Sunday, August 15, 2010

Signs of the times

Occasionally you run across a news piece and you just cannot help yourself. You just have to laugh, or cry, or break something.... Well this news piece really just exemplifies what I mean:

Government Salaries Double private sector incomes

Once upon a time you obtained a government job knowing you weren't going to get paid very well, but the benefits were decent and they usually had a pension. Also the size of the government was much smaller with only a small fraction of the population working for the government.

Today the largest employer in the country is the government(city, county, state, federal). This is the first time in our nations history that this has ever happened. Now to add insult to injury we find out that federal employees now make on average double what people working in the private sector do. This is outrageous!

And yet the people of this country cannot figure out how we reached this point with our debt and unfunded liabilities? Medicare, Medicaid, and Social Security are bankrupt. The government spent your money and left you with a pile of IOU's. Today you have more people living off the government than in the private sector and to add insult to injury those working for the government make double the people that pay the bills? The private sector is where jobs and money are created, and the government is product of the real economy. The government is not some self sustaining independent thing that has a life of it's own. It is a parasite that needs an economic host to live on and the host here in the US is dieing. The government is killing the host.

The housing market is still collapsing for the most part across the US. Some places have firmed up, but generally speaking the decline persists. Foreclosures are up 6% over last year, house prices are still falling, and the shadow inventory of homes that are on the banks books are at all time highs. People have stopped paying mortgages and the banks are just letting them stay in the homes just to avoid having a vacant home sitting and being vandalized. So residential real estate is still in bad shape. Well commercial real estate isn't fairing so well either. We hear this week that the company that owns 3 malls across the country lost one to the Federeal Reserve program called Maiden Lane where we the tax payers get stiffed into buying defaulted assets. They already own properties like Red Roof Inn in the Maiden Lane program. Well this mall owner lost one property in GA, and now it appears they are about to loose a mall in MN and CO. The one in CO is in Colorado Springs called the Citadel Mall. Yet we hear the Federal government telling us that hard hit areas like CA and CO are recovering and that the economy has bounced back. Sorry folks it just isn't true, and the mall parking lots are still largely vacant, and many larger retailers are leaving the malls. So while Jim Kramer and other talking heads are out there touting how resilient commercial real estate has been they know that things are not well. I hate to break it to them, but a few bright spots in a few major metropolitan areas does not make for a commercial real estate recovery... I mean how many vacant commercial properties do you see in your area that are vacant or for lease? Then ask yourself how well the commercial real estate market is.

Despite all the stimulus the unemployment rate is climbing again even after trillions of dollars in stimulus has been spent. All we have to show for it is a massively increased debt and nothing has been fixed. Most of that stimulus went into the pockets of bankers who are desperately trying to sure up their balance sheets that are filled with derivatives products that are completely worthless. They know the day of reckoning is coming and hope to be able to weather the storm with the free money the Federal Reserve is pumping into them daily. The bank bailouts continue as these banks borrow money at 0% and loan it out to consumers an high rates. Have you looked at your credit card statement lately and seen the rate they are charging?

When it becomes obvious that the free money flow to bankers isn't enough to help them they will be back asking for more bailout money. Of course they are going to continue to tell you that if we don't give them the money the consequences will be unbelievable and unbearable. Are you going to fall for it again? Are we going to let them tell us that the real problem is that we need to control this problem on a global level and that we need a global bank? Are we going to let them then come along just like they are now in the EU and tell us that the real problem with the Euro zone economy is that they don't have a single government entity calling all the shots? They are ever centralizing their power, and using every crisis to increase their control. Each crisis is used to make us do what they want... and when your the one creating the crisis it really looks good for them.

Funny thing in this fake recovery is that many corporations are reporting increasing profits. Top line revenue has not increased(their sales are not improving, except overseas in China and India) for the most part, they are getting the increase in profit from cutting expenses. This means even more jobs are heading overseas. These multi-national corporations are saving their cash and restructuring their debts at new low rates. They are sitting on a mountain of cash which is the highest we have seen in 50 years. Why do you suppose they are doing that if the economy is so great? I mean if you listen to Washington, the Federal Reserve chairman, or even the Treasury secretary they all tell you the recession is over. They hope that you won't notice what is really going on. They hope that you don't recognize the fact that if you subtract out the trillions in deficit spending the government is doing that it would be obvious that we are in the Greatest Depression. Many people are already living in TEOTWAWKI, check out this video:



See the funny thing is today you get a food stamp card and can get access to food at your grocery store. No standing in food lines. Do you think it would be obvious today that we are living through the Greatest Depression if the 45 million people getting assistance were standing in food lines all over the country? Do you think then they could still deny that the train left the tracks a long time ago? What about those that have had their unemployment benefits extended to 99 weeks and they are still adding on... Do you think that it would suddenly be obvious that the number of people unemployed is staggering if they went back to the normal 6 months unemployment benefits? Can you imagine the level of homelessness and the tent cities we would see right now?



So to see a figure that government employees make double what the private sector does is just a clear sign of the times. The trajectory into a SHTF world is in fact on track. Not many people can go through a hard time, pull out the credit cards and think they can live off of them for long and think that they will be able to recover from it, and even fewer will be able to pay back all that money they borrowed while living this way. Yet somehow the US economy is somehow the exception? That somehow we can defy all the odds and continue to live on debt, hire more people onto government payrolls, and pay them twice what they would make in the private sector while racking up massive piles of debt and live to tell about it? Sadly folks I don't think it is going to happen that we can recover from this level of disconnect from reality. Unless someone wakes up fast and puts the government on a massive diet and we start tackling these huge debts and broken programs the future is not going to be brighter for our kids or our grandkids.

How are we going to be remembered by our kids when all we have done is saddle them with debts because we were too selfish to live within our means? Instead of demanding more government programs to help us maybe we should have been working harder as families, churches, and communities to address our issues as they came up instead of increasingly looking to the state and federal government for help. Will we learn? Will we act in time? I can only hope, and pray that someone is listening and willing to do what is needed to divert a catastrophe. I don't want to see our world transformed into the end of the world as we know it(TEOTWAWKI), but the future does not look bright.

So what have you done today to prepare?

God Bless,
Longsnowsm

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