Day: December 12, 2008

Trade Takes A Hit In Economic Slide

I know this might not be the most interesting subject for most, but to understand what we will be looking at down the road it is essential.

U.S. exports slid to a seven-month low and the number of Americans filing claims for unemployment benefits surged to the highest level since 1982, signaling the economy is shrinking even faster than previously estimated.

The export slump, caused by recessions spreading through U.S. trading partners, spurred a widening in the trade deficit to $57.2 billion in October, a Commerce Department report showed in Washington today. Initial jobless claims rose more than forecast to 573,000 in the week ended Dec. 6, the Labor Department said.

Rising joblessness will deepen the pull-back in spending by consumers, and the worsening trade balance removes what had been a source of support for an economy that’s been in a recession for a year. The Bush administration said the Labor report shows why U.S. senators should approve an emergency loan for automakers, to prevent a bigger hit to jobs from that industry’s collapse.

American exports dropped 2.2 percent to $151.7 billion as foreign purchases of U.S. aircraft, automobiles, chemicals and food waned. The trade gap was projected to narrow to $53.5 billion, according to the median forecast in a Bloomberg News survey of 70 economists. The shortfall was $56.6 billion in September.

Imports declined 1.3 percent to $208.9 billion, the lowest level since March. Decreases in demand for foreign-produced automobiles, televisions, computers and fuel reflected the worsening slump in U.S. consumer and business spending.

Rather than helping shrink the trade gap last month, as most economists predicted, oil contributed to the deterioration. A record $15.56-a-barrel drop in the price of imported crude in October was swamped by a 70.9 million-barrel jump in purchases that was also the biggest ever, the report showed. Excluding petroleum, the trade gap was little changed at $24.5 billion.

The economy has lost 1.9 million jobs so far this year as payrolls dropped for 11 consecutive months. U.S. companies eliminated 533,000 jobs in November, the most since 1974, and the unemployment rate increased to a 15-year high of 6.7 percent, the government said last week.

So far this year, weekly claims have averaged 412,000, compared with an average of 321,000 for all of 2007, when employers added a total of 1.1 million jobs.

Rising unemployment and the persistent credit crisis raise the likelihood the recession that began in December 2007 will turn into the longest slump in the postwar era. The U.S. economy contracted at a 0.5 percent annual pace in the third quarter.

Exerpts were from an article from Bloomberg.com

None of the news is good news….and it will continue and quiet possibly get much worse.

Personal Debt Shrinking?

The American consumer’s long-running love affair with debt appears to be on the rocks. But like a lot of soured romances, the reasons are open to debate.

What’s known is that the debt held by U.S. households shrank in the three months ended Sept. 30. That’s the first time that has happened since the government began keeping records more than 50 years ago, the Federal Reserve said Thursday.

Economists say consumers appear to be curbing their spending and displaying a healthy prudence about taking on new debt — something financial planners have been admonishing Americans to do for decades.

What economists don’t know is whether people are bringing down their debt voluntarily or whether it’s being imposed on them through foreclosures or the denial of credit.

Household debt declined 0.8% in the third quarter, mostly as a result of a 2.4% decline in mortgage debt, the Fed reported. Other consumer debt, which includes credit card debt, rose a modest 1.2%.

The Fed also noted that household net worth continued to decline in the same quarter, largely because of shrinking home equity. Homeowners’ equity as a percentage of the value of their homes has fallen to just 44.7%. Until this year, that percentage had not fallen below 50% since 1945.

Same Sh!t, Different Day

This is just tit for tat….after all the Dems used corruption against the Repubs in ’06.  They, Repubs, say they are not on a witch hunt while conducting a witch hunt.  That is pathetic.  They keep saying that Obama needs to come clean on what is what with Blago–somehow they are trying to infer that it is Obama’s fault that Blago is a criminal.  But they are not on a witch hunt.  Do they really think we are that stupid?  The answer is yes they do and in most cases they are right.

The Repubs keep trying this lame attempt to link Obama to something not so forthright.  Rezko did not do it.  Ayers did not do it.  Wright did not do it.  But yet they keep going with a loser track.  Repubs please stop pouting and whining and get on to the work at hand–you know the stuff that you were sent to Washington to handle–the people’s business.

Using their logic, does this mean that we can blame Bush for the corruption of Stevens and Cunningham and that idiot in Idaho?  Repubs need to get over the fact that they lost the election in November and get on with the repairs to a party that has no direction and definitely has no real leader.

Actually, the Repubs are doing an excellent job at diverting attention from the fact that they are about to crap all over the American worker in the Auto bailout thing.  The more they keep the media focused on Blago the easier it is to slide their anti-worker agenda through the Senate.

What Causes Poverty?

We can point at several causes to the question asked of what causes poverty?  Loss of a job, social injustices, education and the list can go on and on.  But can one factor be named as the cause of poverty?

Back in the late 1800’s an economist named Henry George stated that involuntary poverty and unemployment is the direct result of land speculation.  Speculators hold land out of use waiting for higher prices.  This means that land would not be readily available to labor and capital.  Thus, unemployment is the result because the land is not being used for production.

This withholding of the land leads to depressions and recessions in the business cycle.  Land speculation leads to higher prices in boom times that makes it too expensive for business to use.  And in turn labor suffers, production suffers.  In deflated times land values drop to a point where it stimulates investment and business.  Labor and production improves.  Unfortunately, this “good” times does not last.  For with the lower prices in land speculation returns and the cycle begins again of boom and bust.

According to this example the speculation in land prices leads to and is a direct cause of poverty.

I will understand it if Wall Street economists do not agree with this model.  But they are hiding their heads; they are wrong or they are just stupid.  Many seem afraid of this simple answer, they want to turn the science of economics into something it is not.  Many noted economists have won a many ward by inventing graphs and stats….but in reality it is not that complex….it boils down to speculation.

I know can it be as simple as that…and the answer is yes.  Look at the current economic situation–it began in the housing sector then moved on to the others.  The housing sector is most effected by speculation and that is what lead to this point in our economic history.  The prices kept climbing and financial wizards kept finding ways to put people onto land and it reached a point that it broke.  Speculation lead to this point and now it is on the down turn and eventually production will return when the price of land reaches a point that stimulates the business cycle.

By reading this one should get the understanding of what is happening in the world of economics.  I hope it helps.

Senators Crap On Detroit

The U.S. Senate took on the role of Christmas Grinch for autoworkers when it failed on Thursday to pass a $14 billion rescue package for Detroit’s three major car manufacturers.

Attention now turns to the Bush administration’s Treasury Department, who Reid and other supporters of a bailout said should dip into the $700 billion fund Congress created to help Wall Street firms and banks, and lend automakers the money they need to avoid bankruptcy and save millions of jobs.

The Senate late on Thursday came only a few “yes” votes short of the 60 needed to block a filibuster on the bailout bill, effectively killing any chance of Congress providing a lifeline to the financially drowning automakers this year.

“It’s going to be a very, very bad Christmas for a lot of people based on what takes place here tonight,” Senate Majority Leader Harry Reid told his colleagues before the vote. “It’s over with.”

Looks like a new War Between The States is developing and the low paid South is winning.