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What Economic Recovery? Your Taxes At Work?
I’m going to do a post on the bogus housing “recovery” but it will require some extra work. As a teaser, based on the data and analysis I’ve looked at – in conjunction with and confirmation of my own thinking – the so-called “housing recovery” as its being promoted in the media is as phony and manipulated as any other economic statistic. But for the amount of time I have to post something today, I wanted to unload some news reports that irritate the crap out of me, which means you’ll have to read them if you decide to read my post today.
To begin with, lets shoot down this notion that the economy is regaining health. I saw an article on the Financial Times blog this morning that suggested that the U.S. economy was the only relatively bright spot around the globe. I’m scratching my head on this one. Here’s how John Williams (www.shadowstats.com) summarized last weeks main economic reports: Quarterly Industrial Production Contracted for First Time Since Official Recession, Quarterly Pace of Inflation Picked Up, With CPI and PPI Topping Market Expectations, September Year-to-Year Inflation: 2.0% (CPI-U), 9.6% (SGS), Real Average Weekly Earnings Continued to Tumble, Inflation Provided Half of September Retail Sales Growth. CPI-U is the Government number and CPI-SGS is Williams’ alternative calculation of inflation. I know my own spending experience is a lot more consistent with the SGS measurement.
To be sure, the massive Government and Fed stimulus initiated in late 2008, and continuously administered since then, somewhat stabilized the economic shock from the 2008 banking system collapse. However, if you apply a true inflation measure rather than the Government-rigged CPI metric, there is a very valid argument that the economy never achieved real growth (real growth = nominal GDP minus real inflation). Based on many factors, including the data I posted on Friday, it would appear that the economy is heading back into tailspin. Caterpillar announced its earnings this morning and, like the major GDP/infrastructure companies that reported last week, it reported earnings that fell short of expectations and had to lower future expectations: LINK
A big part of how the Government has created a tenuous safety net for the economy has been to take your tax dollars and heavily subsidize automobile manufacturing and ramp up welfare spending. Everyone knows about the massive bailout of GM and Chrysler. But check out this news item from a local Michigan newspaper about the “success” of the Government’s Chevy Volt program:
Workers at LG Chem, a $300 million lithium-ion battery plant heavily funded by taxpayers, tell Target 8 that they have so little work to do that they spend hours playing cards and board games, reading magazines or watching movies.
Here’s the LINK Speaking of the Volt, I saw a report about two weeks which had calculated that the Government was spending something like $40,000 per car to produce the Volt, which has been a colossal failure. You can probably use google to find the report if you think I misread.
In addition, everyone knows that entitlement spending on student loans and social security disability has started to go parabolic since Obama took over the Government (please note: I believe that Government spending and debt accumulation would have ramped up like this regardless of which Party controlled the Oval Office). It was reported last Thursday that Federal welfare spending has increased 32% over the last four years. In fact, Federal and State welfare combined is now $1.03 trillion: LINK That number is over 25% of total Federal reported spending (as opposed to “off-budget” spending). But that’s okay. Even though private sector wages are declining on average, Obama wants to make sure Government employees are well taken care of: LINK
Make no mistake in thinking that any of the above numbers would have been any different under a Republican administration. Look at Government welfare and union-industry bailouts as “insurance” payments against widespread revolt. If the Government were to cut back on any of its spending, without real private-sector growth replacing that Government spending, our economy would collapse into the worst depression in the country’s history. I’m not defending it, I’m just telling it like it is.
The bottom line is that this is completely unsustainable. And neither Presidential candidate has clarified with specifics as to how they would address the above mess. I have heard plenty of grandiose political platitudes and promises, but no workable solutions. I don’t think there are any. I have no idea how or when this is going to hit the wall, but I do know it will be most unpleasant. You can soften the blow to yourself and your family by moving as much of your fiat-based wealth out of the system and into precious metals…I plan on switching between the NLCS game and the Monday Night Football game tonight – the Presidential debate will go unwatched by me – the first two were just not entertaining enough…
2012-10-22 14:42:53
Source: http://truthingold.blogspot.com/2012/10/what-economic-recovery-your-taxes-at.html
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