Collapse of the U.S. Economy

Things Are Coming Apart Before Our Eyes

September 27, 2010

Financial Sense - ...We have officially been in a recession (make that a depression) since the last quarter of 2007. Now we are being informed that the “economic dislocation” (what a lovely — and innocuous — way to describe our mess, don’t you TH*NK?) ended July of 2009, well over a year ago.

The Federal Government and the Federal Reserve Bank had sewn a few TRILLION here and there into the major money center banks, the investment banks, Fannie Mae and Freddie Mac, the US insurance giant AIG, and the US automakers.

Not much — as in nothing — had been divided out to main street America — nothing except increasing the time to draw unemployment to 99 weeks!

We have been, and are being, inundated with numbers, graphs, and stats that support their claimed recovery. Do you feel this first downturn of the 21st century is behind us? I sure don’t....

Unemployment figures “improved” to a 9.5% rate — until this Thursday that is. Everybody knows the real number is at between 22% and 24% when you figure in the underemployed, those whose benefits have lapsed, and those who have given up looking. Housing is stagnant. Foreclosures have stalled only because of glitches in who is actually holding the valid title to the packaged mortgages.

The most recent “good news” was that housing (construction) starts increased in August. What we were told only in the micro-footnotes was that “the new construction” included rental construction, not just single family homes. As more people lose their homes, they had two choices — move in with family or become renters.

From Reuters, September 17, 2010:

Henderson Global Investors has launched a new $1.1 billion fund targeting the U.S. apartment market. The fund manager is targeting an initial equity raise of $100 million by end-2010, and a total of $400 million. It will target properties with 200-plus units in suburban and urban areas with strong economic trends. "Apartments are anticipated to have the most favorable occupancy and rent growth conditions of all asset classes," Henderson said in a statement. It believes newly acquired, unleveraged apartments can offer net total returns of 7-9 percent over a five-year horizon, adding it expects tax-exempt bond financing to provide the lowest-cost means of financing apartment investments. "Apartments have historically proven less volatile than other property sectors, and core apartments are likely to offer attractive total returns with a strong income component." [See Social Engineering is Forcing People into Cities Because It is Easier to Track and Control an Urban Population.]

Our troops have been moved out of Iraq to next door Kuwait, except for the 100,000 or so advisors, instructors, and paid private mercenaries. Afghanistan has a “new” commander, General Petraeus, who has vowed their will be no graceful exit next July (as we have been promised).

These “truths” of our real situation are being reflected in the changing poll results and predictions for the coming mid-term elections in November. It is likely that the Republican Party will regain control of the House of Representatives. Fifteen US Senate seats are now in play.

October is known for its surprises. I wish I could predict what is coming at US/us first. An Israeli (US) attack on Iran, Gaza, Jordan, Syria…? A major stock market “correction” of greater than 20 percent? A significant downward spiral of the Dollar revaluation to other world currencies? An outbreak of war on the Korean peninsula? The Federal Reserve being forced to purchase all the failed rollovers of maturing US government debt instruments? Inflation? Deflation?

What will become the rock foundation for this elusive recovery? Will we see any changes for the better? I TH*NK about a hymn that we just sang in church: “Upon this solid rock I stand… all other things are sinking sand… all other things are sinking sand.” Sinking sand? Humm… Time will tell…

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.