Thursday, November 20, 2014


The title equation is simple enough and it is used by every nation even before nations became modern states. However, in a consumer economy like in the US, it is the leading component of its economic structure. In a nation of over 300 million, the birth rate and immigration ensures that 150,000 new jobs will be needed every month and this will lead to the formation of 1.8 million new households on a yearly basis. So, where does the US stand with the above projections?
NFC South
For those of you that do not follow American football, it is a conference within the league's two divisions. The leader of this group is the Atlanta Falcons, but this team has a losing record. This is the correlation to the US economy. The government, the Federal Reserve and the media all claim that the US has recovered from the 2008 financial crisis, but I disagree.
They Claim
The US dollar is surging. We will soon be oil independent. Job creation has lowered unemployment to 5.7% and housing prices have regained all their losses. In addition, the stock market is at all time highs, inflation is non-existent and the economy is growing. All these things are true, just like the Falcons are in first place except if you open the book not just read the title, then, many problems appear.
Global Economy
Three of the ten largest economies in the world are in recession. Japan is the world's third largest economy and it has returned to recession for the third time since 2008. Prime Minister Abe has instituted a national tax that caused the recession. This same tax is to increase next year, but he has suspended the timeline of this tax. His country has a debt ration of 250% to GDP. Not good.
Brazil is the world's seventh largest economy and it has been in recession for six months. Not only that, its oil giant, Petroleo Brasileriro is under investigation for fraud. Morgan Stanley will write off $8.1B due to this scandal and this will effect derivatives which could cause a negative financial chain reaction. Not good.
Italy has been in recession all this year. It is the world's ninth largest economy. The EU released its GDP for the recent quarter and it is only up .02%. Consider this view of this report. The number is an average which means, many members did not even get positive like Italy. Not good.
In addition, China is slowing and whatever numbers that they release cannot be trusted. Russia is on the brink of recession due to low oil prices. Israel just released a negative quarter, and all the oil economies will suffer with low energy prices. Not good.
Back To The NFC South
The US dollar is up among fiat currencies just like the Falcons are in first place. At .87 cents, it is not even worth its name, a dollar. Within the US economy there are 47 million people or one out of every seven on food stamps. The US government has spent a whopping $3.6T since 2009 on welfare and entitlement programs. This is unsustainable. It gets worse. A report released by the National Inflation Association(NIA)says the US is in debt over $100 trillion due to long-term obligations and the national deficit. This 590% to GDP. Unbelievable! Not good. In addition, child homelessness in the world's greatest economy is 2 million or one in 30 kids or at least one kid in every classroom. This is an increase of 8% year over year. Just like being in first place with a losing record.
Closer Look
How about car sales which have been growing every year since 2009, beginning with the clunker car program? Within the sales are car loans. Within the car loans are sales to sub-credit borrowers, who now are delinquent to the tune of 40%. New name but sounds like sub-prime loans which caused the financial crisis in housing. Delinquency is up 9% in the third quarter. Not good.
Fannie Mae's data on single family homes is down 43% in the third quarter for mortgage insurance and home purchases is down 15% with refinancing down 61%. Not good. Getting back to population, the total new construction is 1.009 million for 2014 and that is far short of the 1.8m needed just to maintain par. The government says unemployment is down, but long-term unemployment has not changed since 2008. In addition, the population has grown since that date, and yet, the workforce is down to its lowest level in 30 years. This is the only truth in unemployment and its not good.
Within housing there are still 5.31 million homes with negative equity, prices have not regained all there losses. The number is an average just like the EU says it has growth of .02%.
Finally, the Census says that the average income in the US is $52,000 a year. Again, the rich are skewing the total numbers because 52% of Americans make less than $30,000 a year and 72% make less than the 52K basis number. This is why we can't pay for our car loans or buy a house. Yes, we are in first place, but like the Falcons, it is with a losing record. We need a new political party that will protect jobs and industry. We cannot keep exporting our wealth, and claim new jobs and industries will form to make up for the losses. Those jobs come with a slogan, "Would you like fries with that?" In addition, to make a dollar a dollar again, we need to end fiat money and the culprit of all our problems, End the Fed!