Posted on 12/18/2008 7:27:53 PM PST by SeekAndFind
I’m sorry, but the media doesn’t ‘hoodwink’ the unemployment figures.
Ask anyone in commercial insurance in the southeast, businesses are dropping like flies, which means so are jobs.
Sadly, I see too many posts of Freepers “I’m busier than ever...” or “I’m working my butt off...” and I think “Lucky you”.
One person being insulated from what is going on does not a good economy make. Yes, it’s not as dier as it was a few months ago with the $4 gas prices (and accompanied higher food prices), but one a dime it could go back the other way. Americans have a way of lulling themselves back to sleep like those giants in cartoons. The little mouse just plays a tune and back to sleep they go. That is exactly what it reminds me of.
Where will the prices go next week?
Customers are looking for the best deals and I've had a lot more people putting things back once they get to the check-out after reaching their budgetary limit. The kids in many cases are still getting their ‘Christmas’ this year. Many adults are talking about how agreements were reached of no gift exchanges between the adults this year or there is just one large family gift.
I am pegging this holiday retail season as the last hurrah for many! The experts will look at the retail numbers and never have heard the remarks at the checkout. Consumers are pulling back, but many are waiting until the New Year to really put the pinch on things.
Yes, the mountain of fear broadcast and fed in regular doses by an MSM hoping to get more income through ratings. And, of course the private minions who get off on terrorizing others through constantly harping on "run for your lives, knuckle under my thumb, because I "know".
In an area near me, a company had announced to hire. The panic is so intense, the company has had to hire security, to prevent problems in the lines forming to apply for a few jobs.
Major Bingo!
There’s no denying the liquidity crisis. There’s no denying what’s going on is a huge problem. And, there’s also no denying that some people are getting their rocks off on promoting a U.S. apocolypse. Facts are one thing. But hysteria and the promotion of hysteria is quite another.
We can't even agree there is a problem.
How could we ever agree on any solution?
I do believe this house of cards is going to collapse because nobody trusts anybody anymore. Trust is the foundation of any economic system. If you can't believe you'll keep your job or that anyone knows the truth or will share the truth, you will not have any long-term faith in the system which means you won't want to buy any big-ticket items.
People buying Christmas presents are not a reliable yardstick for the long-term health of the underlying economy.
The massive buying of guns and ammo says what the people are really thinking about the future.
Dangerous and uncertain!
I worry that you're correct and the 1Q numbers could be terrible.
It may be a good time to start planning a garden.
Atlas is shrugging, just as he did throughout the 1930's. And every time the government spends more of the non-existent taxpayer money trying to correct the problem, the economy will sink further.
Sterling Slide Is Worst Since 1931
The pound is suffering its worst slide since Britain was forced off the gold standard in 1931.
By Edmund Conway and Angela Monaghan
Last Updated: 12:27PM GMT 19 Dec 2008
Sterling dipped closer to parity against the euro, with the single currency now worth more than 95p for the first time ever. The pound's fall came amid fast-growing disquiet about the fate of the UK economy and consumer sentiment next year.
The pound has now fallen by 23pc against a basket of other currencies, according to figures from the Bank of England. The fall is sharper than the devaluations in 1992, after leaving the Exchange Rate Mechanism, 1976, when the International Monetary Fund was forced to intervene, and 1949, when a host of countries slumped against the dollar.
The devaluation is only matched by the moment in 1931 when, under Ramsay MacDonald, the UK was forced to abandon the gold standard, plunging by more than 24pc against the dollar. The parallel is significant, since many economists have attributed the gold standard exit as one of the main reasons the UK enjoyed a relatively mild depression in the 1930s, while the US suffered mass unemployment and saw its economy shrink by a third.
[snip]
Actually, that is the key to things. Banks used to ferociously protect their loans, so literally, a loan would only be assured if the bank kept 100% collateral for the loan in cash in the bank. They really meant “You can’t have a loan unless you don’t need it.”
Otherwise, the bank loan officer would interrogate whoever wanted the loan. Proof of employment, in the right kind of job; proof of home equity; proof of vehicle ownership; etc., to several hundred percent more value than the loan itself. Loan defaults were exceedingly rare, because loans were very hard to get.
In the 1960s, easy credit was unheard of, so much so that both the US government and Hollywood tried to teach people how to improve their lives with easy credit. That is, it was used as a plot device on TV shows and in the movies. Many people were “credit averse” and refused to own a credit card.
Much of the impulse for this was that the government wanted to move away from the great cost of physically printing cash, as well as the difficulty of keeping track of cash. Were the US to return to just cash, the US Bureau of Engraving and Printing would have to have from 15 to 20 times as many facilities, from the two in Washington D.C. and Fort Worth, TX, to most of the US States.
This creates confusion when some commentator says that the government is “just going to print more money”. Because this means more virtual money, not actual paper money. Paper money and coinage are in extreme shortage right now, backing only 5% of daily US retail trades.
Right now we face a bizarre situation, in which our currency might be “split” between virtual and paper currency. There is no law that anyone must accept virtual currency for anything, but paper currency is valid for all debts, public and private, and must be accepted.
A credit crunch, that is happening right now, throws a monkey wrench into the whole system. Starting with the government, that has already promised half the annual US GDP this year, on top of twice that much in existing national debt, and the leverage economy, there is literally no more money left to loan. All possible creditors, read “China”, have been tapped out.
This means that all other debtors or bond issuers have no one to borrow money from, either. This includes the credit card companies that have to issue bonds to underwrite their cardholders transactions.
In real terms, this means that if you have good credit, and are in a good credit class of people unlikely to default, your credit limit may be reduced from $10,000 to $5,000 or less. If your credit is good, but the class of card holders like you is becoming riskier, you might have your card canceled. And if you have problems with your credit, you will be canceled, and they will demand full payment now.
Millions of Americans are reliant on credit cards for their monthly expenses, and will be instantly bankrupt if their card is canceled. So those with bank checking will likely overdraft en masse, and either banks will cancel checking, or retailers will refuse personal checks.
This leaves only debit cards and cash as ways to spend money. Most retail will have to be with debit, but cash will be king, because there is so little of it.
At the same time, with tax revenues dropping by double digits, and the US government unable to sell T-bills, or worse, if the T-bill holders cash in their T-bills and demand the principal, the US government will have no choice but to “monetize the debt”, or as it is incorrectly called, “print money”. Again, just decreeing that more virtual money exists.
Instantly, this creates hyper-inflation in virtual money, while at the same time deflation in paper currency and coins. Cash is king. Bank accounts may have tens of thousands of dollars in them, but the bank branch will have to currency to redeem that money. All they can do is issue a debit card for what they owe you.
So retailers will have signs to the effect that debit card purchases for $1 cost $10, because of hyperinflation, or if you pay cash, 10 cents, because of deflation. At the same time.
The next step is for the government to physically print, and issue, very high denomination paper currency, from $100k to $10M, to be given to the real economy corporations in exchange for some of their virtual money. This VHD paper cannot be legally transferred without the permission of the Treasury Department.
This insures that they *cannot* go bankrupt, and can be used as 100% collateral on loans from authorized lenders. However, the money cannot be taken from them without permission, and cannot be owned by individuals, only *that* authorized company.
And because international trade has stopped completely, the US will have to rebuild all the industry it outsourced, which will put us on the road to recovery.
All of us have a difficult time looking beyond our immediate day-to-day lives. It it takes a lot of effort, desire and time to stop and look beyond your house, your block, your office...
Most people are just too darn busy to make that effort and just don’t have the time to do this. As a result, it is natural human nature to be in good shape and say “I’m fine so everybody else must be” or to say “I’m screwed so everybody else must be.”
Knowing this is human nature doens’t make it any easier on those who know what is going on in the nation and the world, to try to talk with these masses of people who are too busy, too harried to really study what is going on. Very frustrating on our end.
Safe sales are also way up. I have to wonder why. Is this from new gun owners trying to beat Obama’s new restrictions, or is this from people who saw Money Markets break the bank and have decided to move a chunk of their cash home, or to buy gold and store it at home?
I want to thank you for another great post. There are maybe 6 people here at FR from whom I learn most about economic and financial matters. You are one of them. Thank you.
Very interesting insight into the power of physical money while virtual money loses value. I’m sure many Freepers will deny this is possible — yet I’ve seen it with my own eyes. Anytime you buy something where they say X= cash price or 3% fee on credit card purchases” that is exactly as you said. Cash price is lower than credit card price. All you are saying is that spread is going to really open up.
Thanks again. Wild, scary times. Nobody knows what is coming but your valuable insight helps to reveal what very well could happen. It is too bad more people here aren’t capable, aren’t yet prepared to listen to what you ahve to say. Maybe some day they will be. Be sure that many of us here understand and appreciate your insight, and many more are lurkers who don’t post.
Thanks again. Learned a lot.
Stores are expected to post an 18.8 percent decline in fourth-quarter profits, marking the seventh consecutive period of profit declines, according to Ken Perkins, president of research company RetailMetrics LLC. He expects profits to keep tumbling into the first quarter, with predictions so far of a 10.4 percent drop.
http://news.yahoo.com/s/ap/20081224/ap_on_bi_ge/last_minute_shopping_6
Yes.
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