Thursday, December 11, 2008

The Good the Bad and the Ugly.

Terry Bankert

THE RELATIVE GOOD NEWS Our country will lose 2 million jobs in 2009 and undergo economic contraction through the first half of the year.

THE BAD NEWS The quarterly forecast issued by UCLA's Anderson School of Management was peppered with words like "ugly," "nasty" and "abnormalities." In the report, senior economist David Shulman said the recession will include four quarters of declining real gross domestic product, and unemployment will rise to 8.5% by late 2009 from the 6.7% reported last month.

THE BADDER NEWS We have thrown billions to the free market private sector to avoid a recession. Now this guy says “The report began with a blunt statement from Shulman: "The news from the economy is bad.

The recession that we had previously hoped to avoid is now with us in full gale force."”

THE WORSE NEWS The future declines in our gross national product are predicted to be” 4.1% annual rate in the current quarter, in 2009 by a rate of 3.4% in the first quarter and 0.8% in the second, the report said. GDP declined at a 0.5% rate in the third quarter of this year.

THE HORRIBLE NEWS Americas . deficit will exceed $1 trillion in fiscal 2009, and is such a mess that it is difficult to predict by those people whose day job is to predict the economy. Just how did this happen?

The oil cartel did not do this , we did it to our selves.

The housing market collapse was a trigger for increased defaulted mortgages, which threatened the liquidity and solvency of the economy as it became "dependent upon the easy flow of mortgage credit." Where were our leaders when the dominos began to fall? The collapsed housing market caused by the downturn, this caused severe asset price deflation. Some say our leaders should have seen this when the monster first reared its head as a liquidity crisis in the short-term money market in August 2007, causing a financial panic.

We elect and pay people to watch these things for us.

Where were the watch dogs?

With all the bailouts the stock markets are crashing worse than during the great depression. Some say this began in the 1990. Remember the .com busts. Now our middle class is crumbling. Ask you friends about their 401k or mutual fund or the equity in their homes, will their kids be able to go to college. We should be angry instead of sheep in shock. Here is a measure of our pain: homes and cars, the industries most tied to middle class wealth and credit of consumer assets, are suffering. Our middle class housing starts will drop below a 700,000 unit annual rate, the lowest in the postwar history. It also noted car sales are at a 25-year low.

HERE A NEW TERM, FIRST RECESSION, THEN DEPRESSION NOW DEFLATION? To survive business are lowering prices. Good today when I go to the Mall. But a a sustained retreat in prices for goods and services will be further drag on the economy. These falling prices will cut demand and discourage employers from hiring. The end result we will have scarce cheap stuff nobody can afford to buy?

THE UGLY NEWS Reduced hiring will lead to increased firing. It is predicted that in late 2009 the U.S. unemployment rate will hit 8.5 percent, compared with 6.7 percent in November, as employers shed an additional two million jobs over the next year.

Being from Flint I have to support the GM bailout, we have no choice.

But we can insist on a sharing of the pain.

In the end what will the frantic lemming like actions of congress have accomplished?

Will the rich still be rich and we are just a bunch of drowned rats.

Posted here by

Terry Bankert

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