Saturday, October 13, 2007
We have become Complacent to Warning Signs
From Definitions Below:
Recession: An extended decline in general business activity, typically two consecutive quarters of falling real gross national product.
GDP = consumption + investment + government spending + net exports
GDP = consumption + (residential (new homes only) and nonresidential investment spending (not stocks and bonds) - but corporate expansion etc.) + government spending + (exports - imports)
So what we really are encountering is that the GDP is increasing at a decreasing rate - like an airplane climbing as it runs out of fuel - higher and slower until it Stalls out. In the components of GDP; we see New Residential Homes - standing still, Government spending increasing only to support the war and certain Big Business (so for Growth to be effective it must benefit the greater population) and finally, Exports increasing (as a reduction of a negative) at the cost of the falling dollar.
Calculation of Historic Concepts - is now tempered by "Floating Decimals." - Much more difficult to quantify.
So what may be appearing as Growth (stripping away "Floating Decimals") in actuality we are running out of "Oxygen."
An example of "Floating Decimals"
Energy for Life consists of Food and Nutrients and for living - fuel for comfort and electricity to make everything run correctly. These items are excluded from REAL inflation to get to "CORE" inflation. WHOSE DECISION WAS THAT? Was it a correct decision - and if not why are we still following the concept?
The POWERS TO BE - have spun us into complacency - from weapons of mass destruction to what is and what is not inflation - and the American Public feels helpless to act. After all, Al Gore won the popular vote and lost the election - whose rule was that?
So what America sees and believes, is the "spin" - Fuck the truth!
The dollar is continuing its slide. In a recent article in the Financial Times, Fred Bergsten suggested the dollar could slide another 15-20% on average. Dr. Woody Brock sees the potential for another 5-10% drop.
Bergsten writes: "The good news for Europe is that most of the remaining decline of the dollar should take place against the currencies of the East Asians and the oil exporters. They are running the counterpart surpluses to the US deficits. They have piled up massive foreign exchange holdings that already far exceed any plausible needs. They are enjoying rapid economic growth that could most easily accommodate the reductions in external surpluses."
China has allowed its currency to drop about 10%. But that has not helped Europe, where the dollar has dropped more than 10% in recent years. This week, we started to hear a small chorus of European finance ministers complaining about the manipulation of the Chinese currency. Expect that chorus to grow even more pronounced as the euro rises to $1.50 and beyond.
What may be the resolution to this complex matter - a recession in the USA followed by a worldwide recession - I hear it - "Ya Know it's you kind of folks who are always predicting doom and are "shorting" the markets - It's UnAmerican - remember - "Love it or Leave it!
Is the sky falling? No, and how would we know - no one's looking up!