Jobs wither, mortgages are missed, but no bottom in sight
Economic indicators hit lower lows
The latest numbers again match the predictions of the land-price cycle. The suffering of millions has even a business commentator howling.
by Jeffery J. Smith, June 2008If money is a problem for you, you’ll have to tough it out a while longer. We’re still in the downslide of the 18-yr land-price cycle, as these five 2008 indicators show. Is anyone to blame? The finger pointing occurs even in the business press. First, the numbers.
* In the US, home prices fell even faster, down 14.4% in March from a year earlier and down 2.2% from February to March. This is the 16th consecutive decline in prices. The sharpest decline has been in the formerly bubble areas such as Las Vegas, Miami and Phoenix. (Case-Shiller Index in MarketWatch, May 27)
* It’s not just an American phenom. Globalization means national economies are ever more in sync. In the UK, house prices fell 2.5% during May, marking their largest monthly fall since 1991, conforming closely to the 18-yr cycle. Prices were 4.4% lower than a year ago, a drop of £8,000, lowering the average UK house price to £173,583. At seven months, this is also the longest consecutive period of monthly falls since 1992 (BBC, May 29)
* Back in the US, both foreclosure starts and the delinquency rate rose in Q1, reaching the highest levels not seen since 1979 (MarketWatch, June 5).
* Unemployment in May jumped half a percentage point to 5.5% from 5% a month earlier, the biggest jump since 1986, over 20 years ago. Altogether, the economy lost 49,000 jobs in May and 324,000 jobs since the beginning of the year -- five straight months of contraction. The economy must create about 100,000 jobs a month just to keep pace with population growth. (Los Angeles Times, June 6)
* Have cash-strapped consumers maxed out their credit cards? Borrowing in the category that includes credit cards rose at an annual rate of just 0.4%, the smallest increase in two years, while borrowing for auto loans and other types of non-revolving credit jumped at an annual rate of 6.5%, up from March's 5.5% rate (for smaller cars?). The overall rate of increase in consumer credit was 4.2%, an $8.95 billion increase, which pushed consumer borrowing to an annual level of $2.56 trillion, a new record. Consumer credit does not include any borrowing secured by real estate. (AP June 6)
At this stage of the game, one business observer has gotten fed up. Appearing in CBS MarketWatch, John C. Dvorak wrote, “Public trust eroding, bit by bit” (May 9):
Credit-card companies practice a kind of usury and add dubious fees whenever possible. To add insult to injury they persuade Congress to change the bankruptcy laws so they always get their money.
Banks charge exorbitant fees for insufficient funds then again if a merchant resubmits the check. If the bank errs, it's nearly impossible to get the fees reversed. Some banks add a fee for actually using the bank. The ATM saves them money yet they add a fee if you use it.
Despite its AAA rating, American International Group (AIG) tipped over. This is yet another example of the failure of established institutions like Standard & Poors and other rating agencies to do honest work. It's a continuation of the more disturbing failures of the accounting and auditing institutions working with Enron and Worldcom.
The government has given us Sarbanes-Oxley -- a law that protects middlemen, not the public. Because of the overhead of Sarbanes-Oxley, it's not worth taking a company public unless sales are at $300 million. Any small-timer, such as a little software company, can never use the public for financing the future.
People have been made paranoid by government surveillance and the now seemingly permanent orange-alert status of the country over terrorism. The terrorists seem to have taken over the country. But it is our own government and institutions terrorizing the public.
Every institution of public trust has decided to see what they can steal from a passive uncomplaining public. Because of a general stupefaction of the public, nothing is done about it. It's a population of sheep being fleeced over and over with hardly a complaint.
JJS: Do more than complain. Organize alternatives!
Jeffery J. Smith runs the Forum on Geonomics.
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