The current economic climate remains disheartening for many. If you ask anyone searching for a job, they likely share the sentiment that ‘no one’s hiring.’ Despite the National Bureau of Economic Research declaring the end of the Great Recession in June 2009, a pervasive disappointment lingers for those living outside the political sphere.
For the middle class, their most important asset—their home—has transformed into a burdensome liability. Meanwhile, the lower class seems caught in a relentless current, struggling to make any progress despite their efforts.
Graduates entering the job market find themselves ensnared by student debt and left with minimal options beyond serving coffee. The Labor Department reports that the unemployment rate for those aged 16 to 24 exceeds 17 percent. What’s happening?
This economic recovery is peculiar, to say the least. New growth doesn’t stem from spending saved during the recession or from capital investment—a remarkable deviation from traditional recovery patterns. Continue reading
Every fall, the hot, dry Santa Ana winds sweep from the east across California’s desert. These fierce gusts roar down mountain passes and sweep across the expansive Los Angeles basin, pushing the smog trapped against the San Gabriel Mountains out to sea.
For a short while, the sunsets appear stunning from our vantage point in Long Beach, filled with vibrant oranges and pinks that linger low over the Pacific Ocean as the sun sets behind the Palos Verdes Peninsula. However, these winds eventually dry the vegetation into tinder. Sometimes, nothing happens; other times, a single spark ignites Malibu Canyon in flames.
A similar kind of financial storm is brewing across Europe this summer. Hot, dry winds, originating from Greece, are sweeping west towards Italy, reminiscent of volcanic ash from Mount Vesuvius nearly 2,000 years ago. They carry with them a risk that threatens to dry up the finances of Spain and Portugal, turning them into a volatile situation. But the winds don’t stop there…
They reach gale force as they blow across the Bay of Biscay, impacting France and Germany from the west, while sweeping northward past the Celtic Sea, where they severely weaken Ireland’s financial stability like an Irish coffee or an Irish car bomb. Continue reading
Efforts by the White House and Congress to reach a Grand Bargain are simply distractions. The premise of this bargain—cutting spending to raise the debt limit—reflects a façade. There’s little indication that the government is genuinely addressing the debt crisis.
Recent discussions, before they collapsed, revolved around proposed deficit reductions of $4 trillion, $2 trillion, or $1.5 trillion over the next decade. These proposals lack merit. For example, a $2 trillion cut over ten years translates to a mere $200 billion reduction annually.
The government’s current deficit stands at $1.65 trillion. Thus, even under this plan, the government would still need to borrow $1.45 trillion annually instead of $1.65 trillion. Consequently, this means the national debt will double over the next decade. Clearly, the charade unfolding in Washington is failing to tackle the underlying debt issue.
Mainstream news organizations are overlooking this reality. They seem more captivated by political maneuvering and who exits meetings. The real problem lies not in needing to increase the debt limit but in the government’s finances having surpassed total debt saturation. Continue reading
The situation is dire. Governments worldwide are teetering on the edge of bankruptcy in unison. In Europe, the credit ratings of Greece, Ireland, and Portugal have been downgraded to junk bond status, with Italian and Spanish debt likely to follow suit.
If even one of these countries were to default, it could wipe out the major banks in France and Germany, which have extended credit to them.
In the U.S., conditions continue to deteriorate. Congress and the President appear incapable of agreeing on spending cuts necessary to raise the debt limit—if you can believe that. And that’s just part of the story…
The economy is sinking like the Titanic while the Federal Reserve’s chairman seems determined to rescue it once more by excessively printing money.
“We must keep all options on the table. We cannot predict where the economy will go,” Federal Reserve Chairman Ben Bernanke stated before the House Financial Services Committee. Shortly after, Moody’s Investor Service placed the nation’s credit rating under review for a potential downgrade.
No doubt, limits exist in every aspect. Continue reading