The Myth of Recovery
By David Glenn Cox
Cue: Smiling faces, young energetic men and women following their dreams as the voice over says, " During times like these, it seems, the world will never be the same. But there is a light beginning to shine again. The spark began where it always begins, at a restaurant downtown, in a shop on Main Street, a factory around the corner. Entrepreneurs like these are the most powerful force in the economy.
"They drive change and they’ll relentlessly push their business to innovate and connect. As we look to the future they’ll be there ahead of us, lights on, showing us the way forward. This is just the beginning of the reinvention of business, and while we’re sure that we don’t know all the answers, we do know one thing for certain, we want to help at American Express."
This is nothing but pure corporate propaganda. A bike shop, a restaurant, a cake shop and a landscaping business, who will buy these bicycles and cakes and meals? All State Insurance has chimed in, "We’ve been with you through seven recessions and we’ll be with you through this one." They're telling us that the worst is over; come on out and let the sun shine down upon you. There is only one problem with this rosy scenario, it’s just isn’t true.
"SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.
"Mr. Schwarzenegger's proposed $82.9 billion general-fund budget for the 2010-11 fiscal year would close a $19.9 billion gap over 18 months. In addition to the federal aid, he called for $8.5 billion in cuts and $4.5 billion in alternative funding to balance the budget."
Last year Mr. Schwarzenegger declared a fiscal emergency and pushed through $42 billion in budget cuts, layoffs, furloughs and tax increases. It was the most draconian budget ever passed in California history, and even before it could even be implemented, California was back in the hole to the tune $8 billion more.
Of course the conservatives screamed, "That’s what you get with a nanny state," forgetting that the general welfare of the populace is the only true purpose of a state in the first place. Yet, the key point is not that California was spending too much but that revenues have shrunk fantastically. California tax revenues year over year in 2009 dropped an incredible 44% from $12.995 billion (April 2008) down to $7.336 billion (April 2009).
"April numbers reflect actual tax returns that show lower incomes and more refunds than April 2008. But it also must indicate that wages/incomes are dropping at an accelerating pace." (California Personal Income Daily Revenue Tracker CA.GOV)
"There's no question this is extraordinary. The worst situation in 50 years," Susan Urahn, director of the Pew Center for the States, told ABC News. "Fiscal year 2010 will be just as bad as it was last year. We saw a $180 billion cumulative budget gap in 2009 and predict the same for 2010." So, a $787 billion stimulus package that was 40% tax cuts will be about as effective as snowballs against an Abrams tank. Plus the $360 billion shortfall doesn’t include cities, counties and municipalities.
In Silicon Valley entire office buildings stand vacant, more than 43 million square feet. That's over 15 Empire State Buildings worth of floor space, a lot of bicycles, cakes and landscaping. But we are all tied together and American Express is wrong when they say, "Entrepreneurs like these are the most powerful force in the economy." The workers are the most powerful force in this economy because if we can’t buy it they can’t sell it.
"In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people. (Franklin Deleno Roosevelt)
Bloomberg- "There is a bubble bursting in much the same way as the residential market burst," said Jon Haveman, principal at Beacon Economics, a consulting firm in San Rafael, California. "None of those towers will fill up anytime soon."
Commercial property foreclosures will at least double in 2010 and job growth won’t return for two years after that, held back by U.S. consumers who are saving more and "getting back in line with sustainable spending habits," Haveman said.
"Bloated inventory and tight lending standards will curtail office construction in pockets around California for the next several years," said Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles Economic Development Corp.
"That means there won’t be jobs for construction workers and hence no tax revenue from sales of construction materials," Kyser said. "It is the ultimate domino effect."
This domino effect, however, falls both ways. No jobs for construction workers or for building material workers means no jobs for the truckers that haul and the salesmen that call. No work for the architect or the construction company exec, no foundation laid nor permits paid. Gee, I guess all those lazy, overpaid, fat American workers had a purpose after all. We paid the taxes that made the train go; on our backs society succeeds or fails. You could put all the investment bankers on Earth on the next rocket ship to Mars and we’d be no worse off, in fact we’d probably be better off without them.
The much ballyhooed November job numbers have been revised down to just four thousand new jobs, four thousand new jobs in an economy that requires fifty thousand new jobs each month just to break even. "Well, isn’t that better than losing four thousand jobs?" Sure, it's like being seventeen million dollars in debt and saying that things are looking up because I just found four dollars in my coat pocket!
The December number returned to the two-year trend, making November an aberration; the economy lost another eighty-five thousand jobs.
Bloomberg- The survey of households, used to calculate the unemployment rate, showed employment dropped by 589,000 workers last month. A decrease of 661,000 in the number of people saying they were in the labor force prevented the jobless rate from rising.
"A decrease of 661,000 in the number of people saying they were in the labor force prevented the jobless rate from rising?" Those 661,000 are discouraged workers! Once you exhaust your unemployment benefits you are no longer counted as unemployed. You are discouraged because there are no jobs and because you haven’t watched enough American Express commercials.
As for the cheerleaders at American Express, this little tidbit:
"Consumer Credit falls by a record $17.5 billion. More than $5 billion expectations--
The consumer credit fell by a record 17.5 billion in November. Revolving Credit (credit card) fell by -$13.7 billion and Non revolving (auto loans, mobile homes) fell by -$3.8 billion. The fall is a combination of lower spending and tighter credit standards." (Forex News)
No one, especially myself, enjoys being the harbinger of dark tidings, but I just can’t stand the lies. We must be honest with ourselves to solve this crisis; we can’t hide behind fictions and fallacies. There is a reason why the office buildings are empty in Silicon Valley and why New York commercial property rents are down 21%. This economy needs us and it won’t get better without us. We need jobs! We need a WPA and a CCC to infuse capital into the economy. The depression isn’t over, it just getting ready to begin.
"We of the Republic pledged ourselves to drive from the temple of our ancient faith those who had profaned it; to end by action, tireless and unafraid, the stagnation and despair of that day. We did those first things first.
"Our covenant with ourselves did not stop there. Instinctively we recognized a deeper need—the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization. Repeated attempts at their solution without the aid of government had left us baffled and bewildered. For, without that aid, we had been unable to create those moral controls over the services of science which are necessary to make science a useful servant instead of a ruthless master of mankind. To do this we knew that we must find practical controls over blind economic forces and blindly selfish men." (Franklin Deleno Roosevelt)
This is the true reason why the name of Franklin Roosevelt sends cold shudders through Republican hearts. His answers are the crucifix that drives them back into their box and his solutions were the stake that was driven through their hearts to make them stay there. So, now they are loosed upon us again and those unwilling to take up the stake should be held up to a mirror to see who is who.