The LA Times published an article this morning about a new study released by UCLA. This study makes the case that there will be no recession. Their thesis is, that the economy will drastically slow. Unemployment will double from current levels. Wages will remain stagnant. Current high rates of home foreclosures will continue. Retail sales, including durable goods, will remain flat. The construction and building materials industries will continue to suffer. They say that the total economy will continue to expand, albeit at very slow rates, through this year. An interesting aspect of their projection, is that they don't see any dramatic recovery, at the end of this non recession. The factors that are currently holding the economy down are likely to remain in place, indefinitely.
We have a capitalist society here. A no growth situation, for any length of time, is one of deterioration. Our model is based on expansion and growth. Increased unemployment puts an increased demand for social services on the government. Stagnant wages and home loss drastically decrease the ability of government to collect revenues. Any extended period of economic slowdown, especially if aggravated by a weak dollar and runaway inflation, is a recipe for disaster.
The American economy, in most sectors, has been increasingly non productive, for the last twenty years. We have been relying on bubble economics to buoy us up. I have been wondering where the next bubble is going to come from. The answer is here.
The government is going to be running up steep deficits to bail out the economy. They will print money and issue bonds to finance this. To do this, they will need rapidly increasing revenues in the future, to service the accumulating debt. There is no likelyhood that this will be the case, none. This is classic bubble economics.
Unbelieveable. Our government has become a ponzi scheme.
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