commentary by Reb Akiva at Mystical Paths
When I wrote Economic Doom, I’d been paying attention to the general news. As everyone knows, according to the general news everything is hunky dory, a-ok, and peachy keen if not quite up to wonderful just yet. The recovery is steaming along nicely, though it’s incredible positive impact hasn’t reached quite everybody just yet. But not to worry, it will get to you soon.
Unfortunately it wasn’t very hard to refute that. However, since then I’ve looked a bit more for the articles in the margins, for others who are paying attention, ignoring the government propaganda, and sharing what they know and see happening. Here’s a few tidbits:
Credit Scores Sink To New Lows:
EILEEN AJ CONNELLY, AP Personal Finance Writer - The credit scores of millions more Americans are sinking to new lows. Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It's unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.
Once the damage is done, it could be years before this group can restore their scores, even if they had strong credit histories in the past… "The pendulum has swung too far," he said. "We absolutely swung way too far in the liberal lending, but did we have to swing so far back the other way?"
So to reiterate the key points, 26% of American’s can’t by a car or house, or make any major purchases (since they can’t get a credit card). And even if they get a wonderful new job today, “it takes years to restore credit”.
Dow Repeats Great Depression Pattern:
CNBC – The Dow Jones Industrial Average repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday. …there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said.
As my cousin tells me, buy on rumor sell on fact. Meaning, stocks are priced according to possible future trends, and when they become real the stock doesn’t move or even falls because the possibility is already priced into the stock. Stocks were getting priced on the government propaganda of a steady recovery. The facts are coming into play.
Business Power Neglect:
Larry Kudlow – …A brief look at the recent jobs report for June tells this story. After spending more than $1 trillion through so-called government stimulus, we are at best experiencing a grinding and anemic jobs recovery. Private payrolls are growing slowly. The workweek is again shrinking. And average hourly earnings have declined. The unemployment rate dropped to 9.5 percent, but that’s because 650,000 people left the labor force.
Most troubling, the household survey, which captures small owner-operated business employment, dropped 300,000 following a decline last month. In other words, this leading indicator is moving in the wrong direction.
So what about all this stimulus spending? Well, it hasn’t worked. When you look at the recent GDP reports, you find that the government contribution to economic growth has been about zero. This is because transfer payments don’t contribute to the output of goods and services. We’ve had three recovery quarters where inflation-adjusted GDP growth averaged a sub-par 3.5 percent. But the federal contribution has been only two-tenths of 1 percent, while the state and local government contribution has been a small drag of three-tenths of 1 percent.
As Kudlow goes on to explain, businesses create jobs and productivity, not government. Yet the current administration is tightening government controls over business. The rest of the analysis is obvious.