by Michael Smith
The governor of the Bank of Spain recently issued a rather bleak but probably more realistic, assessment of the economic crisis, one that is probably than that of any other banking chief or politician, warning that the world faced a "total" financial meltdown not seen since the Great Depression.
"The lack of confidence is total," Miguel Angel Fernandez Ordonez said in an interview with the El Pais daily newspaper.
"The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.
"There is an almost total paralysis from which no-one is escaping," he said, adding that any recovery – penciled in by optimists for the end of 2009 and the start of 2010 – could be delayed if confidence is not restored.
He must be the only one finally willing to say what everyone, at least those of us on the lower end of the food chain, has been seeing for ages.
Ordonez recognized that falling oil prices and lower taxes could kick-start a faster-than-anticipated recovery, but warned that a deepening cycle of falling consumer demand, rising unemployment and an ongoing lending squeeze could not be ruled out.
"This is the worst financial crisis since the Great Depression" of 1929, he added.
Ordonez said the European Central Bank, of which he is a governing council member, would cut interest rates in January if inflation expectations went much below two percent.
"If, among other variables, we observe that inflation expectations go much below two percent, it's logical that we will lower rates."
Regarding the dire situation in the United States, Ordonez said he backed the decision by the US Federal Reserve to cut interest rates almost to zero in the face of profound deflation fears.
Central banks are seeking to jumpstart movements on crucial interbank money markets that froze after the US market for high-risk, or subprime mortgages collapsed in mid 2007, and locked tighter after the US investment bank Lehman Brothers declared bankruptcy in mid September.
Interbank markets are a key link in the chain which provides credit to businesses and households.
The problem is that nothing is going to kickstart anything. If those people really think that a few percent – 2.5% as in the case of Britain – of reduction in sales tax or such gimmicks will boost consumer confidence and they will run out to the stores to spend, spend and spend even some more then they need to leave office now, for they live even more in cloud cuckoo land than we, the people, have assumed for years. Most of those people do not appear to live on this planet anyway but on some parallel universe; that much is clear to all but the blindest person possible. And this blindness has nothing to do with eyesight but everything with vision.
The truth, as I see it, is, I am certain, that the recovery penciled in by the optimists, who seem to try and tell everyone that that is definitely the time that the economy will be back on track, may not just be delayed a little but a lot more, more like a number of years.
The realists, though some would call them pessimists, amongst the financial wizards and analysts, reckon that this economic downturn, as some still term this current depression, might make the Great Depression of 1929 and beyond look somewhat like a walk in the park.
If things really get that bad then we are all in for trouble for, while in the Great Depression people, neighbors, family and community looked out for everyone, in general, such safety net, if we might call it thus, no longer exists.
Families no longer are together, neighborhoods no longer function as they did then and as for community; what community. However, maybe, just maybe, this economic crisis might return us all to the real values of life.
We can but hope, I guess.
© M Smith (Veshengro), December 2008
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Showing posts with label depression. Show all posts
Showing posts with label depression. Show all posts
Wake-up, we are in a depression
by Michael Smith
We are being told again and again presently that we are not in a depression but this is just a recession and that it this recession is going to be over latest by next year. Sure, and on an airfield nearby a squadron of pigs is preparing for takeoff.
So how many jobs must be lost in how short of a period of time to make a depression? How big a loss of consumer spending to make a depression? How many business closkings to make a depression? How many other area's of the economy have to suffer sudden sever loss to make a depression?
According to some sources, such as Panjiva, a firm that analyzes information drawn from shipping manifests filed with US Customs, said the number of global suppliers actively serving the US market fell from 22,099 in July to just 6,262 in October, a decline of more than 70 per cent.
In China, government statistics estimate that at least 67,000 factories across all sectors closed during the first half of the year.
US November Unemployment figures state that November 2008 added 533,000 + to the 320,000 and 403,000 of October and September 2008 respectively. This make 1,256,000 jobs lost in the last three months up to December 2008.
Will the US lose 1 Million jobs per month in 2009? The way things are going at present this might just be the case.
Is that still not bad enough for them to acknowledge that we are in a depression and no longer just a recession, if the latter would not be bad enough already?
This all raises a lot of questions, does it not?
Why? Why so drastic a drop?
Why the sudden rush of business closing, layoffs?
It is hard to believe this all started with a so called "housing" bust. How could one facet of the economy affect all the rest? It would rather appear that the housing bust was one of the latests signs of this.
If the rush of closings, layoffs continue, many, millions will be homeless and penniless. What happens then?
Also, when I look at this with the eyes of someone who does not generally and necessarily accept everything just the way it may appear then I see that somehow things are strange and so not really add up.
Are they really going to tell us that no one noticed the hosing bubble and the bank problems and that it could not have been dealt with before? It could have been handles before but, it would appear that the collapse was something that was intended to happen.
I know that I may look at things strangely, as some of my readers, I am sure, will have noticed, but it makes sense. For, if you want to reorganize the world, so to speak, and where people work and how and where they live and how, you will have to tear down the fabric first to make things easier. And this is what they have done and are doing.
They allow the collapse, the intervene where it suits, and then... well, I guess we have to wait a little longer for that installment of this story.
But, look at it this way. If they can rearrange where the businesses are and where everyone lives – ideally, as they see it, near the factories and businesses – they can then control us all far better. Am I that far off? I think not.
Food for thought...
Let's just be careful outside, keep our powder dry and watch our six.
© M Smith (Veshengro), December 2008
<>
We are being told again and again presently that we are not in a depression but this is just a recession and that it this recession is going to be over latest by next year. Sure, and on an airfield nearby a squadron of pigs is preparing for takeoff.
So how many jobs must be lost in how short of a period of time to make a depression? How big a loss of consumer spending to make a depression? How many business closkings to make a depression? How many other area's of the economy have to suffer sudden sever loss to make a depression?
According to some sources, such as Panjiva, a firm that analyzes information drawn from shipping manifests filed with US Customs, said the number of global suppliers actively serving the US market fell from 22,099 in July to just 6,262 in October, a decline of more than 70 per cent.
In China, government statistics estimate that at least 67,000 factories across all sectors closed during the first half of the year.
US November Unemployment figures state that November 2008 added 533,000 + to the 320,000 and 403,000 of October and September 2008 respectively. This make 1,256,000 jobs lost in the last three months up to December 2008.
Will the US lose 1 Million jobs per month in 2009? The way things are going at present this might just be the case.
Is that still not bad enough for them to acknowledge that we are in a depression and no longer just a recession, if the latter would not be bad enough already?
This all raises a lot of questions, does it not?
Why? Why so drastic a drop?
Why the sudden rush of business closing, layoffs?
It is hard to believe this all started with a so called "housing" bust. How could one facet of the economy affect all the rest? It would rather appear that the housing bust was one of the latests signs of this.
If the rush of closings, layoffs continue, many, millions will be homeless and penniless. What happens then?
Also, when I look at this with the eyes of someone who does not generally and necessarily accept everything just the way it may appear then I see that somehow things are strange and so not really add up.
Are they really going to tell us that no one noticed the hosing bubble and the bank problems and that it could not have been dealt with before? It could have been handles before but, it would appear that the collapse was something that was intended to happen.
I know that I may look at things strangely, as some of my readers, I am sure, will have noticed, but it makes sense. For, if you want to reorganize the world, so to speak, and where people work and how and where they live and how, you will have to tear down the fabric first to make things easier. And this is what they have done and are doing.
They allow the collapse, the intervene where it suits, and then... well, I guess we have to wait a little longer for that installment of this story.
But, look at it this way. If they can rearrange where the businesses are and where everyone lives – ideally, as they see it, near the factories and businesses – they can then control us all far better. Am I that far off? I think not.
Food for thought...
Let's just be careful outside, keep our powder dry and watch our six.
© M Smith (Veshengro), December 2008
<>
Automakers bail out failed
by Michael Smith
Washington, DC., December 12, 2008: The bail out desired by the US automobile makers such as GM, Ford, and others did not go through in the US Senate and was rejected.
In the light of this the market has taken a nose dive on Friday, December 12, 2008, and it can only be expected to get worse. This aside from the fact that, if he automakers cannot get finance from other sources, we will be seeing a lot more job losses in the USA, and elsewhere, such as the UK, as this will be having a knock-on effect with the subsidiaries of those companies over this side of the pond, that is to say Ford and Vauxhall, in the UK, for instance.
That kind of direct knock-on effect aside there will be a far great knock-on effect hitting home as well, as an difficulties with the automakers will also affect those companies that supply products to them.
Very much like the toppling dominoes this spells real problems for the economy, and not just for the US economy or that of Britain.
On the other hand, had the US government given the automakers the desired billions then they would have to go and help out others as well.
In the UK and the USA a bailout of the banking system started this all and while the reason for the banking bailout may just about make sense in that a collapse of the banks, and especially more or less the entire banking system, would have crippled not just the economies of the respective countries and much more, other bailouts just do not make sense.
No government, theoretically, can go and say “we bail out the banks and the automakers, but no one else”. That certainly would not go down very well indeed and it is something that cannot be done. Otherwise the likes of Woolworth too, where in the UK alone 30,000 jobs are at stake, also needs to be bailed out and this would then mean each and every business affected would, automatically, qualify for government assistance. That, I do not think, could be done.
Hence, while it may be cruel, aside from the banks no other businesses should be able to even get as far as the automakers did get. There is no limitless supply of money there and we must not even contemplate the idea of printing more money to finance such efforts. It does not work.
As harsh as it may sound, many businesses just have not been very prudent when times were good and have been throwing money about left, right and center to CEOs and the likes. Those people were on salaries of millions and were given annual bonuses in the millions but nothing was invested really into the companies and nothing was laid up “for a rainy day”. While CEOs ended up with salaries in the millions and bonuses in the same region the poor workers were given a pittance compared to those salaries.
It is now, unfortunately, as always, the poor workers who are going to have to take the brunt for it will be them that end up losing their jobs while the fat cats have enough money stashed away to make a lovely retirement without having to worry. But then, what's new about that? Was is not always the same.
There is a depression coming, folks, and it is time to batten down the hatches. Prepare while you still have the funds to do so and, where you can, get a garden going to have at least some food that you can grow.
Also have a look at how you can protect you own assets and what skills you have that can get you some additional finances and skills that you can use for providing for yourself and your family in time of crisis. The crisis which appears to be just over the horizon.
The British PM Gordon Brown and his Chancellor Alistair Darling try telling the people – and the world – that this is only a little recession and that there is no full blown depression looming but to most of us common people, I am sure, it would appear that the dreaded “D”-word is just a short way away.
Be prepared, must be the motto and we must look at what we can do to aid ourselves. No government is going to come along to help. We are already now, in Britain, being prepared for the fact that there is going to be virtually no unemployment benefit going to be paid in due course and that everyone will have to do some slave labor to get the little bit of money that is currently called “job seeker's allowance”, the dole as it was once known as.
The Subotnik idea was spoken about some years back and that is also still in the offing in which every one is supposed to do some forced voluntary work “for the good of the community”. This is, no doubt, going to come to a community near all of us in due course. “Pre-warned is pre-armed”, as the motto of the old Royal Observer Corps used to go.
© M Smith (Veshengro), December 2008
<>
Washington, DC., December 12, 2008: The bail out desired by the US automobile makers such as GM, Ford, and others did not go through in the US Senate and was rejected.
In the light of this the market has taken a nose dive on Friday, December 12, 2008, and it can only be expected to get worse. This aside from the fact that, if he automakers cannot get finance from other sources, we will be seeing a lot more job losses in the USA, and elsewhere, such as the UK, as this will be having a knock-on effect with the subsidiaries of those companies over this side of the pond, that is to say Ford and Vauxhall, in the UK, for instance.
That kind of direct knock-on effect aside there will be a far great knock-on effect hitting home as well, as an difficulties with the automakers will also affect those companies that supply products to them.
Very much like the toppling dominoes this spells real problems for the economy, and not just for the US economy or that of Britain.
On the other hand, had the US government given the automakers the desired billions then they would have to go and help out others as well.
In the UK and the USA a bailout of the banking system started this all and while the reason for the banking bailout may just about make sense in that a collapse of the banks, and especially more or less the entire banking system, would have crippled not just the economies of the respective countries and much more, other bailouts just do not make sense.
No government, theoretically, can go and say “we bail out the banks and the automakers, but no one else”. That certainly would not go down very well indeed and it is something that cannot be done. Otherwise the likes of Woolworth too, where in the UK alone 30,000 jobs are at stake, also needs to be bailed out and this would then mean each and every business affected would, automatically, qualify for government assistance. That, I do not think, could be done.
Hence, while it may be cruel, aside from the banks no other businesses should be able to even get as far as the automakers did get. There is no limitless supply of money there and we must not even contemplate the idea of printing more money to finance such efforts. It does not work.
As harsh as it may sound, many businesses just have not been very prudent when times were good and have been throwing money about left, right and center to CEOs and the likes. Those people were on salaries of millions and were given annual bonuses in the millions but nothing was invested really into the companies and nothing was laid up “for a rainy day”. While CEOs ended up with salaries in the millions and bonuses in the same region the poor workers were given a pittance compared to those salaries.
It is now, unfortunately, as always, the poor workers who are going to have to take the brunt for it will be them that end up losing their jobs while the fat cats have enough money stashed away to make a lovely retirement without having to worry. But then, what's new about that? Was is not always the same.
There is a depression coming, folks, and it is time to batten down the hatches. Prepare while you still have the funds to do so and, where you can, get a garden going to have at least some food that you can grow.
Also have a look at how you can protect you own assets and what skills you have that can get you some additional finances and skills that you can use for providing for yourself and your family in time of crisis. The crisis which appears to be just over the horizon.
The British PM Gordon Brown and his Chancellor Alistair Darling try telling the people – and the world – that this is only a little recession and that there is no full blown depression looming but to most of us common people, I am sure, it would appear that the dreaded “D”-word is just a short way away.
Be prepared, must be the motto and we must look at what we can do to aid ourselves. No government is going to come along to help. We are already now, in Britain, being prepared for the fact that there is going to be virtually no unemployment benefit going to be paid in due course and that everyone will have to do some slave labor to get the little bit of money that is currently called “job seeker's allowance”, the dole as it was once known as.
The Subotnik idea was spoken about some years back and that is also still in the offing in which every one is supposed to do some forced voluntary work “for the good of the community”. This is, no doubt, going to come to a community near all of us in due course. “Pre-warned is pre-armed”, as the motto of the old Royal Observer Corps used to go.
© M Smith (Veshengro), December 2008
<>
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