It is being asserted these days that “[h]ome-building is so far down it has nowhere to go but up,” which is patently absurd. Such nonsense was preached after 1929 too, and those who believed it probably bid on a bridge in Brooklyn as well. The U.S. economy as well as economies around the world have been going through wrenching experiences already, but much more is likely. Home prices have fallen substantially, though there will be relatively brief respites from the downward trend, such as we are witnessing now.
Anyone who thinks that the bottom is close to being reached, or that the so-called “Stimulus Package” devised by Team Obama and the Democrat-controlled Congress will solve the problems, has never taken a college course in economic history. It took years for the housing bubble to reach its staggering proportions; and when it burst, an economic tsunami was released that has been rolling worldwide with devastating effects, stretching well into the next decade. The Great Depression did not end until the onset of World War II; and the painful experiences that the U.S. and other global economies are witnessing today may take just as long.
The bailout legislation helped Wall Street, the banks, GM and Chrysler, home builders, and others, but there has been no relief for the American people, and they know it in spades. There are lots of rude awakenings yet to come, both in the U.S. and abroad. Barack Obama remains euphorically optimistic, but neither he nor the leaders of other countries can hold back an economic tsunami; and Americans are realizing more and more that he has lied to them.
Vernon L. Smith, Nobel Laureate in Economics, and Steven Gjerstad have written: “The events of the past 10 years have an eerie similarity to the period leading up to the Great Depression.” Years from now, economic historians may look back at this era and conclude that global market forces ultimately determined the depth and duration of the economic meltdown, not the politicians in Washington or anywhere else. The tsunami that was released when the housing bubble burst may not run its course until about 2017-2019, and its effects will be devastating worldwide.
While U.S. politicians and their counterparts in other countries have been trying to convince their electorates that they have the answers, they are simply holding out false hopes that real solutions are at hand; and Americans are in the process of realizing this as the elections of 2010 and 2012 approach. America and other nations are in uncharted waters; and their politicians are facing backlashes from disillusioned and angry constituents that will be unprecedented in modern times.
The latest highly-respected Rasmussen Reports national telephone survey—which was released on December 14, 2009—found that just 40 percent of American voters favor the health care plan proposed by President Obama and congressional Democrats. Fifty-six percent of Americans oppose it, which is the highest level of opposition found in six months of polling. Perhaps more significantly, 46 percent of U.S. voters Strongly Oppose the plan, compared with 19 percent who Strongly Favor it. Yet, Obama and the Democrats are in the process of trying to shove it down the throats of Americans.
Obama’s poll numbers have been falling like a rock. The Rasmussen Reports daily Presidential Tracking Poll for December 15, 2009, shows that 26 percent of the nation’s voters Strongly Approve of the way he is performing his role as president. However, 41 percent Strongly Disapprove, giving him a negative Presidential Approval Index rating of -15. Tragically, the legacies of former Fed Chairman Alan Greenspan—who is to blame for the domestic and global economic meltdown[2]—Obama and the Democrat-controlled Congress will haunt the United States and the American people for generations to come, as the economic tsunami continues to roll worldwide.[3]
ObamaCare, which the American people strongly oppose, Obama’s war in Afghanistan and his failing economic policies, and his failure as a president may cost the Democrats both houses of Congress and change the course of American history.
© 2009, Timothy D. Naegele
[1] Mr. Naegele was counsel to the U.S. Senate Banking Committee; and chief of staff to Presidential Medal of Freedom recipient and former U.S. Senator Edward W. Brooke (R-Mass), the first black senator since Reconstruction after the U.S. Civil War. He practices law in Washington, D.C. and Los Angeles with his firm, Timothy D. Naegele & Associates (www.naegele.com). He has an undergraduate degree in economics from UCLA, as well as two law degrees from the School of Law (Boalt Hall), University of California, Berkeley, and from Georgetown University. He is a member of the District of Columbia and California bars. He served as a Captain in the U.S. Army, assigned to the Defense Intelligence Agency at the Pentagon, where he received the Joint Service Commendation Medal. Mr. Naegele is an Independent politically; and he is listed in Who’s Who in America, Who’s Who in American Law, and Who’s Who in Finance and Business. He has written extensively over the years. See, e.g., www.naegele.com/whats_new.html#articles
[2] See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html
[3] See, e.g., http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html
See http://www.forbes.com/2009/12/16/great-depression-economy-finance-opinions-columnists-mikka-pineda.html?partner=daily_newsletter
This is an interesting article that touches on the issues that I addressed above, as well as what I wrote about in the American Banker and for the McClatchy Newspapers and McClatchy-Tribune News Service. See http://www.americanbanker.com/issues/173_212/-365185-1.html AND http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html
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See http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6962632/America-slides-deeper-into-depression-as-Wall-Street-revels.html
This article entitled, “America slides deeper into depression as Wall Street revels,” is worth reading.
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The following Wall Street Journal article is interesting, which reports that former Federal Reserve Chairman Paul Volcker is supposedly returning “center stage” in the Obama Administration.
See http://www.naegele.com/documents/VolckerReturnstoCenterStage-WSJ.com.pdf
Here is what I wrote at the Journal’s Web site:
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In December 2009, sales of previously-occupied American homes took the largest monthly drop in more than 40 years, plunging far deeper than expected.
See, e.g., http://finance.yahoo.com/news/December-home-sales-down-apf-2729493334.html?x=0&.v=6
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The Notion That We Are Only In A “Recession” Is Absurd
The Ritz-Carlton Hotel chain has announced that it will close its five-diamond property in Las Vegas this May.
See http://money.cnn.com/news/newsfeeds/articles/reuters/MTFH39692_2010-02-09_21-21-37_N09114487.htm
Just like “global warming” is a farce, so is the notion that we are only in a “recession.”
Major hotel owners do not close multi-million-dollar properties in the midst of mere “recessions.” The economic tsunami that former Federal Reserve Chairman Alan Greenspan unleashed just keeps on rolling, as it will for the rest of this decade.
Giulio Tremonti, Italy’s Minister of Economy and Finance, was correct when he said: “Greenspan was considered a master. Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most.” That speaks volumes.
See http://www.americanbanker.com/issues/173_212/-365185-1.html; see also http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/
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One Of The Worst Housing Busts In History Continues
According to the Los Angeles Times, the seasonally-adjusted annual rate of 308,000 units in February was the lowest since the Commerce Department began keeping statistics in 1963, as the U.S. tries to recover from one of the worst housing busts in history.
See http://www.latimes.com/business/la-fi-home-sales25-2010mar25,0,963479.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+latimes/mostviewed+(L.A.+Times+-+Most+Viewed+Stories)
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Property Taxes Remain High Despite Falling Prices
As expected, despite the decline in housing prices nationwide, property taxes are remaining high. This is because income tax and other tax revenues have fallen, which has dramatically impacted government revenues; and one way to offset the shortfall is to refuse to adjust property tax assessments downward, or at least to have lag times that keep revenues high. It was only a matter of time before taxpayers wised up to this scandal, and began to rebel.
An article in USA Today states:
See http://www.usatoday.com/money/economy/housing/2010-03-29-property-tax-assesments-protest_N.htm
What the article does not discuss is how many Americans will lose their homes not only because they cannot afford their mortgages, but because they cannot afford their property taxes as well. In increasing numbers of cases, a property’s value is less than what the homeowner owes the bank (i.e., the property is “underwater”), and it makes sense for the homeowner to simply walk away from the property because he or she no longer has any equity in it—and is nothing more than a renter from the mortgage lender.
In turn, this will result in further declines in prices and more lost property tax revenues—as the downward housing spiral continues. Also, it may fuel a taxpayer revolt, similar to what happened in California with Proposition 13 in 1978.
See http://en.wikipedia.org/wiki/California_Proposition_13_(1978)
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Vital Services Are Terminated
Whether it involves bus services that get people to and from their work, or parks or libraries, or many other services that so many people depend on to live and have any quality of life in America today, they are being terminated across the country, as the economic meltdown takes its toll—which will continue and get even worse, during the balance of this decade.
See, e.g., http://www.latimes.com/news/nationworld/nation/la-na-georgia-bus1-2010apr01,0,380807,full.story
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The Myth About FDR And The Great Depression
The Wall Street Journal has an important article, which states in pertinent part:
See http://online.wsj.com/article/SB10001424052702304024604575173632046893848.html (emphasis added)
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Crime Goes Up, Law Enforcement Capabilities Go Down
One of the anticipated byproducts of the economic meltdown nationally and globally is that crime would go up, while the number of law enforcement would go down, creating even more of a crime-ridden society. In California, large numbers of inmates are going to be released from prisons and other detention facilities, which alone will create an increase in crime.
Also, in Los Angeles, homicide investigations are sitting idle already as detectives of its police department hit overtime caps. With its overtime budget decimated, the department is forcing officers to put cases on hold and take days or even weeks off. Despite an uptick in killings, the homicide unit is among the hardest hit. However, as the “Great Depression II” takes hold during the balance of this decade, things will get much worse.
See http://www.latimes.com/news/local/la-me-lapd12-2010apr12,0,7214535.story
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Very Troubling
A new Rasmussen Reports national telephone survey of Americans shows that 54 percent lack confidence in the stability of the U.S. banking system.
According to Rasmussen:
Just 42 percent of Americans express confidence in the U.S. banking system today.
See http://www.rasmussenreports.com/public_content/business/general_business/april_2010/54_lack_confidence_in_u_s_banking_system
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As Predicted, The Economic Meltdown Is Shuttering Museums, Closing Parks And Curtailing Other Services
It has been reported:
See, e.g., http://www.sacbee.com/2010/04/21/2695337/calif-museum-wont-sell-rare-ansel.html
It is expected that the situation will get far worse for museums, libraries, parks and other public facilities—which Americans have taken for granted—between now and the end of this decade.
See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/ and http://www.latimes.com/news/local/la-me-0501-locked-parks-20100501,0,4597841,full.story (Parks feeling the budget squeeze) and http://www.latimes.com/news/local/la-me-state-budget-20100504,0,680610.story (“Plunge in state revenue dashes hopes of an easy budget fix“)
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I think you’re right–we are either in a Depression or heading for one but I question whether Republicans taking the House and Senate in 2010 will change the course of history. It may stop this radical, extremist, agenda that has been foisted upon us over the last year and a half by this Cabal of left wing terrorists squatting in Washington DC but do the Republicans really have the gumption to take these deficits head on?
The Republicans expanded Medicare with their drug prescription plan. They retreated on Social Security reform. It’s going to take principled men and woman to do the right thing, and besides people like Paul Ryan, Eric Cantor, or Ron Paul (I’m not a libertarian but I respect the man) I think the rest of the party is more concerned with power than real results.
I stopped being a Republican in 2006 because I was so fed up with them. Now, like a cheating wife, they want me to forgive and forget? I’ll vote for them because the socialists in power are far more dangerous and destructive than I could have ever believed but I don’t know that The Republicans will be making history because that would require the party to grow a pair.
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Thanks, Ian, for your comments.
In many ways, I share your views. I began as a Democrat, then became a Republican, and have been an Independent for many years. The Republicans are “Neanderthals,” but by far the lesser of two “evils.”
If they have any guts, they will stop the radical agenda, but curtailing deficits much less slowing the economic tsunami are beyond the powers of mere mortals. The tsunami will run its course, with much worse yet to come, unfortunately.
Your last sentence echoes my sentiments exactly. 🙂
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The Crash Of All Crashes
Arnaud de Borchgrave is one of the “deans” of Washington reporting, and his article is sobering beyond belief, but not surprising.
Among other things, he writes:
See http://www.upi.com/Top_News/Analysis/2010/05/07/Commentary-Fiscal-WMD/UPI-69801273233877/
Query who will buy American debt if that happens, and won’t a “domino effect” ensue?
Hold on tight. It will not be pretty!
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The UK: A Marriage Made In Hell?
Despite all of the temporary euphoria, the political match between the Conservatives and Liberal Democrats in the UK—and between David Cameron, the Tory leader, and Nick Clegg, his Lib Dem deputy—may prove to be a marriage of convenience that was fashioned in Hell. For openers, the philosophies of the Tories and Liberal Democrats are vastly different, not to mention the clash of egos that may know no bounds.
More fundamentally, the UK, Europe, America and the rest of the world are in the throes of what economic historians 20-40 years from now will describe as the “Great Depression II,” or by some similar name; and there is nothing that the Conservative-Liberal Democrat government can do to stop it. Like a tsunami in the oceans, Man is helpless to stem its destruction and massive human suffering.
Economists never saw 2008 coming, and former Federal Reserve Chairman Alan Greenspan never saw the housing crisis coming—as he testified before a congressional committee—so it is not surprising that they are being caught flat-footed now. Clearly, the Great Depression had fits and starts like this one. However, what is most serious is that it took World War II to get us out of that one.
The central banks of the world are essentially out of options, and the worst is yet to come. Hold on tight. It ain’t apt to be pretty during the balance of this decade. And global citizenry anger may be mind-boggling!
See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_… and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come and http://www.upi.com/Top_News/Analysis/2010/05/07/Commentary-Fiscal-WMD/UP… (“China’s economy will slow and possibly ‘crash’ within a year as the nation’s property bubble is set to burst”) and http://www.breitbart.com/article.php?id=CNG.0b1b3cc87552bf616f77d0ae461b404c.561&show_article=1
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Hold Cash!
I have believed for a long time:
See http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/; see also https://naegeleblog.wordpress.com/2010/05/16/will-the-eus-collapse-push-the-world-deeper-into-the-great-depression-ii and http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html
The Wall Street Journal has an article that quotes the investment advice of Seth Klarman who runs Baupost Group, a Boston-based investment firm with about $22 billion under management. He is described by the Journal as “a conservative value investor and one of the most highly regarded in the market,” and he believes:
See http://online.wsj.com/article/SB10001424052748703957904575252530841586358.html?mod=WSJ_hps_sections_personalfinance
The worst is yet to come!
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Kudos, Timothy, for providing a clear, impartial analysis of the situation. I’ve been worried since 2005. Didn’t vote for Obama, as it seemed to me he was a narcissistic liar, who had as his best accomplishment covering up a sketchy past, light on real accomplishments.
I’d like to read your take on: the impact of the CRA, especially as ramped up under Clinton, aided and abetted by ACORN banking protests- soliciting a ‘payoff’ if you will, to the progressive agenda’. Also, Summers, Rubin, and maybe Greenspan in the Clinton Admin ganging up on Brooksley Born who urged the regulation of derivatives trading. Lack of this legislation, coupled with the removal of Glass-Stegal, set the stage. The final plug was pulled when the Democrats swept into Congress- 2007 saw the removal of short-selling prohibitions and installation of mark to market. Like a game of Jenga, removal of these final blocks made the edifice crumble.
The entire financial calamity appears to me to be a culmination of several administrations ill-advised…or worse…policies. Mission accomplished.
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Thank you, Sharon, for your thoughtful comments.
Never forget that the lobbyists run Washington, and they do so throughout Democrat and Republican Administrations.
See, e.g., http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/
Also, with respect to Obama, pick up a copy of his book, “Dreams from My Father.” You may be shocked as I was. The “whole truth” will come out some day.
See, e.g., https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/
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More Signs Of Museums Being Hit Hard
See http://online.wsj.com/article/SB10001424052748703691804575254321564633624.html?mod=WSJ_newsreel_lifeStyle; see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-384
And the worst is yet to come economically—with museums, libraries, parks and other public services being devastated!
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Again, Cash Is King!
See http://www.cnbc.com/id/37259541
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Congress Does Not Know What It Is Doing
The highly-respected Rasmussen Reports has concluded:
See http://www.rasmussenreports.com/public_content/politics/general_politics/may_2010/72_are_not_confident_congress_knows_what_it_s_doing_when_it_comes_to_the_economy
It is a fact that most politicians have zero training in economics, and do not understand it, and have no appreciation for economic history. They are simply interested in getting elected and reelected, and wielding power while they have it.
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The Great Lie Of Europe
Writing in UK’s Telegraph, Christopher Booker says:
See http://www.telegraph.co.uk/comment/columnists/christopherbooker/7754100/The-euro-crisis-is-a-judgment-on-the-great-lie-of-Europe.html; see also https://naegeleblog.wordpress.com/2010/05/16/will-the-eus-collapse-push-the-world-deeper-into-the-great-depression-ii/
Sobering, very sobering, but not surprising—and consistent with what I have been writing.
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Here It Comes—Or Rather, This Is What It Looks Like To Be In The Beginning Throes Of The Great Depression II
A Washington Post article states:
See http://www.washingtonpost.com/wp-dyn/content/article/2010/05/23/AR2010052304170.html
Not “recession,” but the continuation of the Great Depression II.
The Post article adds:
. . .
Also, it is clear that the economist Nouriel “Dr. Doom” Roubini has gone “Hollywood” on us, and is full of himself. However, like Harry Houdini, whoever doubted that? 🙂
See, e.g., http://www.telegraph.co.uk/finance/economics/7756684/Nouriel-Roubini-said-said-the-bubble-would-burst-and-it-did.-So-what-next.html
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Is Gold The Next Bubble?
The Wall Street Journal has a fascinating article by Brett Arends, which is worth reading, and concludes:
See http://online.wsj.com/article/SB10001424052748704792104575264863069565780.html?mod=WSJ_hps_sections_personalfinance
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Museums Forced To Sell Off Collections
USA Today quotes Anne Ackerson, director of the Museum Association of New York, who “doesn’t expect museums to rebound from the effects of the recession for two years because so many states and cities have cut arts funding. ‘Museums,’ she says, ‘are lagging economic indicators.'”
See http://www.usatoday.com/news/nation/2010-05-23-sell-history_N.htm
Museums, libraries, universities and other educational institutions, parks and other public facilities need to brace themselves. The worst is yet to come. And no, this is not a “recession”!
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Is Europe Turning Japanese?
There is an article in the Wall Street Journal written by its Brussels bureau chief, Stephen Fidler, which is worthwhile reading. The author is charitable when he writes:
See http://blogs.wsj.com/brussels/2010/05/25/is-europe-turning-japanese/
Things will be much worse than that. He cites Adam Posen, a member of the Monetary Policy Committee of the Bank of England, as saying:
By the same token, the “Great Depression II”—which America, Europe and most of the global economies are in right now, and will be during the balance of this decade, if not a “generation”—is reminiscent of the Great Depression I, with a series of “green shoots” (or recoveries) followed or choked off by policy errors and other factors.
Now too, the American banking system is in bad shape and unwilling to lend, and this is true on a global scale.
The article refers to a worrying trend of corporate and household balance sheet adjustments that, were they to last, “would represent a lack of faith in future U.K. economic prospects.” This lack of faith is not unique to the UK. It is sweeping Europe and America as well.
The highly-respected Rasmussen Reports daily Presidential Tracking Poll for May 25, 2010 shows that 24 percent of the nation’s voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-four percent Strongly Disapprove, giving Obama a Presidential Approval Index rating of -20.
Overall, 42 percent of voters say they at least somewhat approve of the president’s performance. That is the lowest level of approval yet measured for this president. Fifty-six percent now disapprove of his performance.
Also, support for repeal of his new national health care plan has jumped to its highest level ever. A new Rasmussen Reports national telephone survey finds that 63 percent of U.S. voters now favor repeal of the plan passed by congressional Democrats and signed into law by President Obama in March.
Prior to today, weekly polling had shown support for repeal ranging from 54 to 58 percent. Currently, just 32 percent oppose repeal.
America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times—as the Great Depression II continues to take its toll.
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What Would Reagan Do?
The Wall Street Journal has a fine article by David Malpass entitled, “The Panic, Round Two: What Would Reagan Do?” that is worth reading.
See http://www.naegele.com/documents/DavidMalpass-ThePanicRoundTwo-WhatWouldReaganDo.pdf
Yes, the panics are upon us—and there will be many of them globally—as America and the world sink deeper into what economic historians will describe 20-40 years from now as the “Great Depression II,” or by some similar label.
See, e.g., https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii
David Malpass is right in asking what would Reagan do, because the former president—certainly at the top of his game—might have figured out a way of getting us out of this mess, or of somehow making it less onerous than it will be. After all, he was a creature of the “Great Depression I,” and he learned its lessons well.
Unemployment peaked at 10.8 percent in December 1982, two years after his election—which was higher than any time since the first Great Depression—then dropped during the rest of Reagan’s presidency. But facts and figures do not tell the whole story of the Reagan presidency by any means: his personality and leadership qualities, and his ability to instill hope and optimism.
See, e.g., http://www.usnews.com/money/business-economy/articles/2009/08/27/is-unemployment-the-worst-since-the-great-depression.html
One must remember too that Paul Volcker was Chairman of the Fed, and he contributed mightily to keeping the economy on an even keel, and preventing runaway inflation. He was followed by Alan Greenspan, who never saw the Housing Crisis coming, and he testified to that before a House committee. Or, as Giulio Tremonti, Italy’s Minister of Economy and Finance, put it: “Greenspan was considered a master. Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most.” That speaks volumes, in terms of the human suffering domestically and globally, which Greenspan launched.
See http://www.americanbanker.com/issues/173_212/-365185-1.html; see also http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/
Implicit in Malpass’ fine article is the fact that Congress does not know what it is doing. Most politicians have zero training in economics, and do not understand it, and have no appreciation for economic history. They are simply interested in getting elected and reelected, and wielding power while they have it.
Malpass adds correctly:
However, Ronald Reagan’s leadership was broader and more important than that. He instilled confidence and optimism when there had been little or none, across the board (e.g., national security, economics).
See also https://naegeleblog.wordpress.com/2010/03/20/ronald-reagan-and-john-f-kennedy-a-question-of-character/
Sadly, Reagan’s leadership and vision are lacking now, as wrong-headed politicians lead us father down the path toward financial ruin, dashing the hopes and dreams of Americans and their counterparts worldwide. However, the days of reckoning are upon us. America and other nations are in uncharted waters; and their politicians may face backlashes from disillusioned and angry constituents that are unprecedented in modern times. We are beginning to see that now.
Also, Barack Obama has zero experience with respect to economic and a plethora of other issues. Americans should read (or reread) his “Dreams from My Father,” and realize that he is one of the most “uneducated” presidents in American history, in terms of real-world issues. This is not said by way of condemnation, but as a fact.
See, e.g., https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/
At best he is an academic. Perhaps more importantly, he and his advisers are “a bunch of academics” and ideologues, who have pre-set ideas about how the world should function, which do not square with reality. In many ways, they are the most ill-equipped individuals to confront and understand the “Great Depression II,” much get us through it.
I cannot think of another group that is so ill-equipped to deal with critical issues facing America and the world (e.g., two wars, the risk of any EMP or other devastating attack, North Korea, China, Russia, Iran, the Great Depression II). Fortunately, no calamities hit the Clinton years. We are not and will not be so lucky this time around.
Lastly, Ronald Reagan was blessed—yes, blessed by God. He had innate wisdom and a reservoir of faith, confidence, optimism and good will, and collective life experiences that allowed him to do just the right thing at the right time. Clearly, the fall of the “Evil Empire” was a shining achievement, but there were many many others too.
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U.S. Debt Tops $13 Trillion, Or Almost $118,000 Per Taxpayer!
Also, U.S. Debt to GDP is more than 90 percent.
See http://www.usdebtclock.org/
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Barack Obama: The Lowest Approval Rating For This President
The highly-respected Rasmussen polling organization is reporting:
See http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll (emphasis added).
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An Anatomy Of Bank Failures
Having purchased seven failing financial institutions for clients, and having worked on plans to establish California’s Department of Financial Institutions, the following article in the Los Angeles Times is worth reading. It describes what really happens when failing financial institutions are seized, and how much it costs the government.
See http://www.latimes.com/business/la-fi-bank-failure-20100527-79,0,1275127,full.story; see also http://www.naegele.com/naegele_resume.html
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U.S. Money Supply Contracts At 1930s’ Pace
The UK Telegraph’s Ambrose Evans-Pritchard has an article about “[t]he M3 money supply in the United States . . . contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.” It is sobering, and worth reading.
See http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html
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Las Vegas Hotel King Steve Wynn Lashes Out At Washington
Hotel magnate Wynn says Americans are afraid, and of course he is correct:
In a fascinating article, the king of “sin city” added:
It is worthwhile watching his “no punches pulled” video comments as well.
See http://www.cnbc.com/id/37392344
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Morris: Obama Doesn’t Have A Clue
Dick Morris has a new article that is worth reading, in which he states:
See http://thehill.com/opinion/columnists/dick-morris/100913-obama-doesnt-have-a-clue
This should not come as a surprise to anyone. He was a “community organizer,” and not a very good one. Read (or reread) his book, “Dreams from My Father.” He has no training in economics or any business experience, nor any experience with respect to national security matters. Like those on Capitol Hill, he is a professional politician who learned how to get elected, and to wield power for good or evil. Nothing more.
See, e.g., https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist/
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The Economy Will Collapse In 2011
This is the prediction of Arthur Laffer, of “Laffer Curve” fame. His article in the Wall Street Journal is worth reading and pondering.
See http://online.wsj.com/article/SB10001424052748704113504575264513748386610.html
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The Shadow Economy
USA Today has an article that discusses the so-called “shadow economy”—involving “a growing number of Americans who need bankruptcy protection but cannot get any benefit from it or simply cannot afford to file”—which is worth reading.
See http://www.usatoday.com/money/economy/2010-06-09-bankruptcy09_CV_N.htm?loc=interstitialskip
These problems will only get worse, lots worse, as America and other countries slide farther into the “Great Depression II.”
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Governments Out Of Options?
As indicated above, and in comments by Naoyuki Shinohara, the IMF’s deputy managing director—who was the top currency official in Japan—”a key concern is that the room for continued policy support has become much more limited and has, in some cases, been exhausted.” In other words, the central banks and governments of the world are out of options, or close, as the “Great Depression II” continues to take its toll.
See http://www.telegraph.co.uk/finance/economics/7812903/Risks-to-global-economy-have-risen-significantly-top-IMF-official-warns.html
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EU Chief Warns Of Nightmare Vision For Europe
As the Daily Mail reports:
See http://www.dailymail.co.uk/news/worldnews/article-1286480/EU-chief-warns-democracy-disappear-Greece-Spain-Portugal.html (emphasis added)
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The Great Depression Repeated
Banks and other financial institutions are not making loans except to the most creditworthy customers, which is a replay of the “Great Depression I.”
Long-time customers are being told that their loans and lines of credit are not being renewed; and bank and other financial institution employees are being rewarded for getting loans off the books, instead of creating new loans.
The ripple effects of this will be devastating.
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City To Lay Off All Employees, Dismantle Police Department
The city of Maywood, California will lay off all city employees and begin contracting police services with the Los Angeles County Sheriff’s Department effective July 1, the Los Angeles Times is reporting. This is a sign of things to come around the U.S., as the revenues of more and more small cities fall, and they are unable to afford essential services (e.g., parks, libraries, law enforcement).
See http://latimesblogs.latimes.com/lanow/2010/06/sheriffs-dept-to-patrol-maywood-while-city-employees-now-face-lay-offs.html
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Greece Puts Its Islands Up For Sale To Save Economy
In a desperate attempt to repay its debts, and because it cannot find the monies to develop the infrastructure on the islands, Greece is preparing to sell—or offering long-term leases on—some of its 6,000 islands. Potential investors are Russians and Chinese, according to the UK’s Guardian.
See http://www.guardian.co.uk/world/2010/jun/24/greece-islands-sale-save-economy
In actuality, such austerity moves by Greece may be too little too late, especially as the “Great Depression II” continues to take hold globally during the balance of this decade—at the very least. Also, the amount of money raised might be a pittance when compared to Greece’s staggering debt.
The article adds:
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The Third Depression
Paul Krugman has an article in the New York Times, in which he states:
See http://www.nytimes.com/2010/06/28/opinion/28krugman.html
This conclusion is consistent with the thesis of my article above; namely, we are in the midst of the “Great Depression II”—certainly in terms of the 20th and 21st Centuries—which will continue to unfold during at least the balance of this decade.
Krugman adds:
Amen, in spades!
Where I differ with Krugman is that his solution is more Keynesian governmental spending, with the goal of spending our way to prosperity. As stated in my article above—and in my other recent articles and discussions—the economic tsunami that Alan Greenspan released has been rolling worldwide, with no end in sight. At most, government policies can affect it at the margins, because it will run its course, essentially oblivious to government intervention. Where and when it stops, no one knows. Originally I predicted the 2017-2019 time frame, but it may take longer than that because of misguided and wasteful government “tinkering.”
See, e.g., http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/
Lastly, the Wall Street Journal has an editorial entitled, “The Keynesian Dead End,” which concludes that spending our way to prosperity is going out of style—and essentially rebuts the solutions that Krugman recommends:
The Journal adds:
See http://online.wsj.com/article/SB10001424052748703615104575328981319857618.html?mod=WSJ_hp_mostpop_read (emphasis added)
Thus, economic “thinkers” continue to flail around, while the Great Depression II takes its toll, in terms of horrendous human suffering worldwide, with no end in sight.
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Ireland Collapses Economically
The once-proud “Celtic Tiger” of Europe is no longer growling, much less purring. It is in the throes of an economic collapse, not unlike Greece, which will become far worse before the end of this decade. The twin austerity measures of cutting public spending and raising taxes are a recipe for disaster, just as they were during the first “Great Depression” of the 20th and 21st Centuries.
Any notion that Ireland is in a “recession” is naive. Twenty-to-forty years from now, economic historians will describe this period of the tiny island nation’s history as a depression—assuming that any recovery whatsoever will have taken place by then.
See http://www.nytimes.com/2010/06/29/business/global/29austerity.html?hp=&adxnnl=1&adxnnlx=1277809673-pHFkNARs14VJW6SFrmTShg&pagewanted=all (“The budget went from surpluses in 2006 and 2007 to a staggering deficit of 14.3 percent of gross domestic product last year—worse than Greece“); see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-616
The New York Times’ article adds:
As I noted in an earlier article:
See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html; see also https://naegeleblog.wordpress.com/2010/05/16/will-the-eus-collapse-push-the-world-deeper-into-the-great-depression-ii/
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The Death Of Community Banks
The Wall Street Journal has a fine article about the death throes of small community banks, and how they are being regulated out of existence, which is worth reading.
See http://online.wsj.com/article/SB10001424052748703964104575334611037072320.html?mod=WSJ_Opinion_LEADTop
Having purchased failing savings and loans for our banking and non-banking clients some 20 years ago during the midst of the “Savings & Loan Crisis,” and having watched many essentially-healthy financial institutions be regulated out of existence, history is repeating itself with a vengeance.
Then as now, regulators can mark loans to market when the face amount of such loans exceeds the value of the underlying collateral, and destroy financial institutions overnight. Also, the management of such entities and key borrowers may be held personally liable, and sued—for example, to recover the proceeds of management’s “Directors and Officers Liability Insurance” (or “D&O”) coverage, and tap the policy limits.
For the most part, so-called “community banks” are nothing more than savings and loans or small commercial banks that survived the last blood bath, but they will not be so lucky this time around. As the article correctly points out in part, creditworthy customers are being told that their lines of credit are not being renewed; new loans are not being made; in some cases, loans are being called even though customers are current on their payments; and serious efforts are being taken to shrink balance sheets in the hopes that this will “appease” financial institution regulators, who will not be influenced at all in many cases.
Banks and other financial institutions hold staggering amounts of “toxic assets,” which if marked to market would make them insolvent or headed in that direction. The regulators are looking over the shoulders of management; and the resulting credit contraction is reminiscent of the “Great Depression” of the 1930s. However, much much worse is yet to come. Some 20-40 years from now, economic historians will describe the end of the last decade and this entire decade as the “Great Depression II,” or by something similar term.
Given the risks involved why would anyone go into banking as an investor or member of management, who might be wiped out or sued, respectively? Congress and the White House are putting enormous pressures on the financial institution regulators to insure the safety and soundness of the entities they regulate; and in turn, some regulators are prone to regulate risk taking “out of existence,” and thereby produce the results that the author describes. But again, it will only get worse. The handwriting is on the wall, and the chickens are coming home to roost.
Hold on tight. It isn’t apt to be pretty; and we have a long way to go until the end of this decade. What is happening here in the United States is happening in Europe and elsewhere in the world; and the snowballing effect is likely to accelerate. The economic tsunami that Alan Greenspan unleashed continues to roll worldwide, with devastating effects. As Giulio Tremonti, Italy’s Minister of Economy and Finance, has said: “Greenspan was considered a master. Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most.” That speaks volumes.
See, e.g., https://naegeleblog.wordpress.com/2010/04/23/is-financial-reform-simply-washingtons-latest-boondoggle and https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii
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The Failure Of Obama’s Economic Programs
The Wall Street Journal has a fine article entitled, “Why Obamanomics Has Failed.” which is worth reading.
See http://online.wsj.com/article/SB10001424052748704629804575325233508651458.html?mod=WSJ_hps_MIDDLEFifthNews
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Two More Articles About The Depression
Much worse is yet to come!
See http://www.forbes.com/2010/06/30/greater-depression-still-ahead-personal-finance-economy_print.html and http://www.usatoday.com/money/perfi/columnist/waggon/2010-07-02-investing02_ST_N.htm?csp=hf
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With The US Trapped In Depression, This Really Is Starting To Feel Like 1932
This is the title of a new article by Ambrose Evans-Pritchard in the UK’s Telegraph, which is worth reading. In it, he states:
See http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html; see also http://www.cnbc.com/id/38092759 (“Dow Repeats Great Depression Pattern: Charts”) and http://www.lvrj.com/opinion/barack-obama–the-great-jobs-killer-97758294.html (“Barack Obama: The great jobs killer”)
Barack Obama is this American generation’s Herbert Hoover—and so far we are only witnessing the beginning throes of the disastrous consequences of the man and his presidency.
See, e.g., https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama and https://naegeleblog.wordpress.com/2010/01/19/emp-attack-only-30-million-americans-survive and https://naegeleblog.wordpress.com/2010/01/01/barack-obama-america%E2%80%99s-second-emperor and https://naegeleblog.wordpress.com/2009/12/26/obama-in-afghanistan-doomed-from-the-start and https://naegeleblog.wordpress.com/2009/12/05/is-barack-obama-a-racist
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The Obama Depression
Political pundit and former Bill Clinton adviser, Dick Morris, has penned a hard-hitting article in which he states:
See http://www.dickmorris.com/blog/2010/07/07/economic-numbers-hurting-obama/#more-1141 ; see also http://www.dickmorris.com/blog/2010/07/07/the-left-wing-spiral-trap/#more-1143
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The Coming Deflation
As the Wall Street Journal states:
See http://online.wsj.com/article/SB10001424052748703787904575403204077239996.html?mod=WSJ_hps_LEFTWhatsNews
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Very interesting article Timothy. Thanks for keeping us aware of what could be a dismal forecast….
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48% Blame Obama For Bad Economy, 47% Blame Bush
For the first time since Barack Obama assumed the presidency, voters see his policies as equally or more to blame than those of George W. Bush for the nation’s economic problems.
See http://www.rasmussenreports.com/public_content/politics/obama_administration/august_2010/48_blame_obama_for_bad_economy_47_blame_bush
Despite the inherent wisdom of the American people, they are at least partially wrong with respect to this issue. Former Federal Reserve Chairman Alan Greenspan is to blame for what is happening economically, both in the United States and globally. The tsunami that he unleashed cannot be restrained by government policies, which at most affect it at the margins. Such policies can and are making things worse (e.g., the massive deficits that Obama has created).
As Italy’s Minister of Economy and Finance, Giulio Tremonti, has said:
That speaks volumes.
See http://www.americanbanker.com/issues/173_212/-365185-1.html; see also http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come/
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Obama Celebrates Birthday Alone In U.S., While Wife Jets Off To Spain On Air Force Two
As the Daily Mail states:
See, e.g., http://www.dailymail.co.uk/news/worldnews/article-1300240/Michelle-Obama-jets-Marbella-5-star-holiday-daughter-Sasha.html
To what extent are the American taxpayers footing her bills, in this time of economic chaos and uncertainty for so many families?
See, e.g., http://www.nydailynews.com/opinions/2010/08/04/2010-08-04_material_girl_michelle_obama_is_a_modernday_marie_antoinette_on_a_glitzy_spanish.html (“Material girl Michelle Obama is a modern-day Marie Antoinette on a glitzy Spanish vacation“) and http://www.dailymail.co.uk/news/worldnews/article-1300604/Michelle-Obama-modern-day-Marie-Antoinette-First-Lady-slammed-lavish-Marbella-holiday.html and http://www.dailymail.co.uk/news/worldnews/article-1300852/Spanish-police-close-public-beach-Michelle-Obamas-250k-Spanish-holiday.html; see also https://naegeleblog.wordpress.com/2010/01/20/the-end-of-barack-obama/#comment-659 and http://www.dailymail.co.uk/news/worldnews/article-1301302/Michelle-Obama-lunches-Spains-royal-family-backlash-extravagant-holiday-continues-home.html and http://www.dickmorris.com/blog/2010/08/11/michelles-travels-will-trigger-backlash/#more-1250
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The Collapse Of State And Local Governments
Political pundit and former BIll Clinton adviser, Dick Morris, has a new article about the collapse of state governments, which is worth reading. He only neglected to include local governments in his discussion.
As stated above, libraries will be closed, along with state and local parks; law enforcement will be cut back or become nonexistent; and prisoners will be released, as contemplated in California (e.g., the number of 40,000 prisoners is the target), and crime will escalate as the “Great Depression II” continues to wreak havoc in the United States and other countries.
See http://www.dickmorris.com/blog/2010/08/05/the-coming-catastrophe-state-governments/#more-1239
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While The EU Might Survive What’s Coming, Many European Governments May Not
There is an interesting article on this subject in Forbes, which is worth reading.
See http://www.forbes.com/2010/08/11/global-economy-finance-europe-opinions-columnists-michael-moran.html?partner=daily_newsletter
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Falling Real Estate Prices . . . And The Worst Is Yet To Come!
The Wall Street Journal is reporting on the worst and best markets at present, in an article that is worth reading. However, the worst is yet to come in the United States and other countries.
See http://online.wsj.com/article/SB10001424052748703791804575439871207245044.html?mod=WSJ_newsreel_personalFinance
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Finally, A Sense Of Reality: We Are In The “Great Depression II”!
CNBC is reporting:
See http://www.cnbc.com/id/38831550
This echoes what I have written for a long time now—in the article above, and in two earlier articles and an interview that I gave.
See http://www.americanbanker.com/issues/173_212/-365185-1.html and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan%E2%80%99s-legacy-more-suffering-to-come/
Also, it is predicted that the Dow will fall to 5,000:
See http://www.cnbc.com/id/38826988
And housing sales are plunging.
See, e.g. , http://online.wsj.com/article/SB10001424052748703447004575449352676306326.html?mod=WSJ_hp_mostpop_read and http://www.naegele.com/documents/TheHousingMirage-WSJ.com.pdf and http://www.usatoday.com/money/economy/housing/2010-08-25-new-home-sales-prices_N.htm?loc=interstitialskip
A New York Times article speaks in terms of “reinvigorated concerns that the United States risks sinking into the sort of economic stagnation that captured Japan during its so-called Lost Decade in the 1990s.”
It adds:
See http://www.nytimes.com/2010/08/29/weekinreview/29goodman.html?scp=1&sq=Policy%20Options%20Dwindle%20as%20Economic%20Fears%20Grow&st=cse (emphasis added)
Lastly, as mentioned above, China’s banking system is showing “disturbing, U.S.-style cracks,” which may entail a full-blown crash of its real estate markets and its economy.
See http://www.usatoday.com/money/world/2010-08-30-chinesebanks30_ST_N.htm and https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-418
Hold on tight!
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More Than 400 U.S. Banks Will fail, Which Is A Conservative Estimate
Economist Nouriel Roubini is predicting that more than 400 U.S. banks will fail, which I believe is conservative.
See, e.g., http://www.cnbc.com/id/38986777
In talking with community bankers, they are not making new loans or extending existing lines of credit even to long-term, totally-creditworthy customers. They are shrinking their balance sheets and hunkering down. No amount of government prodding is apt to change that (e.g., Obama says one thing, but the federal financial institution regulators are interested in safety and soundness only, and rightly so).
As the Great Depression II continues to gather momentum in the United States and abroad—like a tsunami in the vast oceans—governments will not have any positive effect, but will only make things worse. The economic tsunami will run its course, probably toward the end of this decade; and the carnage globally between now and then will certainly rival the last Great Depression.
U.S. real estate prices will continue to plummet, despite occasional “green shoots” that realtors will use to tout their hopes and fondest dreams—as more and more are forced to leave the industry—with the “bottom” being reached perhaps in five years or so. This will create even more disastrous problems for banks and other financial institutions, and a new wave of foreclosures, which is why Roubini’s predictions are likely to prove very conservative.
Banks should be allowed to fail, and they are. Homeowners who were encouraged to buy homes that they could not afford will lose them too. This is how free markets and market economies work. Only when market discipline is restored will a state of equilibrium be reached. Between now and then, it is apt to be very painful in the U.S. and abroad.
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Gangster Government!
The Wall Street Journal has an editorial entitled, “The Obama Economy,” which is subtitled appropriately enough, “How trillions in fiscal and monetary stimulus produced a 1.6% recovery.”
More importantly, it states:
See http://online.wsj.com/article/SB10001424052748703444804575071281687927918.html?mod=WSJ_Opinion_LEADTop
Amen! And the symmetry with respect to Lyndon Johnson, and the fact that he could not run for reelection in 1968, is worth noting. Obama is sinking farther into the “Great Depression II” and the Afghan “tar,” both of which are likely to doom his presidency and foreclose his reelection chances in 2012
See, e.g., https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/ and https://naegeleblog.wordpress.com/2009/12/26/obama-in-afghanistan-doomed-from-the-start/
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Great posts and overall blog – nice to see some truth injected into the conversations.
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Thank you, Krisztian, for your comments.
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Homeownership Is A Cruel Myth Brought To You By Realtors And Homebuilders
The Wall Street Journal has an article by Brett Arends entitled, “10 Reasons To Buy a Home.”
See http://online.wsj.com/article/SB10001424052748703376504575492023471133674.html?mod=WSJ_hps_sections_personalfinance
Generally speaking, Arends does a fine job of writing and analyzing issues. However, this article is pure propaganda, poppycock, and unabashed cheerleading for homeownership, which is offensive. Indeed, it might have been written for him at the headquarters of the realtors and/or the homebuilders. Apparently he did not read a companion article about the same subject that appears in the Journal.
See http://online.wsj.com/article/SB10001424052748704652104575494000535866666.html?mod=WSJ_hps_sections_news (“Allure of Home Ownership Dims, Fannie Mae Survey Shows“)
Whatever deals can be had today will be much much better and sweeter in about five years. The house you buy today, with a hefty mortgage, may be “under water” tomorrow. Hence, do not buy. Arends is wrong, dead wrong. Also, by buying at today’s still inflated prices, it is a good bet that whatever mortgage you get—albeit at a good rate of interest—will exceed the value of your house in the not-too-distant future, so it does not made sound economic sense to gamble like that. It is not an “investment”—it is a crapshoot.
Tax breaks from mortgage payments will not make any financial sense if you lose your job, or your earnings fall dramatically. Again, the “joys” of homeownership dissipate fast when you realize fully that the lender owns the structure; you don’t. You are simply a renter by another name: “owner.” Also, if deflation occurs instead of inflation, as Arends suggests, it is time to sit with cash, not with the Albatross of homeownership around your neck.
Perhaps Arends’ most specious comment is that homeownership is forced saving. Just ask those who have lost their homes already to foreclosure how they feel about this one. It was fraud sold to them on a platter, by realtors and homebuilders alike; and regrettably Arends is doing the same thing with this article. The housing inventory of unsold homes will keep on rising, and may not peak for about five years.
Put succinctly, the realtors and homebuilders have been pushing the myth of homeownership for decades now, and the chickens are coming home to roost. Their respective industries are being decimated, and far worse is yet to come. My cousin is a realtor, and he told me sometime ago that four out of five realtors would be gone, which I believe is a conservative estimate.
The United States is in the midst of the “Great Depression II,” which economic historians will describe as such (or by using similar terms) 20-40 years from now. It will not run its course until the end of this decade in all likelihood; the carnage and suffering in human terms are apt to be horrific; the economic bottom may not be reached for another five years or so; and we are not even close to the bottom of housing prices. “Cash is king,” and those who have it and “bottom feed” when the time is right will be rewarded handsomely. Until then, it is best to sit on the sidelines and watch . . . and wait.
Renters have much more flexibility in terms of being able to move as job changes take place. Also, they are not burdened by the costs of property taxes, endless repairs . . . and the list goes on and on. Homeownership is a luxury and a burden and a myth. Your lender is really the owner, while you are simply a “slave” to the mortgage. Wake up, Americans, and say no to the propaganda spewed by the realtors and homebuilders, who are like used car salesmen—they do not have your best interests in mind.
See, e.g., https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii and http://www.philstockworld.com/2009/10/11/greenspan’s-legacy-more-suffering-to-come
The Wall Street Journal has a good article that contains tips about how renters can protect themselves against getting scammed in these difficult economic times, which is worth reading too.
See http://online.wsj.com/article/SB10001424052748703440604575496004249195326.html?mod=WSJ_hps_sections_realestate
However, perhaps most sobering is the fact that an “estimated 40% of American homeowners [will have] mortgages in excess of the value of their homes.” I believe this prediction is still very conservative, and that things will get a whole lot worse than this. In an excellent Wall Street Journal article, U.S. News & World Report’s Mort Zuckerman adds:
See, e.g., http://www.naegele.com/documents/MortimerZuckerman-TheRecessionandtheHousingDrag.pdf
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You get a ” Smilin’ Jack Sez ” rating of five stars in our theme of the day
” TELLING THE TRUTH “. Again, if other reports were as accurate as yours, we wouldn’t be in up to our necks in debt because of the present administration and his hoodlums…up to our ankles maybe, but most everyone will agree that we are in a nose-dive like you say, and it isn’t being reported by most of the media. Keep up the excellent posts…we need more like you.
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“Recession Ended In June 2009”
This is the title of a Wall Street Journal article, which quotes the National Bureau of Economic Research—”the unofficial arbiter of the start and end dates of a recession”—as having determined that the “recession” began in December of 2007 and ended in June of 2009.
The Journal added:
See http://blogs.wsj.com/economics/2010/09/20/nber-recession-ended-in-june-2009/
There is one thing for certain with respect to economists: they are almost always wrong in predicting the future, and often wrong in assessing the past as well. They make weathermen (and women) look like geniuses by comparison.
They never saw the “Great Depression II” coming, and they do not have the foggiest notion that we are in it now. At best, 20-40 years from now, economic historians may describe it as such (or by some similar name), after a decade of carnage and unfathomable human suffering—much like the first Great Depression, where “green shoots” appeared from time to time too.
And the economists’ hero and “champion,” former Federal Reserve Chairman Alan Greenspan—who is responsible for what Americans and their counterparts in other countries are going through and will experience in the future—testified before a House Committee that he never saw the housing crisis coming. As I have written before:
See http://www.americanbanker.com/issues/173_212/-365185-1.html; see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii and http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html and http://www.philstockworld.com/2009/10/11/greenspan%E2%80%99s-legacy-more-suffering-to-come/
Greenspan should be ostracized and consigned to oblivion, not revered by anyone. He is responsible for the enormous suffering that Americans and their counterparts abroad have been going through, which will get even worse between now and the end of this decade.
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He’s not revered? He comes out and says the tax cuts shouldn’t be extended and the left jump around saying see, they shouldn’t
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IMF Admits The West Is Stuck In Near Depression
The IMF is conservative, and is reluctant to admit that the “Great Depression II” is upon us, for fear that panics may erode economies even more—which will happen when the economic realities are realized fully around the globe. An article on this subject in UK’s Telegraph is worth reading.
See http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8039789/IMF-admits-that-the-West-is-stuck-in-near-depression.html
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More Uncertainties In the U.S. Housing Market
The Wall Street Journal has a fine editorial about foreclosure moratoriums, which are apt to raise more havoc in the housing industry, and prevent housing prices from reaching a bottom.
See http://online.wsj.com/article/SB10001424052748704696304575538440995389092.html?mod=WSJ_Opinion_LEADTop; see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-745
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85 percent of Americans Are Angry Or Dissatisfied With Economy
A poll by ABC and Yahoo! News has found that eighty-five percent of Americans are either angry about the economy or at least dissatisfied with it, which is fueling the Republican advantage in the upcoming elections.
See http://abcnews.go.com/Politics/2010_Elections/abc-news-yahoo-pollanger-economy-fuels-republican/story?id=11826703
Because the economy is going to get far worse during the balance of this decade, this anger will grow even more dramatically. As I wrote a year and a half ago:
See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html
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“Green Shoots For Housing Mowed Down”—And Become Dead Weeds
The Wall Street Journal has an article by this title about the American housing market and its effect on the U.S. economy, which states:
See http://www.naegele.com/documents/GreenShootsforHousingMowedDown.pdf
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Is Europe Collapsing?
In an excellent UK Telegraph article by Ambrose Evans-Pritchard entitled, “Europe stumbles blindly towards its 1931 moment,” it is stated:
See http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8132689/Europe-stumbles-blindly-towards-its-1931-moment.html (emphasis added)
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How The Financial Crisis Happened
Peter Wallison of the Financial Crisis Inquiry Commission tells what he has learned, which is worthwhile watching.
See http://online.wsj.com/video/opinion-journal-how-the-crisis-happened/5E633276-1259-4233-A08D-8684ACFF106F.html
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“Shadow Inventory” Of 2.1 Million Homes Looms In U.S. Market
In a short but very important article, the Los Angeles Times is reporting:
See http://www.latimes.com/business/la-fi-shadow-inventory-20101123,0,6137482.story; see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-871
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A Dangerous Bubble Is Emerging In China
This is the title of a Forbes’ article, which adds:
See http://www.forbes.com/2010/11/23/china-tudou-youkou-video-bubble-leadership-managing-rein.html?partner=daily_newsletter; see also https://naegeleblog.wordpress.com/2009/12/16/the-great-depression-ii/#comment-418 (“China’s economy will slow and possibly ‘crash’ within a year as the nation’s property bubble is set to burst”) and http://www.usatoday.com/money/world/2010-08-30-chinesebanks30_ST_N.htm (China’s banking system is showing “disturbing, U.S.-style cracks,” which may entail a full-blown crash of its real estate markets and its economy)
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American Exceptionalism Endures, But . . .
In a thought-provoking article by U.S. News & World Report’s Mort Zuckerman entitled, “The Danger of a Global Double Dip Recession Is Real,” he writes:
See http://politics.usnews.com/opinion/mzuckerman/articles/2010/11/29/the-danger-of-a-global-double-dip-recession-is-real.html
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California On The Brink
The UK’s Economist has an article entitled, “The tide begins to turn”—and subtitled, “For once, California’s prospects seem better in the long term than in the short”—which is pure poppycock. The article is worth reading to see how out of touch some people are with respect to the economic realities that are sweeping the world, and will prevail at least through the balance of this decade.
See http://www.economist.com/node/17631115?story_id=17631115
First, I live in Southern California part of the year, where I was born and raised before working nonstop in Washington, D.C. for 21 years. I love the state; however, California’s prospects have not gotten better at all, and its long-term prognosis is even more dire. The state has diversity, great weather and natural beauty, which are perhaps unsurpassed anywhere else in the world. Yet, its parks, libraries, schools and other governmental facilities may be closed; law enforcement may undergo substantial cutbacks; state prisons may have to release significant numbers of inmates, as the Economist points out; and crime may skyrocket.
Second, the Democrats have driven the state into the ground, economically; and at its most crucial moment, they are in charge once again—like putting alcoholics in charge of running the local bar (or pub). Also, they are like Salmon trying to swim upstream, against a strong tide of anti-Obama and anti-Democrat sentiment nationally that was evident in the mid-term elections last month. Independents—of which I am one, and have been for more than 20 years, after having been a Democrat and then a Republican—joined with “disenchanted” Democrats and members of the Tea Party movement nationally to reject Barack Obama and his Democrats resoundingly.
Third, because California is bankrupt, and there is no way that its Democrats—who are responsible for the state’s problems—can sober up all of a sudden, and get “newfound religion,” they will turn to the federal government in Washington to bail them out. However, having worked on and with Capitol Hill for many years, the anti-California sentiment is strong even under the most positive economic conditions, which certainly do not exist today. The country as a whole is hurting, and this will be true for the balance of this decade; and the Republicans who control the House of Representatives are not going to bail out California and its Democrats. They will be made to suffer, at the very moment when the state is hurting most. They will pay dearly for their unbridled Liberalism, which is out of step with the rest of the nation.
Fourth, Barack Obama cannot help California, because any “big-dollar” rescue plans that the state truly needs will be blocked in Congress. Also, he is trying to save his own hide, at a time when we are witnessing his end politically. He will not be reelected in 2012, but he will do everything that he can between now and then in a desperate albeit futile effort to change that result. Helping California while the rest of the nation suffers is not in his best interests, nor does such help bode well for his long-term political survival; however, he may have to try to produce such aid, to keep California’s voters and electoral votes clearly in his column. While the fact that California bucked the national trend and elected Democrats to its statewide offices may be gratifying to him, it does not help him politically with the rest of the country. California is considered to be “la la land” to many Americans and members of Congress, and a land of nonstop “wackos” and “loonies,” and the mid-term election results simply reinforced such impressions.
Fifth, California does not have time to get its economic house in order. Time is not a friend of a state that is effectively on “life support.” Also, all of the political “fairness” reforms that theoretically might be become possible or present in the future—according to the Economist—will not make a tinker’s damn to a state economy that is bankrupt now and in the foreseeable future (e.g., during the balance of this decade). Indeed, economically, they are akin to rearranging deck chairs on the Titanic. With no realistic political or economic possibility of turning back the clock on the damage done to the state by the Democrats in the past, and essentially no chance that the congressional Republicans will bail out the state, the most dire predictions for the rest of this decade are likely to realized in California.
Hold on tight. It is apt to get very ugly for the state, Obama and his Democrats. The chickens are coming home to roost, which is happening in Europe too.
See, e.g., https://naegeleblog.wordpress.com/2010/12/03/barack-obama-is-a-lame-duck-president-who-will-not-be-reelected/ and https://naegeleblog.wordpress.com/2010/09/27/the-economic-tsunami-continues-its-relentless-and-unforgiving-advance-globally/
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U.S. Home Values To Drop By $1.7 Trillion This Year
As the “Great Depression II” continues to take its toll during the balance of this decade, Bloomberg is reporting:
See http://www.bloomberg.com/news/2010-12-09/homes-in-u-s-poised-to-lose-1-7-trillion-in-value-this-year-zillow-says.html
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The Great Depression II
Despite the “green shoots”—or promising economic news, which seems to be present on both sides of the Atlantic and elsewhere in the world—one must never forget that the same thing occurred during the Great Depression of the last century too. Yet, we did not emerge from that depression until the onset of World War II.
Vernon L. Smith, Nobel Laureate in Economics, and Steven Gjerstad wrote last year in the Wall Street Journal:
See http://online.wsj.com/article/SB123897612802791281.html
These words were sobering then, and they are sobering now. Indeed, the predictions that I made last year have been coming true as well:
See http://www.realclearpolitics.com/news/tms/politics/2009/Apr/08/euphoria_or_the_obama_depression_.html; see also http://www.philstockworld.com/2009/10/11/greenspan%E2%80%99s-legacy-more-suffering-to-come/
What happened in last month’s mid-term elections in the United States is just the beginning, with much more to come.
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What Remains Of An Undergraduate Degree In Economics
As indicated above and elsewhere in my writings, I believe:
Having read this, a Wall Street Journal contributor brought words by economist Joan Robinson to my attention, which are wise and worthwhile repeating:
See, e.g., http://en.wikiquote.org/wiki/Joan_Robinson; see also http://en.wikipedia.org/wiki/Joan_Robinson
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Will Obama Dig Us Out Of The Second Great Depression? Do You Believe In The Tooth Fairy?
In another scintillating and scorching column, Ann Coulter writes:
See http://www.humanevents.com/article.php?id=41419
Even more sobering than Ann Coulter’s often humorous insights is a Wall Street Journal editorial entitled, “After You, Mr. Ryan”—and subtitled, “The President says the deficit is the GOP’s problem now”—which states in pertinent part:
See http://online.wsj.com/article/SB10001424052748703293204576106293283157786.html?mod=WSJ_Opinion_LEADTop
Having let former House Speaker Nancy Pelosi and her fellow Democrats in Congress write the legislation that has put our great nation in its present financial bind, it is not surprising that Obama would once again abdicate his responsibilities and try to shift blame to others.
The Journal’s editorial continues:
Again, Obama is a far-Left, anti-war, raving narcissist who has been weakening this great nation at every turn since he became the president. He must be removed from office at the earliest date possible, before he can do even greater damage.
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Will The Last Economic “Crash” Be Overshadowed By What Is Coming?
Compare https://en.m.wikipedia.org/wiki/2007%E2%80%932008_financial_crisis (“2007–2008 financial crisis”) with
https://www.dailymail.co.uk/news/article-11841715/Turmoil-Silicon-Valley-Bank-triggers-market-panic.html (“Turmoil at Silicon Valley Bank triggers market panic: Four biggest US banks lose staggering $52 BILLION in valuation and Dow drops 540 points”); see also https://www.cnbc.com/2023/03/10/silicon-valley-bank-is-shut-down-by-regulators-fdic-to-protect-insured-deposits.html (“Silicon Valley Bank is shut down by regulators in biggest bank failure since global financial crisis”) and https://nypost.com/2023/03/10/silicon-valley-bank-meltdown-sparks-contagion-fears/ (“Silicon Valley Bank meltdown sparks contagion fears: ‘We found our Enron'”)
American banks are holding bonds and other assets that have fallen in value, and lack liquidity. If they were “marked-to-market,” the banks’ valuation might fall dramatically and precipitously, potentially causing panics and “runs” on such financial institutions.
Fewer and fewer Americans trust their government today; and many are holding their monies in accounts that are not insured by the federal government. The “Great Depression Ii” did not come in 2007/2008. Will it come soon . . . and be accompanied by World War III?
And so it begins . . .
See https://www.dailymail.co.uk/news/article-11845495/Silicon-Valley-Bank-branch-calls-NYPD-tech-investors-tried-pull-cash.html (“Silicon Valley Bank’s Manhattan branch calls COPS on investors trying to pull their cash out as Boston tech CEO with $10M in bank describes ‘worst 18 hours of my life’: Lender is SEIZED by regulators in largest US bank failure since Great Recession”)
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