If you have been reading the news on a daily basis as religiously as I have, you would find yourself totally confused by good-news/bad-news, both referring to the same thing – the US economy, particularly job growth.
Mainstream media tend to report on ever lowering unemployment rates, from 8.5% last year gradually down to 7.4% yesterday, and you could take comfort in it and close the screens and go shopping.
On the other hand, “fringe media” would tell you that the new jobs created are low-paying and often part-time, and the unemployment rates are calculated by first eliminating the “non-participants” from the equation, i.e. those who have given up looking for work (last I heard was close to 1 million, and rising), thus making the unemployment rates look lower than they really are.
Further, other related signs, e.g. the severe shortening of unemployment benefit coverage periods in various states, the increasing number of food stamp recipients nation-wide (lowest est. 47 million, latest 100 million), hardly support the rosy illusion.
Most hurtfully, when we think about it, who speaks for the suffering of the long-term unemployed, whose resumes are categorically swept into the waste basket of employers without a glance? None that I’ve come across, even once. They have become regarded as worthless social rejects or not parasites, swept under the economic rug to rot.
Meanwhile up at the top, the Federal Reserve (“the Fed” – US central bank) counts on the illusory “improving employment picture” to determine its globe-affecting policies, particularly regarding Quantitative Easing (QE), i.e. the injection of $85 billion per month of newly printed paper money into Wall Street, artificially boosting the stock market, which continue rising to “confirm” the “economic recovery”. And herein lies the greatest danger.
The fact of the matter is that the $85 billion/mo injection is supposed to haul the nation up from the 2009 Great Recession, not as long term sustenance of a chronically faltering economy. The longer QE continues, the bigger the bubble when it eventually will burst. The longer it continues, the harder Wall Street will crash when QE has to be “tapered” and eventually withdrawn.
Fed Chairman Ben Bernanke must be the most carefully watched person on Earth. Anything he says will be analysed to the letter and will have wide-spread effects not only on the US economy but the global economy. Over the last several months, he merely hinted at that QE would have to be “tapered” later this year, down to zero in mid-2014. Wall Street, so myopic that it cannot and does not care to look more than a month or even a week down the road, reacts to Bernanke’s every word with immediate rising and falling of the stock market. Bernanke himself watches his own every-word to make sure that the financial house-of-cards does not disintegrate on his watch. He knows that QE has to stop to prevent a catastrophic crash, and the longer he waits, the worse the crash would get when it happens. If he suddenly announces today that QE would cease tomorrow, Wall Street would crumble for certain, but not as bad as he waited until next year to announce it.
Sorry to say, as I said last year, a full scale economic collapse in the US is inevitable, and the longer this is delayed by the continuance of QE, the more catastrophic the collapse will be, including a worse replay of the 2008 housing meltdown, corporate bankruptcies and massive layoffs.
Can there be any good outcome? Sorry, not that I can see. My best advice is to prepare for the worst. The most optimistic thing I can say is that to build a new house, the old one has first to to be demolished.
Read this article [“We Have Become a Nation of Hamburger Flippers”: Dan Alpert Breaks Down the Jobs Report]
Anthony Marr, Founder and President
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