No Joy in Mudville *
[* The imaginary town of Mudville: This refers to a famous old baseball poem, Casey at the Bat - a fictional Babe Ruth who spread sorrow, not joy, when he struck out, his team losing as a result. Analogized, it may refer to the markets striking out. - SL]
Indeed not. The equity markets struck out, or as highly respected analyst Louise Yamada believes: "Clearly, this cyclical bull is over," but it's worse than that with Western and other economies cratering.
Some hover close to collapse or may head there. The operative word is hard times, the beginning of leg two of the global Depression that begin in fall 2007, likely to exceed it in harshness and duration.
Only massive monetary intervention prevented collapse earlier. Doing it, however, exacerbated a major problem, the equivalent of treating a metastasizing cancer with snake oil remedies. As a result, the patient is in sickbay failing.
Perhaps hindsight will prove what many analysts now believe - that the August 4 market rout was a major negative inflection point. By early August 8 trading, in fact, America's S & P 500 lost all its gains for the past nine months. By day's end much more. Other markets also got hammered, and why not.
Weak economic data are, in fact, worse than reported by manipulating them to look better or omitting their fine print, let alone what they portend.
For example, Friday's employment report showed 117,000 jobs gained in contrast to the broader Household Survey showing thousands lost. Moreover, labor force participation and the employment rate both dropped to a 28-year low heading south.
But's its worse than that as economist Jack Rasmus explains, presenting his views often on the Progressive Radio News Hour.
Analyzing the Labor Department's August 5 data, he explained greater weakness than reported, showing large job losses, not gains because of bias toward larger companies.
In fact, small and medium-sized firms, millions of non-incorporated proprietorships, and millions more self-employed are excluded from the headline number, the only one getting media attention.
As a result, the sum of net gains and losses showed 198,000 fewer workers than the previous month, a clear sign of economic decline. Moreover, the number of employed workers dropped for the fourth consecutive month, a cumulative loss of 901,000 jobs.
In addition, the broader survey showed only 55% of US workers holding full-time jobs, a record low heading south as economic conditions weaken. As a result, expect mass corporate layoffs at a time federal, state and local governments are shedding an annualized 500,000 or more jobs. It's why Rasmus says the "real crisis is not deficits or debt, but the crisis of job creation," hammering the other two.
On August 8, economist David Rosenberg said the market rally since March 2009 "was built on sticks and straw, not bricks." It was similar to "the financial engineering in the 2002-2007 cycle that gave (an) appearance of prosperity."
He also advised against putting much faith in Friday's employment report, expecting many revisions lower, calling fewer full-time Household Survey jobs "critical."
He added that market losses for the past two weeks were the steepest since the depths of 2008 and early 2009 "when US banks were being priced for insolvency." Concern now focuses on European banks because of their shaky sovereign debt exposure.
However, American banks are directly tied to them, and all major Western ones are linked through a global derivatives network totaling over $600 trillion, according to the Bank for International Settlements, a central bank for central bankers, a banking boss of bosses accountable to no government.
Moreover, real consumer spending is weak, falling three straight months when more economies are heading south or veering that way. It's no time to believe what's going on is short-term pain. It's far more serious.
In fact, "(t)he global economy is slowing down much faster than" last year when some analysts expected serious trouble. Moreover, sovereign debt problems are "more acute" now with Italy and Spain teetering. Add in US and European austerity, and it spells deeper, more protracted hard times.
A new IBD/TIPP Economic Optimism Index (Investor's Business Daily TechnoMetrica Market Intelligence) showed 35.8 in August, a steep slide with all subcomponents weakening dramatically. In fact, the showing was TIPP's worst reading "on record" since 2001, prompting its president to conclude that:
"The weak confidence data strongly suggest that the economy has fallen into recession, driven by high unemployment, under-employment and low confidence in the government's ability to improve the economy."
Nearly 30% of respondents said someone in their household was unemployed, the highest ever level, exceeding July's 24% showing. Clearly conditions are bad, getting worse, and for growing numbers most vulnerable potentially catastrophic without prospects for employment and enough income to manage.
Since 2008 or earlier, financial expert/investor safety advocate Martin Weiss warned about serious economic trouble, updating his analyses often. He now advises caution during hazardous times as economies crater, stocks represent extreme risk, credit disappears, municipal bonds collapse, corporates may follow, and Treasuries no longer are "fool-proof," a safe haven place to park cash.
S & P's downgrade may prove the first domino, "a methaphor for the historic, life-changing, world-changing transformations that could vaporize massive amounts of wealth" and create new opportunities by shifting course to safe harbors.
At the same time, forced austerity is hammering workers globally because Obama and other Western leaders won't provide help when it's most needed.
As a result, living standards are plummeting as economies teeter. Where it all ends looks bleak for growing millions left high and dry on their own.
Short of revolution, there's nothing in sight to help because Washington and other governments prioritize wars, super-wealth accumulation, and power. If that doesn't produce rebellion, what will? If not now as depravation grows, when?
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Stephen Lendman: I was born in 1934 in Boston, MA. Raised in a modest middle class family, attended public schools, received a BA from Harvard University in 1956 and an MBA from the Wharton School at the University of PA in 1960 following 2 years of obligatory military service in the US Army. Spent the next 6 years as a marketing research analyst for several large US corporations before becoming part of a new small family business in 1967, remaining there until retiring at the end of 1999. Have since devoted my time and efforts to the progressive causes and organizations I support, all involved in working for a more humane and just world for all people everywhere, but especially for the most needy, disadvantaged and oppressed. My efforts since summer 2005 have included writing on a broad range of vital topics ranging from war and peace; social, economic and political equity for all; and justice for all the oppressed peoples of the world like the long-suffering people of Haiti and the Palestinians. Also co-hosting The Global Research News Hour, occasional public talks, and frequent appearances on radio and at times television.
Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site sjlendman.blogspot.com and listen to The Lendman News Hour on RepublicBroadcasting.org Monday - Friday at 10AM US Central time for cutting-edge discussions with distinguished guests on world and national issues. All programs are archived for easy listening.
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URL: http://www.a-w-i-p.com/index.php/2011/08/09/no-joy-in-mudville
