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aint no recession this is a "collapse"

Discussion in 'Financial Cents' started by Tango3, Jul 21, 2009.

  1. Tango3

    Tango3 Aimless wanderer

    Washington's Dilemma: This Isn't a Recession, It's a Collapse [dunno]140 comments

    by: Gregor Macdonald July 14, 2009 | about: TBT / TLT

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    [​IMG]Washington is bluffing that it will not bail out California, and every other state suffering from collapsed revenues and massive job losses. If cuts in police and schools don’t force DC off from its current position, then the math will. Because in many states the aggregate revenue losses and looming cuts to state payrolls will largely render the intended effects of federal stimulus as moot. Frankly, unless Washington prints money and bails out every state that needs capital, including California, federal power will decline amidst this severe economic recession, and the process of a soft American devolution will begin. If you think this idea is outrageous, then you’ve still not come to terms with a core reality of our current situation: the structure of this financial crisis is wholly different than any in our post-war era. This isn’t a recession. This is collapse.
    In Recession vs. Collapse published in March, this blog explained that in a normal recession existing savings are used to support government debt issuance and that those who remain employed increase their savings to also support government debt issuance. Neither phenomenon is at work today. Yes, the savings rate has soared in the US. But this has not resulted in any actual accrued savings. Because private sector debt came to define the internal structure of the US system, savings currently is little more than debt service. Also, bank purchases of US Treasuries are really just a result of the circularity of monetization. It’s just money from the FED being recycled into Treasuries. There is no privately driven growth of bank deposits, in the aggregate. Americans as a class are broke. What the savings rate more accurately measures is a collapse of consumer spending.
    The internal composition of the US economic and financial system when it hit 2007/8 was very different than in previous recessions, even the severe recession of 1980/82. It’s this internal composition that’s now determinative, to the outcome. The sawdust of debt, and the monetization of assets rather than the production of goods, continually came to define the internal composition of the system. The economy cannot, therefore, express the same kind of resilience it has done so often, since WW2.

    -more at-

  2. RobertRogers

    RobertRogers Monkey+++

    It's looking bad. The middle class has been just about gutted out. We are headed toward the haves and the have nots. And you can bet there are going to be a whole lot of have nots.
  3. Tango3

    Tango3 Aimless wanderer

    ( I'mnotan economist;).
    It occured to me Our money hasn't been based on gold since Nixon right(who are we fooling?)So inside the borders of the u.s. it really makes little difference whether they switch the presses into high speed and let them run. its all those peky foreigners who won't take our paper as worth something.
  4. QuietOne

    QuietOne Monkey++

    That's exactly what the Finance Minister said in Zimbabwe.
  5. Tango3

    Tango3 Aimless wanderer

    [peep]didn't really work out too well for them did it...[shtf]:D
  6. gunbunny

    gunbunny Never Trust A Bunny

  7. ghrit

    ghrit Ambulatory anachronism Administrator Founding Member

    It's getting worse. You're gonna love it --

    The cash for cars scheme is about to run out of money. Car dealers are lobbying Congress to add more to the incentive pool, as they expect the one billion to run out by the end of August. Once again the laws of unintended consequences takes over and runs with it --.

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