As the beginning of 2007 rolls with his shares of hopes and dreams, i decided to publish some ideas that in my humble opinion are worth considering.Basically, as the title of this blog indicates I reached the self-realization that the economic system of the United States is at edge of the abyss.
I am not going to pull charts , graphics or statistics to demonstrate this , only the common experiences of someone living the day to day life of work,pay bills, taxes , etc.
On January 5Th,the (short=3days) first week of trading ended up with big declines in the commodities and small declines on NASDAQ,Dow,S&P 500's.
Let's start with the commodities part first, on the decline of oil prices the warm winter was set as culprit.
In the case of copper the culprit was a waning demand in China and the U.S.
Unfortunately, nobody listened to the hissing sound of the economic balloon being deflated...
The dark clouds are starting to gather.
Make no mistakes the economy is slowing as we speak, the raw materials (commodities) go down in price when factories don't see increment of production in the near future.
In the case of copper, which some consider as the true predictor of economic growth (or not), this falling of price means less wiring,pipes ,electronic components will be needed in the near future.
Perhaps this will be tied with the slowdown making fewer homes, offices and computers, perhaps the fact of China, which accounts for 22 per cent of global demand for copper is sourcing more copper from within their borders.
The fall on oil prices indicates a lower demand for fuel and plastics.(can somebody tell me what we use plastics for?) and for the part of fuel....
The latest American Trucking Association's Truck Tonnage Index indicates
a decline on 3.6 percent in November after falling 1.9 percent in October.
November was the worst month in truck tonnage since the last recession.
The year to year contraction from 11/05 to 11/06 was 8.8%.
This "little"flashes of warning red lights in the economic dashboard were quickly turned off by the Government.
Yes , some December data was promising.....
Job growth accelerates: non farm payrolls rise by 167,000.
Let's chew on this numbers .
Remember that if the phone rings at home and somebody in the other end of the line ask you : Do you you work at least 15 hours this week? If you say yes, you are counted as employed....
167.000 jobs created in December....What kind of jobs? May I ask....
Professional and Business SERVICES gain 50.000.Health Care 31.000.
Food and Beverage services ,23.000.
Financial and banking created 5.000,Telecom,6.000.Mining about 4.000.
But this are SERVICE jobs not manufacturing jobs.
12.000 manufacturing Jobs were lost in December, and this is the sixth consecutive decline with an accumulated of 72.000 for the year.
Construction jobs fell by 3,000 after seasonal adjustment. Residential construction jobs fell by 16,000, but those losses were partially offset by gains in nonresidential construction.
In a economy of consuming and not producing, the producing jobs are being eliminated and only the service jobs stand. This "service" job does not manufacture or create .
We can't export nurses to Japan , accountants to Europe or waiters or bartenders to China. Or trade them for flat panels, cars, computers or else...
The low prices of imported manufactured goods are pushing US industry to cut its workforce in order to increase productivity, and at the end, close shop in United States and move facilities to another cheap labor country.
It's free trade but not fair.
Meantime,the ships keep comming to the United States ports, full of cars, TVs,clothes ,furniture,etc and leave empty on their way back .
The "Service" workers continue working for low wages and without benefits , getting in debt, ,to sustain the lifestyle or the "the American dream".
The latest spur of economic activity was fueled by the Real Estate boom, during that time , Home Equity loans generated enough money to keep the dream alive.
But , the Real Estate boom is over,a lot of owners who took ARM are facing reset of rates and some of them are not going to have enough resources to make the payments and face foreclosure.
Compounding the problem there is a low or negative savings rate since 2005 according to the latest report ,Americans, spent all money earned and them some more -1.00% in November of 2006.
The only time that something like this happened was after the Great Depression.
Meantime Chinese average savings moves around 35-40% of their income .
But not only the citizens are getting into debt , the whole nation USA is operating in red.
Our largest creditors and bankers are the providers of goods China and Japan.At 10/2006 Japan holds 641.1 billions and China 344.9 billions .
Think about this:
the official debt (8.676 TRILLION) divided by the actual population 300,5 MILLIONS of Americans leave each and everyone of us with a debt of $28,857.35. Or working a full year of 40 hours a week at $13.87 an hour without paying taxes.
This dependency of manufactured goods along with oil is eating any wealth that the "service" industry workers can produce.
Add on the expense of the war on Iraq and Afghanistan, about 3 BILLIONS A WEEK, and all these ingredients will create "the perfect storm."
Perhaps "globalization" which is not new , will become the great equalizer for the under-developed countries but it will ended up making United States
a poverty-stricken, third world county, with financial resources depleted, totally dependent of foreign crude oil and manufactured goods,populated with low-income workers,unable to obtain health care, renting for ever .
Even the Chairman of the Federal Reserve,Ben S. Bernanke, warned about this on his speech on 08/2006 that :"The changes in the pattern of production are likely to threaten the livelihoods of some workers and the profits of some firms, even when these changes lead to greater productivity" .
But now, I think is already too late.WAKE UP AMERICA .THE DREAM IS OVER.!!!
My thanks to different resources used for this post:
http://business.timesonline.co.uk
http://www.forbes.com/
http://www.leap2020.eu
U.S. Department of Labor
Bureau of Labor Statistics
http://www.marketwatch.com/
http://www.housebubble.com/
http://www.federalreserve.gov/
I am not going to pull charts , graphics or statistics to demonstrate this , only the common experiences of someone living the day to day life of work,pay bills, taxes , etc.
On January 5Th,the (short=3days) first week of trading ended up with big declines in the commodities and small declines on NASDAQ,Dow,S&P 500's.
Let's start with the commodities part first, on the decline of oil prices the warm winter was set as culprit.
In the case of copper the culprit was a waning demand in China and the U.S.
Unfortunately, nobody listened to the hissing sound of the economic balloon being deflated...
The dark clouds are starting to gather.
Make no mistakes the economy is slowing as we speak, the raw materials (commodities) go down in price when factories don't see increment of production in the near future.
In the case of copper, which some consider as the true predictor of economic growth (or not), this falling of price means less wiring,pipes ,electronic components will be needed in the near future.
Perhaps this will be tied with the slowdown making fewer homes, offices and computers, perhaps the fact of China, which accounts for 22 per cent of global demand for copper is sourcing more copper from within their borders.
The fall on oil prices indicates a lower demand for fuel and plastics.(can somebody tell me what we use plastics for?) and for the part of fuel....
The latest American Trucking Association's Truck Tonnage Index indicates
a decline on 3.6 percent in November after falling 1.9 percent in October.
November was the worst month in truck tonnage since the last recession.
The year to year contraction from 11/05 to 11/06 was 8.8%.
This "little"flashes of warning red lights in the economic dashboard were quickly turned off by the Government.
Yes , some December data was promising.....
Job growth accelerates: non farm payrolls rise by 167,000.
Let's chew on this numbers .
Remember that if the phone rings at home and somebody in the other end of the line ask you : Do you you work at least 15 hours this week? If you say yes, you are counted as employed....
167.000 jobs created in December....What kind of jobs? May I ask....
Professional and Business SERVICES gain 50.000.Health Care 31.000.
Food and Beverage services ,23.000.
Financial and banking created 5.000,Telecom,6.000.Mining about 4.000.
But this are SERVICE jobs not manufacturing jobs.
12.000 manufacturing Jobs were lost in December, and this is the sixth consecutive decline with an accumulated of 72.000 for the year.
Construction jobs fell by 3,000 after seasonal adjustment. Residential construction jobs fell by 16,000, but those losses were partially offset by gains in nonresidential construction.
In a economy of consuming and not producing, the producing jobs are being eliminated and only the service jobs stand. This "service" job does not manufacture or create .
We can't export nurses to Japan , accountants to Europe or waiters or bartenders to China. Or trade them for flat panels, cars, computers or else...
The low prices of imported manufactured goods are pushing US industry to cut its workforce in order to increase productivity, and at the end, close shop in United States and move facilities to another cheap labor country.
It's free trade but not fair.
Meantime,the ships keep comming to the United States ports, full of cars, TVs,clothes ,furniture,etc and leave empty on their way back .
The "Service" workers continue working for low wages and without benefits , getting in debt, ,to sustain the lifestyle or the "the American dream".
The latest spur of economic activity was fueled by the Real Estate boom, during that time , Home Equity loans generated enough money to keep the dream alive.
But , the Real Estate boom is over,a lot of owners who took ARM are facing reset of rates and some of them are not going to have enough resources to make the payments and face foreclosure.
Compounding the problem there is a low or negative savings rate since 2005 according to the latest report ,Americans, spent all money earned and them some more -1.00% in November of 2006.
The only time that something like this happened was after the Great Depression.
Meantime Chinese average savings moves around 35-40% of their income .
But not only the citizens are getting into debt , the whole nation USA is operating in red.
Our largest creditors and bankers are the providers of goods China and Japan.At 10/2006 Japan holds 641.1 billions and China 344.9 billions .
Think about this:
the official debt (8.676 TRILLION) divided by the actual population 300,5 MILLIONS of Americans leave each and everyone of us with a debt of $28,857.35. Or working a full year of 40 hours a week at $13.87 an hour without paying taxes.
This dependency of manufactured goods along with oil is eating any wealth that the "service" industry workers can produce.
Add on the expense of the war on Iraq and Afghanistan, about 3 BILLIONS A WEEK, and all these ingredients will create "the perfect storm."
Perhaps "globalization" which is not new , will become the great equalizer for the under-developed countries but it will ended up making United States
a poverty-stricken, third world county, with financial resources depleted, totally dependent of foreign crude oil and manufactured goods,populated with low-income workers,unable to obtain health care, renting for ever .
Even the Chairman of the Federal Reserve,Ben S. Bernanke, warned about this on his speech on 08/2006 that :"The changes in the pattern of production are likely to threaten the livelihoods of some workers and the profits of some firms, even when these changes lead to greater productivity" .
But now, I think is already too late.WAKE UP AMERICA .THE DREAM IS OVER.!!!
My thanks to different resources used for this post:
http://business.timesonline.co.uk
http://www.forbes.com/
http://www.leap2020.eu
U.S. Department of Labor
Bureau of Labor Statistics
http://www.marketwatch.com/
http://www.housebubble.com/
http://www.federalreserve.gov/
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