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Monday, October 15, 2012

Recovery or Ruin? Depends on Ideology

Generally speaking, when people seek out news on the state of the US & global economy, they fall into one or two camps:  Those who can't ever seem to find anything negative and those who can't ever seem to find anything positive.

And of the two camps, we admit we fall more into the latter one and have feelings of envy & deep resentment over those positive pollyannas who always see the symbolic 'glass' as full even when its nearly empty.

We can only wonder what sources their news comes from?  Perhaps the same outlets that wish to inject 'Big Bird' into a serious discussion of whether this nation should continue to borrow excessively to pay for programs that could be self sustaining.  For instance, PBS sells over 5000 Sesame Street related products which generate a profit of over $1 Billion annually.. All products of course made in China.

Its actually not too difficult to see the economic world via rose-colored glasses, especially when the news outlets wish to portray as sunny a economic picture as possible... until the 'other party' wins the Presidency of course... then watch how everything suddenly falls to hell in a hand basket.
We can only imagine what the nightly news would have been like the last four years if McCain-Palin ruled the roost and yet the exact same economic policies were implemented as Obama has... You'd actually see stories of 'tent cities' which are sprung up in some cities and endless stories of elderly people who can't afford their medicines and single mothers and children being evicted and living in their cars or on the streets...

You'd need some Xanax just to get through the telecast.

And gotta love how its still being portrayed that if you can't find work, its 'obviously' your fault!  Why there's jobs-a-plenty don't ya know?  Employers are just 'desperate' to find workers with the right education... Of course those same employers are too Lazy and Cheap to actually TEACH new hires how do complete the tasks.. No, you're expected to know A to Z on your own Before you even apply.. Ugh!

And its your fault because you don't lower your salary expectations... your fault you aren't willing to take that Masters' degree and apply it to a job waiting tables at Denny's or Ihop... Your fault you're not willing to go back to school and take on tens of thousands of dollars in extra student loan debt to get additional degrees because employers don't value the knowledge already possessed...

There are people out there who Truly, Sincerely and Emphatically believe this nation is in a full economic recovery and give 100% credit to the President for the turn around.   What can one really say to that?  You just have to smile and nod to keep the peace.

Here's a small example of how the optimist can allow themselves to be continually deluded:  Reports were released yesterday saying that consumer spending was up for the 3Q which is 'very good' because the numbers beat expectations.

OK..  Why?  Well more people bought cars and spent on gasoline...

So let's break that down-- most new cars are released to be sold to the public during the 3Q.  In this case we're talking about 2013 models.   And usually who are the people who rush to acquire those vehicles the quickest?  Those who are leasing models from 2 or 3 years prior and who's lease end occurs during this period.

In other words, vehicle sales are always higher during this period because most vehicle leases expire in the 3Q, the leesees have to have something to drive to replace the old leased car, and dealers are giving discounts to '12 models to finally get them off the showroom and back lot.
Now, next we're supposed to look at gasoline consumption as a good thing.   Hardly..  First, its not that we spent more on gas because we as a nation are driving more and feel good about things..  Its that gas prices have spiked on average 50cents/gallon since the end of the 2Q which was right before Independence day.

Also, where does all that $$ go?  Gas stations, sure... but beyond that?  It goes to the Middle East and Venezuela.  Every extra penny per gallon gone to buy gas is less money for Americans to use to stimulate the economy domestically through local goods/services.

But funny, the mainstream news never takes the time to go into depth... and the 'Recovery'-believing simps can still be allowed to live in delusion.

Yes.. everything's going on so wonderfully here and abroad.. In fact, let's go on a brief tour of the world to see how good things are for so many...
Greece:

"Greece will allow the sale of expired food at a price lower than the original, in a move that the government has not been able to justify but consumer groups have interpreted as evidence of their inability to stop the escalating cost of commodities...

The regulations exclude meat and dairy from the list of perishables that can be sold and sets a ceiling dates you can continue marketing. Thus, foods in which the expiration date is indicated by the day and the month, may continue on the shelf for another week...the wage and pension cuts and rising unemployment, food prices and commodities has not stopped rising. Between August 2011 and August 2012, the price of sugar shot up 15%, the eggs, 6.8% for butter by 3.2% and that of coffee, 5.9%" (Voz Populi)

~ Yum Yum.. Love the taste of rotted bread and fruits..  Yep, all is well in Greece.  So glad the leadership capitulated to Germany and the ECB last year..
Switzerland:

Switzerland Prepares Army for Euro Zone Fallout -- "With anti-austerity protests across Europe resulting in civil unrest on the streets of Athens and Madrid, the European country famed for its neutrality is taking unusual precautions... Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal. The Swiss defense ministry told CNBC that it does not rule out having to deploy troops..."  (CNBC)

~ Didn't even know Switzerland had an Army to be honest.. we knew of those famous multi-use knives but still..  Good to see continental Europe doing well, yes?
Portugal:

" Prime Minister Pedro Passos Coelho pledged to stick to his austerity drive despite the impact on his party’s political fortunes...

Finance Minister VĂ­tor Gaspar is due to unveil the draft state budget for next year in parliament ... He has already flagged some of the government’s spending and revenue plans, which will contain massive tax hikes to meet the country’s deficit-reduction commitments assumed as part of its 78-billion-euro bailout from the IMF and the European Union...

The Portuguese economy is already mired in its worst recession since the 1970s, with output expected to contract some three percent this year and one percent next year when average unemployment is set to rise to 16.4 percent...

Tax hikes will have an impact across the board. A single person earning 10,000 euros previously exempt from income tax will now pay 75 euros next year, while a family with two children earning 40,000 euros a year, will pay 1,970 euros more."  (El Pais- English translated)

~  10k euros equals $12,900 US dollars, so 40k euros is equivalent to $51,600 US and the increased taxes on family of four earning that amount would be like $2,550 extra taxes for a US family.  So.. yes Portugal is doing fine... no need to worry..
We could go on and on with examples but really its not necessary.  The global economy is in a holding-pattern basically... everything delayed and can-kicked until after US elections.    Its no so much the world leaders really care who wins on November 6th.. its just that Obama cares... Very much...

So all the bad stuff that we've written about for two years and counting, is being held back a teensy-weensy bit more so that millions of head in the sand voters will believe things are better and support/reward the incumbent for saving the world.

There are intelligent Democrats out there... they follow the news and understand reality and support the President in his re-election bid.   That's fine.  Also intelligent Republicans who know the truth and will be supporting Romney because he supports their beliefs and values..

But there's an awful lot of stupidly uninformed people out there who will be basing their vote on the silliest of reasons and from them, will this elections like all before it, hinge...  And whoever wins, after the celebrations and champagne toasts, its going to be one extremely difficult economic period to maneuver and only then will the naive and oblivious begin to wake-up.