RRRevolution

"Speaking truth to the powers that be..." is our most powerful weapon. "Trading liberty for security results in the loss of both" "Give me liberty or give me death - Patrick Henry" "Government of, by and for the people"

Tuesday, August 23, 2005

The Coming Economic Meltdown Is Here!

Publicly available information now points to the coming of an Economic Meltdown. Consider the convergence of each of the following: (1) Credit Card minimum payments double this month, with approximately 39% of all credit card holders presently paying the minimum balance and the average adult carrying a balance in excess of $6000 each this will trigger exorbiant fees and costs and lead to default interest rates as high as 30%; (2) New Bankruptcy Law becomes effective October 17, 2005, and significantly impairs the right to a "fresh start". Consider that most will not qualify for traditional bankruptcy and will be forced to file a Chapter 13 which will tie them to a "repayment plan" over 5 years if their income over that time would contribute a total of 25% of the debt owed, will require repayment of all credit card debt incurred in last 90 days before filing, and raise the cost to file and participate in the plan for 5 years; (3) Rising interest rates will affect every form of credit for a nation that borrows 125% of its disposable income rather than saving. Adjustable rates on credit cards will continue to go up. Adjustable rate mortgages will hit homeowners like a brick as the cost of everything else goes up; (4) The housing bubble will shake the economy to its foundation as housing properties flood the market when people can no longer make the payments, driving prices straight down, and resulting in the loss of millions in equity for not only those selling but those still owning homes; (5) Job layoffs are going up as good paying jobs flow overseas by the thousands every week, and the paltry number of jobs created pay little more than minimum wage; (6) States are finding that they have to both raise taxes and cut back on services to meet demands; (7) Healthcare costs are skyrocketing like never before, with premiums set to increase 10% more this year, on top of 1/4 of the population having no medical health insurance, which transfers that costs for healthcare to the states with no increase in federal assistance for medicare and medicaid; (8) The Chinese and Japanese are beginning to cut back on their monthly purchase of treasury bills which provide liquidity and lower interest rates for all Americans, which will lead to even higher interest rates throughout the economy; (9) The increase in the price of oil and gasoline is hitting Americans not just at the pump, but in the cost of everything we buy. Gasoline surcharges are appearing on invoices for small businesses already operating on the margins, which must be passed on to consumers in higher costs. (10) The increase in the price of natural gas will hit people extremely hard during the upcoming winter; (11) The new Energy bill will transfer billions of dollars from the public treasury to the oil and energy companies who are drowning in corporate profits; (12) The non-budgeted cost of the wars in Iraq and Afghanistan will continue to escalate beyond the $300 billion already spent, drawing needed capital out of the US economy; (13) Taxes will have to increase at the Federal Level on workers as the corporations pay less, the wealthy pay less, and the Bush tax cuts are allowed to become permanent, along with the elimination of the Estate and Gift Tax; (14) Global warming will soon require US companies to expend more of their assets to respond to the effects of global warming; (15) Weather related disasters within the US further strain the US budget in a time of war; (16) The US is facing increased competition on the world market from China in its acquisition of oil, and our foreign policy could lead to an oil embargo against the US by oil producing countries; (17) A depression would be profound if the stock market takes a huge plunge; (18) Economist are already stumped by the increased in corporate profit and resulting stagnation in worker wages and real earning potential; (19) Pensions are being raided by corporate entities, leaving huge numbers of workers with only social security to rely upon; (20) Airlines will require a bigger piece of federal government assistance to keep running, which will further lessen available funds needed by businesses, driving up interest rates even further.

Each of these events has been public addressed individually, but few are putting them together in the same time period and analyzing the expected outcome from their convergence.

Who knows how to proceed in the face of all this bad news. It would appear wise to become as liquid as possible. Beyond that paltry piece of advice, we are probably on our own.

To all of the trained economists out there, if you have some well-considered timely, constructive ideas as to how we can weather this coming economic meltdown, please share them with the rest of us.

3 Comments:

Anonymous Anonymous said...

So, what are your sources for this? Not trying to "flame", but posts like these carry much more weight if links to sources are included.

12:19 PM  
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9:15 AM  
Anonymous Bobby said...

in the last depression, the rich took a big hit, even though the middle class was destroyed. after wwII when the new middle class arose, the rich, angry at this happeing, began setting themselves up to pull the rug out from under the working class and middle class while coming out smelling like roses themselves. A pox upon the rich. They worship the Golden Calf.

3:34 PM  

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