PESSIMIST OR REALIST
November 15, 2009
the past several years I have been referred to as a pessimist, a doom-and-gloomer,
even unkind and trying to scare people. There are a few individuals
in this nation who have read the warning signs and are better informed
spokespersons than the general public, but many citizens are beginning
to take notice and listening to what these realistic thinkers are saying.
I certainly don’t claim to be a prophet or have any insight into
the future. All I can do is study the facts, recall the past and try
to determine what to expect in the future. For the past 30 years I have
been studying economic history and what I have learned is totally different
from what I was taught in the economics courses I took in 1949 and 1950
at the University of Missouri.
During 1982-83 I wrote an article each month for a rural electric publication. The following are the titles of a few of my manuscripts: THE QUESTION OF THE MONEY SUPPLY - WE NEED FAIR TRADE NOT FREE TRADE - WE CAN’T BUY FRIENDS – IT TAKES WORK TO CURE A RECESSION – A WORLD WITHOUT BUREAUCRATS – APATHY WEAKENS A NATION – FOREIGN LOANS PINCH BIG BANKS – DON’T TAKE FREEDOM FOR GRANTED. Nearly everything I wrote in 1982-83 came to pass, yet I was told by the editorial staff in 1983 that my articles were too controversial and my services were no longer needed. They thought I was pessimistic when I was trying to be realistic.
Let’s look at the warning signs and get realistic about the coming months or perhaps years. I don’t have the time or space in this month’s article to discuss the bursting of the housing bubble, the bank bailouts, the auto bailouts or even cash-for-clunkers. We know that 50% of our nation’s wealth was wiped out when the stock market dropped from 14,165 on October 9th, 2007 to a low of 6,469 on March 6th, 2009. While our Treasury Secretary says the “recession is over” and our President tells us he has pulled the economy back from the brink, let’s take a closer look at what is really on the horizon.
The unemployment rate reported by the U.S. Labor Department is misleading. The figures do not take into consideration the jobless Americans who have been unemployed for 27 weeks or longer and have given up on finding work. Each month more out-of-work Americans are no longer counted as unemployed. The unemployed rate for young Americans, age 16 to 24, is now over 52%. By next year there will be still more chronically unemployed so the figures will look better but will actually be much worse. Also many who are considered working are working only part time or have taken jobs with much lower pay. Since such a high percentage of our manufacturing jobs have been outsourced to other nations, it is not likely to improve in the near future. Real unemployment is probably close to 20%. About where it was during the Great Depression.
The number of home foreclosures in July alone was up 32% from a year ago. More than 360,000 (one in every 355 homes in the U.S.) received a foreclosure notice, notice of default or trustee’s sale during that one month period. During that same month banks repossessed 87,000 homes. Since lenders don’t want to take possession of undervalued property they foreclosed on fewer than 10% of the bad loans. I believe home prices will fall much further before reaching a bottom and when they do, another round of bank failures will likely occur.
order to service the trillions of dollars the government is spending
daily, the treasury is running the printing presses overtime. This
year’s deficit will be over $l.8 dollars (nearly two trillion).
China, Russia, Brazil and several other nations are trying to abandon
the U.S. Dollar for another form of currency. The United Nations Conference
on Trade and Development has proposed replacing the dollar with a one-
world currency. Overseas investors hold over half of the U.S. debt and
are replacing our dollars with the euro, Canadian and Australian dollars
as well as gold as rapidly as they can, without influencing the gold
price. Even so on January 1, 2009 gold was at $873 per ounce. In September
it vaulted through the thousand dollar figure. The only way our government
can continue to find lenders for our debt is to raise interest rates
and I believe we will see both interest rates and inflation increase
The more realistic consumers can see the future as I have described it and are trying to save their money. This means they are staying out of the malls and shops, living more frugal, which is causing more stores and shops to go out of business. The real problems are the jobless rates as well as the hefty indebtedness by our consumers, businesses and many corporations. From what I can glean from reading financial reports, many of our banks are still enduring difficult times. The second quarter of 2009 set a record for the number of corporate defaults. Then there is Social Security, Medicare and Federal Pension payments referred to as “unfunded mandates” which now exceed $56 trillion. We the people purchase many times the value in imported goods than we sell to overseas buyers and this not only causes an outflow of cash but keeps our domestic factories closed.
Joan Veon recently wrote: “To conquer a country in the old days, it was a physical invasion, brute force – end of story. But in today’s electronic society, it is through banking, the stock exchange, the bond exchange and the derivatives market. Basically, there has been no physical invasion, no black helicopters and no physical carnage. Today, it is debt.” Early this year Michael Hudson said: “The U.S. economy has reached its debt limit and is entering its insolvency phase. We are not in a cycle but at the end of an era. The old world of debt pyramiding to a fraudulent degree cannot be restored, only delayed to postpone a painful day of reckoning.”
Being more realistic about our nation’s state of affairs than Ben Bernanke, Hank Paulson and President Obama, I believe something big is soon going to take place. A chain is no stronger than its weakest link and the U.S. as well as the world (global) financial system is filled with weak links. The G20, the United Nations and the IMF all want to see a complete overhaul of the world’s monetary policy. Could it be a global currency? If so what will happen to the U.S. dollar? Could it be a bank holiday where no transactions can take place which would bring all business to a halt? Could it be a conglomeration of many things happening at once? I just believe, whatever it is, it is going to change our way of life as we know it here in the “LAND OF THE FREE.”
When I was a kid one of my mentors was a horse trader, who enjoyed trading for unruly horses. I spent many hours with him as we worked with balky horses, horses that would buck, horses that would rear up and fall over backwards, horses that would pull back and break their halter, horses that would run-off with their rider – I think I’ve seen every kind of spoiled horse that ever existed and I was put on the backs of most of them. His comment was always the same, “Your skinny little butt in that big saddle, you can’t get hurt.” Today, that would be child abuse, but I learned a lot about horses; I also learned a lot about survival.
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I feel that getting ready for the approaching times is like getting on a bad horse – you get a funny feeling in your stomach, but know that “If God be for us, who can be against us?” -Romans 8:31. You take a firm seat and say “turn him loose, let’s see what is going to happen.” We may be in for a long hard ride, but for those who believe; EVERYTHING’S GOING TO BE ALRIGHT.”
� 2009 Derry Brownfield - All Rights Reserved