed chair Ben Bernanke will terminate the quantitative easing (QE) program which kept long-term interest rates low while providing financing for the housing market. When the program ends, rates will rise, housing prices will tumble, and liquidity will drain from the system. The end of QE coupled with dwindling stimulus ensures that economy will slide back into recession in the 2nd or 3rd Quarter of 2010.
Policymakers have decided to create conditions that are favorable to financial sector consolidation and the further privatization of public assets. The economy is being strangled by design.
Here's economist Mark Thoma explaining why consumption will not return to pre-crisis levels:
"For the immediate future and likely for much longer than that, slow consumption growth is expected. One way that could change is if the government implements a successful jobs program or uses some other means to increase household income (e.g. a payroll tax cut), and households spend rather than save the extra income..., but the political environment makes a jobs program or further fiscal policy action highly unlikely.
Similarly...the Fed is anxious to unwind its massive policy intervention, not extend it, so monetary policy is unlikely to help much either. Since monetary and fiscal policy authorities are unwilling to provide further help, slow growth is the best outcome we’re likely to get." ("Will Consumption Growth Return to Its Pre-Recession Level?" Mark Thoma, moneywatch.com)
Along with flagging consumption, economists Antonio Fatas and Ilian Mihov show why both investment and employment will not rebound in the way that many bullish analysts expect. By tracking the rate of recovery in the last 5 recessions, the two economists show that demand will remain flat for a prolonged period of time, precipitating a "jobless" and "investmentless" recovery. Their research supports additional stimulus to reduce the output gap and engage the labor force in productive activity. The administration's policies are the exact opposite of the majority of professional economists who believe that deficits need to increase to effect overcapacity and underutilization. Obama is deliberately steering the economy into a double-dip recession.
While financial institutions have been propped up with zero-rates, myriad lending facilities and boatloads of Fed liquidity, the real economy continues to on a downward path. As households rebalance accounts and increase savings, the signs of distress are becoming more apparent. In Europe, the ECB and IMF have begun to use the financial crisis to wrest control of the budgets of deficits-plagued nations to apply business-friendly austerity measures. The economic meltdown--that was generated by overleveraged banks trading dodgy investment paper--is now being used to assert corporate/bank control over sovereign nations. Greece, Ireland, Iceland, Ukraine, Latvia, Lithuania, Portugal and Spain are all presently in the crosshairs of neoliberal restructuring. Surely, the same policies will be applied within the United States under the guidance of supply-side economist and chief advisor to the president, Lawrence Summers. Thus, in 2010, economic contraction will continue to force state and local governments to lay off millions of more workers while public assets and services are made available at firesale prices to private industry.
Debt deflation and deleveraging will continue into 2011, while foreclosures, personal bankruptcies and defaults continue to mount. The public's frustration with ineffective government policies, is likely to change from pessimism to rage on short notice. The prospect of social unrest or sporadic incidents of violence can no longer be excluded.
Mike Whitney is a frequent contributor to Global Research. Global Research Articles by Mike Whitney
Frontline: The Warning
Robert Rubin, Alan Greenspan, Lawrence Summers
"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"
In The Warning, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation's worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.
"I didn't know Brooksley Born," says former SEC Chairman Arthur Levitt, a member of President Clinton's powerful Working Group on Financial Markets. "I was told that she was irascible, difficult, stubborn, unreasonable." Levitt explains how the other principals of the Working Group -- former Fed Chairman Alan Greenspan and former Treasury Secretary Robert Rubin -- convinced him that Born's attempt to regulate the risky derivatives market could lead to financial turmoil, a conclusion he now believes was "clearly a mistake."
Born's battle behind closed doors was epic, Kirk finds. The members of the President's Working Group vehemently opposed regulation -- especially when proposed by a Washington outsider like Born.
"I walk into Brooksley's office one day; the blood has drained from her face," says Michael Greenberger, a former top official at the CFTC who worked closely with Born. "She's hanging up the telephone; she says to me: 'That was [former Assistant Treasury Secretary] Larry Summers. He says, "You're going to cause the worst financial crisis since the end of World War II."... [He says he has] 13 bankers in his office who informed him of this. Stop, right away. No more.'"
Greenspan, Rubin and Summers ultimately prevailed on Congress to stop Born and limit future regulation of derivatives. "Born faced a formidable struggle pushing for regulation at a time when the stock market was booming," Kirk says. "Alan Greenspan was the maestro, and both parties in Washington were united in a belief that the markets would take care of themselves."
Now, with many of the same men who shut down Born in key positions in the Obama administration, The Warning reveals the complicated politics that led to this crisis and what it may say about current attempts to prevent the next one.
"It'll happen again if we don't take the appropriate steps," Born warns. "There will be significant financial downturns and disasters attributed to this regulatory gap over and over until we learn from experience."