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5) The parking lot at Applebee’s is thinning while the drive-thru line at McDonald’s is lengthening
Many Americans are continuing to Super Size their order while downsizing the bill. The Dollar Menu is how people are “Eatin’ Good in the Neighborhood.” This is evidenced by increasing sales at McDonald’s and decreasing sales at Applebees. Cutting back on restaurant bills is the opposite of how people behaved during the most recent bubble when disposable income was flowing in from Flip That House winnings. Forget fancy polls: this consumer sentiment gauge speaks louder than words.
4) Uncle Sam is holding up the housing market
At the moment, the only thing “stabilizing” house prices are historically low mortgage rates and a monster home buyer tax credit. Without these major subsidies, the housing market may have fallen into the great abyss. So don’t get too complacent. If Atlas shrugs while unemployment is high, mortgage prices will rise and the housing market will get slammed. The Home Buyer Tax Credit is set to expire in April. Let’s see if politicians can stomach another round of foreclosures.
3) A bunch of countries are on the verge of going bust
Yes, countries (not corporations). Remember what happened when Lehman Brothers imploded? Now imagine Portugal, Italy, Ireland, Greece, or Spain (affectionately known as the PIIGS) going belly up. Throw in some Eastern European countries and a black swan (the UK or US), and fear could spread faster than swine flu. Don’t think it can happen? The math is simple. Countries have borrowed and spent much more than they make. That is like breaking a fundamental law of the universe. And when that law is broken, bankruptcy or bailouts loom.
2) Many jobs have been lost forever
The US was once a job creating machine. In the 1940s, 10 million jobs were created. In the 1990s, 19 million jobs were created. In the economically crappy 1970s, almost 16 million jobs were created. However, in the 2000s, the private sector deleted 208,000 jobs — many of them are now permanently overseas. We cheered for free market trade agreements like NAFTA, but did we truly understand the consequences? Apparently not. Now the only way to grapple back many manufacturing and tech jobs is to lower wages and compete in the free market. That could get more bewildering than an episode of Lost.
1) 78 million baby-boomers are eligible for Social Security and Medicare
This is the economic atomic bomb. There are not enough greeter jobs at WalMart to offset the back-breaking burden of 78 million people falling into the social safety net. Politicians have used the Social Security and Medicare funds as ATMs for tons of unrelated spending projects over the years. Unfortunately, no one refilled the cookie jar. As tax collectors reach into our purses to make good on promises made to the Boomers, there will be less money to drive the economy back to prosperity. This would hurt a booming economy. What will it do to a fragile one?
What other obstacles stand in the way of prosperity? What are some reasons we will pull out of this mess? Let us know below …
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Nicely done, and with pictures! Should be easy enough for any flat-earther to understand.
We are in major trouble.
We can't see the forest for the trees. And yet it's so simple – and NO solution.
http://en.wikipedia.org/wiki/The_End_of_Work
(or: http://www.marshallbrain.com/robotic-nation.htm)
This idea was declared non-grata for decades, because it was equivalent to cursing in church.
"..In 1995, Rifkin contended that worldwide unemployment would increase as information technology eliminates tens of millions of jobs in the manufacturing, agricultural and service sectors. He traced the devastating impact of automation on blue-collar, retail and wholesale employees. While a small elite of corporate managers and knowledge workers reap the benefits of the high-tech world economy, the American middle class continues to shrink and the workplace becomes ever more stressful…"
"…A number of economists and sociologists have been critical of Jeremy Rifkin for being one of the major contributors to the "end of work" discourse and literature of the 1990s, which they argue is based on a technological determinism that does not take into account the dynamics of employment and technological change in the capitalist era…"
Yah right.
Sounds like Rifkin knew his basic economics: money chases cheap labor.
It still upsets me that people did not take Ross Perot seriously enough to listen to what he was saying about NAFTA. If you remember Ross Perot said that if you give corporations the chance to pay their in Mexico and sell in the US they would, but all anyone remembers about him is his big ears.
Everyone wanted a beer with Clinton. Perot was "too boring". I guess that decision was costly.
Reason number 6 ) China has quit buying our securities . Japan is now buying our dept & will quit soon . Thus it would seem we are out of international financiers . Am I right ? If so I can't take credit . I read that in another article . It said our Keynesian free lunch is over . That sounds scary , clever , & semi humorous at the same time ……. But I bet its bad .
Glenn,
You may be right. Last month Treasury purchases by China declined. It could be a scary trend if our creditors decide they don't like the risk.
6) We have 170 something military bases around the world, and we are fighting two wars with no end in sight. This adds a burden of about 1 trillion a year that has to be paid for by hard working producing Americans.
7) Congress is incapable of cutting just 10 billion in spending to pay for extended unemployment, even after they adopt the pay-go system. How on earth are they going to balance the budget and fight a deficit of 1.5 trillion
8) Savings rate is still close to the lowest (It was even negative a year back). Meaning, americans will have NO MONEY in the future.
9) We have spent trillions of dollars in stimulus and bailouts, setting the stage for another bubble, just like the one we just had was created by the stimulus back in 2000 and 2001. Only this time, the bubble will be even bigger. FWIW, the economists that predicted the current collapse (austrian economists) are saying that we are already in the bubble, and it is a currency/sovereign debt bubble.
10) We are doing exactly what we did during the great depression: Bush stimulus are very similar to Hoovert's stimulus (including bailouts, low interest rates, housing, community projects like the Hoover Dam). And Obama is the equivalent of FDR, with his social programs. Back then, in trying to help the economy, they turned what could have been a deep, quick 1 year recession like in 1920 into the great depression lasting 15 years. "The definition of insanity is doing the same thing over and over again and expecting different results".
Last I heard is we have over 700 bases worldwide.
Wow. That's more than all the bases in every stadium in Major League Baseball!
This sort of crisis happens every 60 years or so, Soros called it the Credit Cycle, Fischer the Debt Deflation. Basically credit, and money supply, cycle just like anything else. They go up, then turn into a bubble and than crash. Now we are at the end of the credit cycle, its a natural occurrence and has very little to do with government policy. In fact, if it weren't for the government this deflation would have occured back in 1987, following the 1929-like collapse. The only problem now is that the bubble got inflated so much that there is a lot more falling and deflating to do.
http://financialmarkets2007.blogspot.com/p/genera...
I agree with the cycles theory. I am actually working on something cool regarding that. However, I think the government does play a big role in the length and depth of the cycles. They can either hose the timber with karosene and then rush to dump tons of water on the flames, or they can deal with the economy like a controlled burn when it's growing.
Thanks for your comment, Kotov. I look forward to hearing from you more often.
Sure it happens in cycles. The problem that you are forgetting is that as technology gets better at automation more and more jobs will be displaced forever. Before the technological and industrial revolutions it would take days and many people to farm a large plot of land. Now a single person with the right machinery has replaced that forever. Same with manufacturing. You think all of these people can go to the service industry? Those jobs are gone too. I scan my own items at the grocery store now, why do we need cashiers? Credit, money and the economy are all artificial and they are what has caused all of the social problems in society today. Its time for "change we can beleive in"
John, I completely agree about tech replacing people in manufacturing. However, a more complicated issue is how many jobs are created to manufacture and service the new tech? The IT budget of many Fortune 500 companies is a great example. There are cost savings, but new industries grow up around the tech.
What I'm saying is that this trend will eventually displace too many people from the workforce in all sectors (not just manufacturing) because the goal of all corporations is lower costs. The only way to lower costs is automation. I'm not denouncing automation, in fact I'm encouraging it because the current monetary system needs to collapse before we can begin to realize that we have lost our connection with Nature and each other. The monetary system is artificial. A stock trader puts fake money in the system, it circulates and gets fake money back. There is nothing real there and no benefit to society. People in the low and middle class have to spend 1/3 of their lives in meaningless jobs just to trade their time for fake money to live. This is slavery. Why? What purpose does all this faking serve? Are we advancing humanity with all of these fake actions?
This is not the best medium to get my message across so please google for The Venus Project and go the site and read what direction the human species should be going for.
Speaking of Soros… didn't I read just a few days back, his Hedge Fund made over a Billion dollars by 'short selling' against the English Pound.
Yeah. That was his big play. But don't get confused with BS political scapegoats: short sellers do not bring down economies.
Yes it does idiot.
This technique is used by the IMF to control an errant economy to bring it into compliance or to collapse one as punishment for non compliance.
Get the straight scoop. Understand economics and money before repeating absurd statements.
Try reading the"Web of Debt" to get in behind the curtain and find out what the wizard is really doing.
Um. You might also want to mention a little thing called a WAR…?
True. But theoretically that can end.
The hard part with getting away from the pyramid system is that one generation is going to have to pay twice.
Yup. I think that's my generation. We will end up being the lost generation.
Failure of the economy? Good! It's time for real change anyway:
http://thevenusproject.com
As a final note recent studies in soil erosion suggest that there may only be about 60 – 100 years of soil left on the planet. How much money will it take to replace that soil when its lost and we can't grow food (not a trick question, money can't replace the damage to the environment just like it can't bring back an extinct species)?
Ah, I believe you've been reading some Charlie Munger, haven't you?
The thing that most people do not want to talk about is the $107 trillion unfunded liabilities such as the ones you mentioned: Medicare and Social Security. We're all screwed and it's just going to get worse, yet no politician even wants to thinkk about it; nevermind talk about it to the general public.
The only reason we aren't paying an arm and a leg for Oil at the moment is because World Demand slipped back down below daily World Production levels. Saudi Arabia, Mexico and Russia are using more and more of their supply domestically, and that dwindling supply from fields Gwahar and Cantarell will not be coming back to the international market at any price.
This "recovery" will be smothered in the crib when Oil costs shoot up again as demand begins to creep back up over production levels.
Oil will be a problem again as the economy improves.