America's Stormy Weather

The future of America will never look like the past. What America is going through now will give us a peak into the future. The past life will be referred to as the “Good Old Days”. “You remember when…”, will be barstool talk. The average American spending money on $2000 or more week long family vacations to child-friendly locations will only be experienced by only a fraction of those who can afford them. The others will only be able to share such memories from their dog-eared pages of the bygone family vacation scrapbook.

A new American paradigm is rapidly evolving. It is just as I have been describing it in my past postings. I am not the only one writing about it, but, unfortunately, many are not planning for it. My neighbor, at the age of 65, has been told by his wife that she wants to put an addition on their house, even though she has saved very little for her retirement. In a year or so, it will be only the two of them in their comfortable home. So why a new addition only after fully gutting the entire home around 10 years ago and a new double car garage just 5 years ago? The reason is his wife cannot change her consumerism ways of thinking.
The new question America will be facing in only a few months will be this--- what will be the new un/under-employment equilibrium level for the nation? I, as others, feel before we find that spot the percentage will reach, at least, 20% nationwide. Michigan and California are nearly there now!

Americans trained in auto assembly, or retail, or construction work, or finance and business are finding themselves asking the federal government for relief in the form of unemployment compensation.

The stock market’s casino winnings are separate from the “real” economy. Those winnings, or losses, are only for those who can afford them. More and more Americans no longer can take the risk with their evaporating incomes. The only risky decision they might make could be either to take the family out for dinner two nights in a given week, or, instead, to just leave it at one.

Americans are feeling the pinch. As more people are finding themselves in need of support from their Uncle Sam in Washington, they could be faced with tough decisions, such as to take that lesser paying job, now, instead of waiting and hoping for that dream job to come along tomorrow; or, to take that part-time job, instead of waiting for a full-time job to drop in their lap. They know they have to save more money, and spend less. Americans realize that they need to increase their savings and pay down debts. This is now where their consumer dollars are being channeled. This is the new economy.
This negatively impacts the GDP of the nation. Less consuming means fewer customers. Fewer customers lead to retail, service, and manufacturing job cuts, wage and benefit reductions, and the trimming of weekly work hours. This all leads to decreased industrial production and capacity. Bankruptcies and foreclosures follow. There will likely be 8 million foreclosures during this 2009 year.

As Americans watch their families and friends and co-workers suffering, they also angrily observe those inside Wall Street demand from the U.S. government, and with Obama’s Blessing, the blatant transfer of the nation’s wealth right into the Banksta’s balance sheets. The more assistance the top tier financial Wall Street banks need and want from the Treasury and Federal Reserve, they get. The Stress Test was really the Scam Test.

Since 2007, we have watched billions and trillions of dollars pledged, promised and issued to the Bankstas. They are so full of liquidity they continue to plan to issue more bonuses and fatter expense account spending limits. But, the truth is there still remains $3.2 trillion in non-performing mortgage loans sitting on their books, being ignored, ready to tear open their balance sheets. The coming foreclosures will blow down their house of card banking façades. Timmy Geithner will be left holding the empty Private-Public Investment Program Goodie Bag. President Obama will have trashed the nation’s balance sheet when he begins to wipe the Banksta’s Swine Flu Flux from his face and proclaims it is time to nationalize the banks and take them into receivership. I sure hope the Bankstas have not transferred the government’s gifts into off-shore accounts.

The nation’s Treasury has a zero balance sheet. There is now a diminishing revenue stream, as TimmyG and Bernie-Nakie promise $11 trillion to the financial economic recovery plan. The nation has now realized that there are fewer products being purchased, therefore fewer sales receipts coming in. There are fewer capital gains, and payroll taxes finding there way into the Treasury, as well as state and local governments. Our GDP is shrinking. And China is now waking up to the fact that they cannot continue to buy zero interest Treasury bonds.

China might actually find themselves in the same economic predicament the United States is now in. China was able to expand as a result of Americans buying cheap stuff from them. As a result of trillions of US dollars entering their central bank, a massive economic surplus was formed. That surplus brought wealth to the Chinese middle class. Jobs were created, buildings were constructed, condominiums sprouted up, and factories were built. Services came along with this growth. But now, this boom is slowing. Jobs by the tens of millions are disappearing. Unemployment is rising. The wealth boom is coming to an end. The cities are filled with major land development projects that might not be completed, but the Chinese central bank has made a commitment to further fueling development.

Who will buy their manufactured over-capacity? The U.S. consumer is dried up, even at deflated prices. The Chinese may actually end up with a huge over-capacity, and a slowing GDP because of it. The Chinese might find their middle class unable to keep up with over-inflated housing prices, therefore, going into foreclosure, and bankruptcy. Credit card users might go into default. The Central Chinese government might find that their massive central banking injections into their development expansion was a bad idea. 20-30 million, and growing, Chinese finding themselves unemployed and in need of food, medicine, housing and health care could easily overwhelm the nation and shift them into crisis-mode.

As the world’s economic engines grinds to a halt, President Obama, confused and bewildered, and realizing that the citizens of this nation have seen their wages eroded while the bankstas are doing pretty nicely-thank you very much!—have stolen the country’s treasure. And then, there are the two wars draining the budget, as well. Two wars with little to show for all the blood and cost invested in them.

President Obama knows what he is doing. He knows he is shifting wealth away from the “real” economy into a “non-functioning” fictional economy. Geithner is just a zombie himself. He was taken over by Goldman Sachs vampires a long time ago. To believe that by stuffing the banker’s pockets now, and that come December or next July or November the economy will percolate up and the beaten down American will begin to spend and spend further, re-inflating the dead housing market, or auto industry, or entertainment industry, instead of trying to replenish their deflated retirement nest-egg stolen from them, must have been waterboarded too many times. It just won’t happen!!

To answer my question of what will be the new equilibrium level of un/underemployment that will be part of this New American Paradigm, I might answer by saying how about 10%? Where will the money come from to rebuild a nation’s industry and work force that had been shipped overseas and outsourced? A new American paradigm is heading our way, and it looks more like stormy weather than a sunny day.

The New American Paradigm

This new blogspot will discuss the new American paradigm. For everyone who believes we are facing a new America, one we have never seen before in our lifetimes. This blog will offer a forum for such a discussion. We will write about money issues: what to do with your money, from a non-expert perspective, what to do in your own life to pare it down, and how to make your life simpler.

This new America, with increasing unemployment, a shrinking consumer marketplace, and damaged personal savings and retirement investments is new for many. 

For most of us, we have to learn new ways to adapt. Being ready and prepared for these changes is critical in order to comfortably survive in this changing world.

Postscript:

Here is the link to my February 2009 article posted on the Eye-On-Washington blogspot site, called The New American Paradigm.