Elaine Meinel Supkis
I left my very rural mountain to go visit New York City on family business. On the long, slow, bumpy train ride, I read the magazine 'Foreign Affairs.' It was as good as comic strips like the Far Side. Namely, it was all about the great power of the USA imperium and how we are rich, rich, rich and should reorder the world to suit ourselves using our vast wealth to take over Ukraine, etc. Every time its writers talked about money, not one of them said anything about our ocean of red ink or our stinky Federal Reserves. Time to visit the Federal Reserve web page, I say!
The quarterly Flow of Funds data from the Federal Reserve Board show that homeowners are still taking on mortgage debt at a healthy pace even as their homes have largely stopped appreciating in value. Homeowners increased their mortgage debt at a 5.4 percent annual rate in the first quarter, adding debt at an annual rate of $510 billion. This is rate of borrowing is down from the 9.3 percent growth rate in 2006, but it is considerably more rapid than the 2.0 percent rate of house appreciation reported for the first quarter.As a result, the ratio of equity to home value continued to fall. At the end of the first quarter of 2007, the ratio of equity to home value stood at 52.7 percent, another record low. This ratio stood at 54.3 percent at the end of 2005. It had been at 57.9 percent as recently as 2000, and was close to 70 percent until the nineties. This drop in the ratio of equity to value is especially disconcerting given the country's demographics. With much of the baby boom cohort at the edge of retirement, it would be expected that the ratio of equity to value would be near record highs.
This is a big news story not coming to a newspaper in your neighborhood. The USA took a decisive turn for the worse when we collectively decided to start piling on debts instead of following the old arc of many debts at the beginning of life and then paying them off until, at 50 years or so, they are nonexistent or very minor such as buying a car and then using it for ten years. The US culture has been utterly transformed by cheap loans that are pegged to pay back at a rate that is very pleasant since it is below the rate the dollar deflates in value. In other words, the grasshopper philosophy of fiddling today and ignoring the onslaught of winter---old age---is now prevailing utterly over the ant philosophy of accumulating reserves and building an underground nuclear-attack hardened bomb shelter.
The pile of debts we are amassing is very dangerous and any sane leader would be most concerned about this not feeding the frenzy like Greenspan and Bernanke have done. The business about the rate of borrowing is still very high in that it is outstripping housing value hikes is a fire alarm screeching in the Federal Reserve's ears. People are spending like crazy despite having no reserves just as our nation spends despite no reserves. The psychological inability to stop wild spending is a sign our nation is headed to a great fall.
Asia is most anxious to keep lending to us. According to Mr. Benn Steil in his 'The End of National Currency' writes:
The USA account deficit is now 6.6% of our GNP. This is well within the 'Red Alert...Danger!...Danger!' zone. The right wing is running in circles, screaming that no one should get health care or retire and this will save us while the so-called 'liberals' in our government run around screaming we can have guns and butter. This is identical to the Vietnam War which launched the US into the debt stratosphere with the guns 'n butter policies that led up to the collapse of the post-WWII gold currency scheme. By then, Fort Knox had lost 3/4 of the gold reserves it held.
All empires that control the Seven Seas through their various navies are ipso-facto, the ruling currency of choice. All empires that control the Seven Seas also go bankrupt. This is an iron rule of historical imperatives. There are no exceptions. The wealth gained by battling violently for dominance and then exploiting the Pax Whatever to steamroller everyone into trade with the Empire that benefits the Empire most is the upside of the arc of history. The downside is when all the subject provinces begin to bleed the capital of all its capitol. Eager to keep the empire running, the center ceases to demand tribute and instead, pays to keep the outer edges of the realm quiet.
And troops and ships end up protecting colonies and allies while Rome lies open to all invaders who burn it down. The USA is in that very stage leading up to its own end: the costs of empire overwhelm all profits and increasingly, all systems run in the red more and more while the outermost provinces and allies enjoy full military protection even as the center of our empire is under fire and burning.
This article ends, like all such articles in the mainstream media, with a totally stupid conclusion that ignores a mountain of facts:
Greenspan was fiscally disciplined? What? That is total, barking lunacy. Anyone writing such claptrap should back it up with some facts and figures. And they all show that our fiscal monetary matters went sailing off the edge of the earth under that dangerous, deluded clown! He is the one who dropped interest rates to 1% when inflation was running at over 4%! He is the one who has run the Federal Reserves down to only $66 billion which is the same as some hedge fund, speaking of which, he encouraged the 'carry trade' with Japan that feeds these hedge funds and yapped about the yuan and never about the weak yen, etc.
Mr. Steil talks about a 'privatized' money system which means gold, I suppose. Only power grows out of the barrel of a gun and a bankrupt gun has few bullets to fire! The history of the world according to the victors of WWII leaves out all mention of the British going bankrupt during WWI. The US allowed Britain to play 'Imperial ruler of the Seven Seas' long after they were utterly unable to do this and when Germany and Japan probed British abilities to stave off attacks, it was laughably easy. Namely, even a bunch of Japanese soldiers on bicycles could defeat the entire British Navy in Singapore, for example. Totally rotted at the core, the British lost every battle or were unable to fight back with any strength and Japan and Germany simply rolled right over them.
The British Lion was a paper tiger. And the paper this tiger used to control the world was the pound. And so it is with the USA: our navy is bravely chugging all over the earth, our Airforce is flying war games with the Israeli AF which would also be bankrupt if the Jews running that entity had to pay for it. But in classic imperial rot mode, the USA pays for the Israelis who are creating wars for us to fight and lose!
The only way the USA can do these things is if the Chinese tailor gives us more loans. And they are giving us loans in order to bankrupt us. This amuses them greatly, I assure everyone! Steil is right about us fixing our own budget but like all Zionist neocon writers today, he assumes we must do this by killing Americans via cutting retirement funds and health care. Not a peep in his entire article about our Seven Seas projects!
The degenerating condition of American citizens is startling. It is obvious that if all family members don't work, most families would sink under the mountain of debts they must carry. I got an email from one reader who remembered his own family long ago during the Great Depression: even the littlest ones had to scavange for money and fuel! Everyone had to seek stuff for survival every day. This meant dropping out of school, etc.
WWII saved us from perpetual depression. Namely, thanks to the Democrats passing important laws like the GI Bill that opened up higher education for our war heroes. My father-in-law suddenly was able to get higher degrees in chemistry, for example, and become a great inventor in his field and he was one of many who make America great and rich: using their brains and improving their skills, they were able to fuel the world's biggest technological revolution. The Greatest Generation would have been nothing if it weren't for the GI Bill and other reforms. But alas, this same generation decided they would rule the Seven Seas and they bequeathed on us today's mess: an out-of-control empire that is going bankrupt fighting everyone all the time or paying off everyone so we can sail our Seven Seas without sinking the ships!
American men in their 30s are earning less than their father's generation did, challenging a long-held belief that each generation will be better off than the one that preceded it, according to a new study published Friday.The report, the first in an ongoing 18-month study on economic mobility in the United States, also revealed that the income growth of the median American household is declining.Relying on Census Bureau figures, the study's authors found that after adjusting for inflation, men in their 30s in 2004 had a median income of about $35,000 per year, for a 12 percent drop compared with $40,000 per year for men in the same age group in 1974.
That stood in stark contrast to men in their 30s in 1994, who earned 5 percent more than their fathers did.
Similarly, American families, which experienced a 32 percent increase in income levels between 1964 and 1994, saw household income growth slow to 9 percent between 1974 and 2004, according to the report.
The American families increase in income was due 100% to women entering the workforce. But now that is done and every available mother is now working while juggling the kiddies and incomes are no longer growing and in some sectors, is definitely shrinking relative to inflation. And this is due to the loss of economic power of the working class as their unions were killed off by politicians, greed and union leadership corruption. The mass media has turned its megaphone to distracting the working classes with fears of gays, for example, The working man realizes he has lost his 'masculinity' in the sense of being the master of his household thanks to the wife earning half the income so this psychological hole has been filled with fears of homosexual love. Which is now collapsing, nearly everyone can see the obvious, that gay men are no threat at all.
The real threat is economic. And the right wing, so far, has allied itself with the people who are confusing the working class males with demands they prove their manhood by fighting wars for our fake allies and by strutting about, pretending to be he-men, buying guns and acting like that all around coward, Cheney, shooting each other while hunting, etc. But if the economic status of working men continues to collapse, it will get ugly eventually. Once they realize there are no lower rungs to their ladders down to the pits, they just might figure out what happened to them!
Going back to the top story, the rise in value of housing assets in the USA is not a wonderful thing all around. The cost of carrying a mortgage is now very high and can't climb much higher. And the burden of paying for housing means wives must work. And this has been no longer enough for a long time which is why debts are climbing rapidly even as housing is stalling or losing value. In NYC, housing is still selling briskly but the number of huge condominium projects that are going up is still climbing but the bottom tiers of even that market are now beginning to see a slowdown due to banks not handing out loans like candy.
When one focuses on either the humblest level or the highest, the problems are the same: everyone everywhere in the USA economic system is spending in the red and the Federal Reserve is printing money l like mad and the only way to do this without much inflation is to ship it all to China and the only way this can be done is in exchange of paper printed money for Chinese manufactured goods which is why our trade deficit is key to all this: it is nearly a trillion dollars a year which is on any level, totally unacceptable and totally dangerous to our sovereignty and financial health. And it is directly tied to the collapsing incomes that is forcing American families to take on more and more debt instead of paying it all off before 55 years of age! The more debt we take on, the more stuff we have to buy from China to keep inflation at bay as we print up money and to give them more money so they can give us more loans. This is a feedback loop designed to destroy the USA's economy. Anyone looking at it can see this obvious fact. Yet virtually no writer in the mainstream talking about our currency talks about all this together in one big lump sum.
I think this is so they can say stupid things like, 'The Chinese can't afford to let us go bankrupt no matter how deep in debt we are.'
Over the past four quarters, the U.S. real gross domestic product (GDP) has increased at an average rate of about 2 percent. Growth during the first quarter of this year was held down by some factors--notably, significant declines in inventory accumulation, net exports, and federal defense spending--that seem likely to be at least partially reversed in the near term. Of course, the adjustment in the housing sector is still ongoing, and the slowdown in residential construction now appears likely to remain a drag on economic growth for somewhat longer than previously expected. Thus far, however, we have not seen major spillovers from housing onto other sectors of the economy. On average, over coming quarters, we expect the economy to advance at a moderate pace, close to or slightly below the economy’s trend rate of expansion.
This statement from Helicopter the Money Bernanke is an important read. He is totally clueless. Deliberately. The 'spill over' is now so great, papering it over is bankrupting our currency. The Japanese, Chinese and Russians are all hiding this from us by buying up dollars only this game is now changing with China buying up very cheap yen so they can control Japan's economy and this is forcing Japan to raise interest rates and defend the yen. Which has a backwash into our own economic system because the differential between a super-duper fake cheap yen and the dollar is what fuels most speculation and many loans being used to buy up each other's businesses and hedge fund funny money games.
The Federal Reserve just released their annual report. I am going to cover that in the next story today. It is, like all government reports, cruel with the data but cozy and sweet seeing only sugar plum fairies and gum drop gingerbread houses in its analysis.
Culture of Life News Main Page
Comments