Tag Archives: recession

PARLIAMENT VS THE PEOPLE

After a mass operation to withdraw the whip from Tory Brexit rebels, Boris Johnson is far short of a working majority.’ Photograph: WPA Pool/Getty Images

In 1642, King Charles I closed down parliament.  It was the trigger for a civil war that ended when Charles was beheaded in 1649.

It also effectively ended royal power.

Today, if the current divisions in Britain result in another civil war, it will be parliament vs the people.

Ridiculous, some may say.   Parliament represents the people.

Not any more.

Not since 2016, when a referendum in the UK showed the majority of people wanted to leave the European Union.   However, the majority in parliament (about 70%), don’t want to leave the EU and they have been fighting to keep Britain in at every opportunity.

Britain’s new Prime Minister, Boris Johnson, is committed to delivering on Brexit, to giving the people want they want. The deadline is October 31st.   He got the Queen’s permission to close parliament from September 9th, an act that enraged members of parliament.

Now parliament has voted to tie his hands behind his back.   He now cannot leave without a deal.   The Europeans may not give him more time, which means he would have to accept the deal they have already offered, a deal which keeps Britain bound to Europe indefinitely.

Normally, an election would have to be held to resolve the issue.   All  Mr. Johnson needs is a simple majority.   But the opposition Labor Party (and others) do not support an election, knowing they would lose.

Mr. Johnson’s hands are tied.

Sensing that this could mean Britain will NEVER leave the EU, financial markets and the British currency were up, a clear indication of where they stand.

A successful Brexit will be a blow to globalization.   Mike Pence, US Vice President, has just visited and expressed his support, including that of President Trump.

A writer for the London Times this morning predicted that in just two weeks Jeremy Corbyn will be PM and then the economy will crash!

This is a dreadful time for the British people.   “But Jesus knew their thoughts, and said to them:    “Every kingdom divided against itself is brought to desolation, and every city or house divided against itself will not stand.” (Matt 12:25).

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CORBYN’S NEW ECONOMY                                                                                  by Jim Pickard and Robert Shrimsley”

“A Corbyn government promises a genuine revolution in the British economy.   Labour’s leadership intends to pursue not only a fundamental change in ownership and tax but a systemic effort to embed reform in a way that future parties will struggle to unpick. “We have to do what Thatcher did in reverse,” says Jon Lansman, founder of the Corbyn support group Momentum.   “We have to take decisive steps to both achieve a significant redistribution and create a constituency of an awful lot of people with an obvious stake in a continuing Labour government.”   Labour has announced plans to nationalize rail, water, mail and electricity distribution companies, in addition to higher taxes on the rich.   At the heart of everything is one word:   redistribution.    Redistribution of income, assets, ownership and power.   The mission is to shift power from capital to labour, wresting control from shareholders, landlords and other vested interests and putting it in the hands of workers, consumers and tenants.   “We have to rewrite the rules of our economy,” says Mr. McDonnell.   “Change is coming.”     (“Jeremy Corbyn’s plan to rewrite the rules of the UK economy,” Financial Times, 9/5)

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US ECONOMY — SIGNS OF IMPENDING RECESSION

It can be hard to know when isolated announcements become something more.   Since last November General Motors has cut several thousand factory jobs at plants across the Midwest.   In early August US Steel said it would lay off 200 workers in Michigan.   Sales of camper vans dropped by 23% in the 12 months ending in July, threatening the livelihoods of thousands of workers in Indiana, where many are made.   Factory workers are not the only ones on edge.  Lowes, a retailer, recently said it would slash thousands of jobs.   Halliburton, an oil-services firm, is cutting, too.

In any given month, even at the height of a boom, more than 5m Americans leave a job; nearly 2m are laid off.    Most of the time, however, overall employment grows.   But not all the time.   America may or may not be lurching towards a recession now.   For the time being employment and output continue to grow.   But in the corners of the economy where trouble often rears its head earliest, there are disconcerting portents.  (The Economist)

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ISLAMIC VIEW ON TRUMP, JOHNSON AND ISRAEL

Fatah Revolutionary Council member Dr. Hazem Abu Shanab, the former Palestinian ambassador to Pakistan, said in an August 18, 2019 interview on Alhadath Alyoum TV that U.S. President Donald Trump will be re-elected in 2020 because American society has turned to extremism the same way that Israeli society has favored extremist parties for the past 18 years.   He added that the situation is similar with Boris Johnson in the United Kingdom, and the TV host, Sayyed Ali, said:   “We are creating a Hitler worse than Hitler.” (MEMRI #7431, 8/25)

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FIGHTING FOR GERMANY

“Recently a party represented in the German parliament (Bundestag) published its program for the military.   The program is no secret.   The voters going to the polls in 2 German states on September 1 could know this program.   Up to 28 percent of the voters have chosen the party with this program.   It wants to further militarize Germany.

“The 28 percent party is calling for a radical “restoration of the German Bundeswehr (the German armed forces).”   The military draft should be reinstated and the number of troops “be raised to 23,000 soldiers” – as a “first step.”   An additional 50,000 man reserve would be necessary.   The German military, it literally states, “would be authorized to intervene domestically.”

“The “foreign duties” of the Bundeswehr should be exercised “in every corner of the earth.”   In Europe:   it lays “claim to a military commanding role” – because of “Germany’s geographic situation and economic prominence.”  The highest command level will be a German “General Staff.”

“Germany should also be in command of the European NATO.

“And finally, being the commanding nation, Germany must insist on “participation” in NATO’s “nuclear capabilities.”   In other words, Berlin should have a finger on the trigger of France’s, and eventually also the USA’s nuclear weapons and be in a position to wage also NATO’s nuclear wars.”   (German Foreign Policy, 9/3)

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GERMAN ELECTIONS:   AFD SURGE IN SAXONY AND BRANDENBURG – BBC * 2 Sep 2019

Germany’s far-right Alternative for Germany (AfD) party surged in elections in two eastern states, but not enough to oust the ruling coalitions there.   The centre-right Christian Democrats (CDU) of Chancellor Angela Merkel lost votes in Saxony but still came top with 32%, ahead of AfD’s 27.5%.    In Brandenburg, the state surrounding Berlin, the centre-left Social Democratic Party (SPD) won with 26.2%, while AfD got 23.5%.    AfD is shunned by the other parties.   In both states the other parties will now discuss forming new coalitions – perhaps including the Greens – which will exclude AfD.

The SPD – nationally in government with the CDU – plunged dramatically to 7.7% in Saxony.   Support for AfD grew when it campaigned against Mrs. Merkel’s admission of nearly a million non-EU migrants in 2015.   AfD also drew on discontent in the former communist east over Germany’s closure of loss-making businesses, including coal mines.

AfD’s slogan “let’s complete the change” harked back to the 1989 “Wende” (change), which many eastern Germans see as unfinished business.   Despite huge investment from the richer west, for many people the economic restructuring did not transform their lives as they had hoped.

“We’re satisfied in Brandenburg as well as in Saxony,” AfD co-leader Alexander Gauland said, adding that his party had “punished” Mrs. Merkel’s conservatives.   But despite the gains, the result may disappoint AfD as the party had hoped to come top in Brandenburg, the BBC’s Damien McGuinness reports from Berlin.

The CDU state premier of Saxony, Michael Kretschmer, said, “I’m very happy with the result,” but added that opposition messages had made an impact on social media.   “The filter bubble on the internet is so powerful, and in 20 months you cannot reach everyone,” he told broadcaster ARD.    The CDU-SPD national coalition is due to last until federal elections in 2021, and a collapse could trigger a snap election or result in a minority government.

Mrs. Merkel herself plans to step down as chancellor in 2021, having already resigned as CDU leader at the end of last year.   (https://www.bbc.com/news/world-europe-49544781)

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ISRAEL AND IRAN ARE AT WAR

Israel and Iran are at war.  Israeli strikes this week in southern Syria, western Iraq and eastern Lebanon – and possibly even Beirut – confirm it.

This war is a very 21st-century affair.   For now it involves only small circles among the Israeli and Iranian populations.   Parts of the air force, intelligence services and probably special forces are active on the Israeli side.   The Islamic Revolutionary Guard Corps, its expeditionary Quds Force and proxy politico-military organizations in Iraq, Syria and Lebanon are engaged on behalf of Iran.

The war marks a hinge point in Middle Eastern geopolitics.   For the past decade and a half, the region has been engaged mainly with internal strife:   civil wars, insurgencies and mass protests.   These are now largely spent, leaving a broken landscape along the northern route from Iran to Israel.   (Jonathan Spyer, Middle East Forum, 8/28)

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ISRAEL FACES SERIOUS ESCALATION IN WAR WITH IRAN

The fact that Israel has found it necessary to attack targets so far from its traditional area of military operations close to its immediate borders is indicative of the alarming escalation that has taken place in recent months in the threat Iran poses to Israeli security.

Earlier this week, in Lebanon, an Israeli drone was reported to have bombed a Palestinian base that is said to be funded by Iran. Israeli warplanes were also reported to have bombed Iranian military bases on the outskirts of the Syrian capital Damascus.

The very idea of Washington sitting down with the Iranians at a time when it is continuing to threaten the security of its closest Middle Eastern ally would be unconscionable.

The reality is that there can be no meaningful dialogue between Washington and Tehran on a future deal so long as Iran remains committed to its long-standing policy of seeking the wholesale destruction of the Jewish state.   (Con Coughlin, Gatestone, 8/29)

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CALL FOR AMERICAN THEOCRACY

The Muslim Ummah of North America (MUNA) held its 2019 annual convention on July 5-7 in Philadelphia.   Just as with last year’s conference – also held in the nation’s birthplace — there was no shortage of extremist speakers sharing the podium.   But in contrast to 2018, this time the focus was squarely on the Islamist charge into the political sphere.   Speakers claimed that Islam required believers to gain political power, impose an Islamic doctrine on America, and fundamentally reshape American society.

Ayman Hammous, executive director of the Muslim American Society (MAS, the American affiliate of the Muslim Brotherhood), stated that “Islam is needed at the spiritual level, at the social level, at the political level.”   Movita Johnson-Harrell, a state representative from Pennsylvania, called on Muslims to “occupy every space of this world.”   (Martha Lee and Benjamin Baird, Middle East Forum, 8/2)

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GERMANY AND FRANCE TO BOOST MILITARY PRESENCE IN SAHEL

 

(Own report) – Berlin and Paris have announced an initiative to increase the militarization of the Sahel. The initiative is called the “Partnership for Security and Stability in the Sahel,” German Chancellor Angela Merkel explained last Sunday at the G7 summit in Biarritz. According to Merkel, within this framework “troops and police forces” from five regional countries should be “reinforced nationally.”  For this purpose new financial means will be made available, French President Emmanuel Macron explained. This project is the EU’s third attempt to control tensions and conflicts in the Sahel with increased militarization. With much fanfare, the EU had launched the EUTM Mali training mission in 2013 and strengthened the United Nations Multidimensional Integrated Stabilization Mission in Mali MINUSMA with soldiers from Europe. In 2017, Germany and France had promoted the establishment of the “G5 Sahel” intervention force. The conflicts had increased each time and have already spread beyond Mali to other countries, some even involving ethnic massacres.   (German Foreign Policy, 8/28)

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NON-RELIGIOUS MAJOR FORCE IN DNC

The Democratic National Committee passed a resolution Saturday claiming nonreligious people are “the largest religious group” within the party, noting these people “overwhelmingly share the Democratic Party’s values.”

The resolution came forward at the DNC’s summer meeting in San Francisco, and it was pushed through with unanimous consent.   The lobbying group Secular Coalition of America praised its passage as the first time a major American political party has “embraced nonbelievers,” according to Fox News.

The resolution states that nonreligious people make up 25 percent of the national population and 35 percent of people under the age of 30.   Of these, 70 percent voted for  Democrats in the 2018 midterm elections, the document notes.   It continues that these people “have often been subjected to unfair bias and exclusion in American society,” asserting that many religious Americans have sought to infringe on their rights.”  (American Truth Today, 8/30)

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US MILITARY’S MOST OVERWEIGHT MEMBERS ARE IN THE NAVY

Sailors need remedial physical training

That could be one just one of many conclusions drawn by a recent Department of Defense study that found the Navy earned the dubious honor of surpassing all other branches in its rate of obese personnel.   The overall rate of fat service members is also up from recent years, with the percentage of personnel weighing in at obese standards climbing to over 17 percent, according to a Health of the DoD Force study.   That number spiked to over a quarter of service members over the age of 35.   For the Navy, the overall number of obese personnel was a shocking 22 percent.  The other branches reported the following frequency of obesity: Air Force: 18 percent; Army: 17 percent; Marine Corps: 8.3 percent.

While the Marine Corps was the least overweight of the bunch — a characteristic partially attributable to the Corps having the youngest average age of personnel — the Marines reported the highest rate of knee and back injuries.

“The Department of Defense, our nation’s largest employer, spends about $1.5 billion annually in obesity-related health care costs for current and former service members and their families, as well as costs to replace unfit personnel,” a recent study by the Centers for Disease Control and Prevention claimed.   Overweight and obese active duty military also cost DoD $103 million per year in the form of 658,000 lost workdays, the study found.

A 2018 RAND Report that analyzed rates of both obese and overweight troops painted a grim picture of the military’s physical fitness standards.  The study, featuring roughly 18,000 randomly selected participants across each of the service branches, reported that almost 66 percent of service members are considered to be either overweight or obese, based on the same BMI measurement standard used in the DoD study.    Broken down by service, the 2018 report lists the Army as the branch accounting for the highest percentage of overweight troops, with 69.4 percent of soldiers falling under this category.  The Army was followed by the Coast Guard (67.8 percent), Navy (64.6 percent), Air Force (63.1 percent) and Marine Corps (60.9 percent).

(https://www.militarytimes.com/off-duty/military-culture/2019/09/03/this-branch-takes-the-cake-as-the-us-militarys-fattest/)

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ALTERNATIVE VIEW

Over thirty years ago, Jeremy Paxman presented an above average in-depth news program on BBC2 called Newsnight. I used to watch it when I got home late from visiting or giving an evening Bible Study. Mr. Paxman, of Jewish descent, lives in England, but has the insightfulness of an outsider.

I’ve recently spent time reading two of his books: “On Royalty” (2006) and “The English” (1998).   I was surprised to see the following in the latter, on page 94. I reproduce it for your interest.

“Nineteenth century missionaries sent out to convert the colonized peoples of the world sincerely believed they were spreading the word from a New Jerusalem in England.   It was only a short step to the crackpot belief propounded by Edward Hine in a lecture in Chelsea in 1879 that Great Britain was Israel, the Americans the lost tribe of Manasseh, the Irish the Canaanites, and that Jacob’s Stone was really in Westminster Abbey.   It was, his followers claimed, the only explanation for the extraordinary success of the English people. According to this theory, the Jews of ancient Israel had been captured by Assyrians led by King Sargon, had migrated across Europe and eventually emerged as the Anglo-Saxons.   As late as the 1960s, an American, Herbert W Armstrong was repeating the “chosen people” theory:

‘Certainly there can be no mistaking the identity!   Take a map of Europe, lay a line due northwest of Jerusalem across the continent of Europe until you come to the sea, and then to the islands in the sea.   This line takes you direct to the British Isles! Proof that our white, English speaking people today – British and American – are actually and truly the Birthright tribes of Ephraim and Manasseh of the ‘lost’ House of Israel.’

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QUOTE

“Things have come to a pretty pass when religion is allowed to invade the sphere of private life,” Lord Melbourne, British prime minister, friend and mentor to Queen Victoria.

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IS EUROPE GOING INTO A DEPRESSION?

EU

The French government has resigned for the second time in four months, following opposition from a couple of cabinet members to German imposed austerity measures. These left-wing members of the French parliament want the priority to be growth not fiscal discipline.

It should be noted that growth is the number one priority of the US Federal Reserve. In contrast, the eurozone believes the priority should be living within your means, hence the austerity imposed on a number of European countries.

The result after three or four years of austerity is a deepening recession throughout the EU. The latest country to go into recession during the second quarter is Germany, the economic engine that supposedly pulls the rest of the eurozone along.

Could Europe’s recession become a depression?

Before the Great Depression of the 1930’s, any downturn in the economy was described as a “depression.” In the 30’s the word had such a negative connotation that, after World War II, it was decided to use the milder word “recession” to describe a milder downturn. If an economy has negative growth for two consecutive quarters, it’s in recession. If the downturn is 10% or more, it’s a depression.

The problem is that a recession can easily become a depression. Deflation is a serious threat in Europe – that’s where prices and wages keep on going down. There is little that can be done to correct deflation, which is considered the worst thing that can happen to any economy.

As economies go into reverse, the consequences are hard to predict.   A look at history can help.

Rising unemployment and spreading poverty, despair, and hopelessness led to the rise of fascism in the Europe of the 1930’s. A number of countries, including Germany, turned to dictators who promised them everything. Those dictators, in turn, led their countries into war, which at least helped boost economic growth. Vast populations blamed the Jews for their financial problems, claiming the Jews controlled the world’s financial system; the result was the Holocaust in which six million Jews died.

Could it happen again?

Of course it could. European history shows that the Jews have been turned on repeatedly throughout history.

Could a depression bring about the collapse of democracy? All EU members are required to have a democratic system of government but most governments in the EU have lost a great deal of support during the economic crisis. If conditions worsen, there is no guarantee democracy will survive. When people are going hungry, they don’t care about constitutional niceties!

Could the EU fall apart?

Yes, it could. The Euro has been a great success for the wealthier nations but is hindering growth in other countries. In the past, countries like Greece, Portugal and Spain could devalue their currencies to boost trade; they can no longer do this when their currency is controlled externally.

In Revelation, chapter 17, we see that a union of ten nations is prophesied to come together at the end time. The EU is a union of 28 members, who, most of the time, are not very united. The UK is even considering pulling out of the Union, which is unprecedented.

A new and different union would emerge after a collapse of European economies. It would also have to emerge fairly quickly if it is to defend itself against the rising threat in the Middle East.

Keep watching events in Europe as well as the Middle East. The latter is the main focus of Bible prophecy but Europe is in second place. Europe and the Middle East have impacted each other greatly down through the centuries and will continue to do so.

GAP BETWEEN RICH AND POOR – A WARNING OF FUTURE UPHEAVALS

Mind the Income Gap

It disturbs me when fellow conservatives make insensitive comments about the poor.   Many of them are too busy making money to read much history, but, if they did, they would know that Marie Antoinette did not live long after she dismissively said, “Let them eat cake!”, when told the peasants had no bread.   Whether or not she really did say that is irrelevant – people believed she said it and she soon had an appointment with Madame Guillotine!

128 years later the Russian Revolution began with a bread riot in the capital Petrograd (now Saint Petersburg).  Both the Bourbons and the Romanovs lost their thrones.

It’s the height of arrogance for us to think that, because we have supposedly matured to a better form of government, it cannot happen here.  When people are hungry, they won’t care about constitutional niceties.  If they are not fed, they will get violent and will then turn on those with the food.

Marie Antoinette might have survived if she had been familiar with the economic Rule of Inequality, an economic law by which you can accurately predict the likelihood of civil disturbance right up to and including revolution.  Simplified, what it says is that the greater the gap between rich and poor, the more likely revolution becomes.   And, if there’s a revolution, the wealthy will lose everything, so the wealthy do have a definite interest in the welfare of the poor.

A nineteenth century Conservative leader of Great Britain saw this clearly.  Benjamin Disraeli wrote the novel “Sybil; or the Two Nations” in 1845.  He was extremely concerned about the increasing gap between the haves and the have-nots.   Disraeli showed that Conservatives can do a great deal to help the poor.

China has tried to address this problem.  Frightened at the prospect of revolution as the wealthy rather vulgarly display their wealth in front of peasants who barely eke out a living. The Chinese government is trying to rectify the imbalance.

The only industrialized nation in the world that has a wider gap between rich and poor is the United States.  Yet, in the last election, the issue of poverty was not even addressed.

Mitt Romney, the Republican candidate, sounded rather like the late decapitated French queen when he talked of the “47%”, the voters who depend on government, saying they would never vote for him.   Even the Democratic leader, the current president, had nothing positive to say about the poor.  They are largely forgotten.

The United States and China are not the only countries with this problem.  It is a worldwide phenomenon that has already caused riots and revolutions in some countries.

Jesus Christ said: “the poor you will always have with you” (Matthew 26:11).  That’s very true.  The Rule of Inequality refers, rather, to the widening gap between rich and poor, a gap we see widening with almost every announcement on the economy.

As a fiscal conservative, I do believe government should live within its means.  But if, as some suggest, government programs like food stamps, WIC (food for Women, Infants and Children), Medicare for the elderly and Medicaid for the really poor, are abolished or greatly reduced, this could trigger off the revolution Marie Antoinette did not see coming!

Put bluntly, abolishing food stamps will mean riots in the streets of our big cities.  Again, that’s how the world’s worst revolution started, in Russia in February 1917.

This does not mean, either, that government programs are the best way to alleviate poverty.   The New Republic magazine showed two decades ago that the Salvation Army is far more cost-effective in caring for the poor, than is the federal government.

But that’s a separate issue.  The reality is that the poor do need help – or we will all suffer the consequences.

Conservative churches in the United States never seem to address this issue.  They tend to focus on abortion and same-sex marriage, both of which are unbiblical.  But they should remember that a major reason for God’s condemnation of ancient Israel and a reason why He let their nations be brought down, was because they exploited and neglected the poor.  Maybe a reason why churches won’t address this issue is because too many of their members are involved in exploitation – people who appease their conscience by making generous donations to the church!

Note the following condemnation of supposedly dedicated people who fast, but oppress the poor while they fast.   “You seem eager for God to come near you.  Yet on the day of your fasting, you do as you please and exploit all your workers.  Yet is not this the kind of fasting I, your Lord, have chosen: to loose the chains of injustice…to share your food with the hungry and to provide the poor wanderer with shelter—when you see the naked, to clothe them?” (Isaiah 58: 2-7).

Also note: Prov. 14:31 Anyone who oppresses the poor is insulting God who made them. To help the poor is to honor God.

One way in which the poor are exploited is through usury.   Millions of people are heavily in debt.  It’s too easy to say that they brought it on themselves.  It would be better to look at what the Bible says.  What many Christians do not realize is that usury, the charging of interest, is condemned in the Bible.  “If one of your brethren becomes poor, and falls into poverty among you, then you shall help him…Take no usury or interest from him….”  (Leviticus 25:35-36).  In stark contrast to this biblical instruction, our cities are full of “Cash Advance” stores that charge exorbitant rates of interest.  The more interest people have to pay on loans, the less money they have to spend, hence the recession!

It wasn’t until 1694 that a Christian country, England, allowed interest to be charged, when the Bank of England was founded.  Before that, Christians were not involved in banking.  That was the preserve of Jews.  This practice often led to pogroms against the Jews.  In York, England, in 1190, all the Jews in the city were killed, when town officials stirred up the people in order to get out from under their own debt obligations.

Today, we see people’s debts constantly rising.  Student loan debt is at an all-time high.  Many students will never be able to pay off their debt and will never be able to buy a house, marry or start a family.  In spite of this, our society encourages people to get deeper into debt.

What’s needed is a biblical Year of Jubilee.  The peoples of ancient Israel were instructed to cancel all debts once every fifty years.  You can read about this in the Book of Leviticus, chapter 25.  The result of the Year of Jubilee was that nobody could become too wealthy or too poor.  Instead of the Year of Jubilee, we have a depression or a recession approximately once every fifty years.  The Great Recession of 2008 was brought on by too much debt.  We have not been able to get back to where we were before 2008 and we won’t be able to until we cancel all debts.

It’s an ancient idea but it remains the best way forward for western nations today!

STUDENT LOAN DEFAULTS ON RISE

CollegeEducation[32]

Assuming that Lansing, Michigan, is typical of national trends, there’s a crisis brewing when it comes to student loans.

Lansing is the home of Lansing Community College.  East Lansing, a city that borders Lansing, is home to Michigan State University, so higher education is a big factor in the local economy.  Not too far away is Ann Arbor, home of the University of Michigan.  Both universities are Big Ten universities here in the US.

These institutions of higher learning hardly suffered after the financial collapse in 2008.   A friend once described Ann Arbor as “a reality free zone.”  But reality has a habit of eventually catching up on people, institutions and countries.  They can’t avoid trouble forever.

“Student loan defaults on rise at LCC” ran a headline in today’s Lansing State Journal (April 26th).  “The recession years brought a boom in enrollment to Lansing Community College and a boom in borrowing.”  IOW, they did not suffer like the rest of us.

Continuing:  “In 2007-08, the year before the markets collapsed, LCC students took out just under $29 million in federal student loans.  Three years later, that number topped $68 million.  More borrowers were borrowing more money.”

Ironically, the reason why more borrowers borrowed more money was the recession itself.  People lost their jobs and went back to school for further training.  (That, of course, has led to a great deal of disappointment as, upon graduation, the jobs aren’t there, leaving many to feel higher education is not worth it.  That could be a further problem for colleges and universities in the future.)

Anyway, “of the 3,779 former LCC students who began repaying their student loans between October 1, 2009 and September 30th of the following year, 653 of them went into default over the next two years.  That’s 17.2 % . . .”

A few weeks ago, it was announced that student loan debt had reached over $1 trillion.   The President promised to do something about it, which, likely, will simply result in government taking over some of that debt, adding to the country’s financial woes.

What’s needed is a deeper look at this problem.

A television news program this week showed that thousands of Americans are now moving to Canada for higher education as the cost is roughly a quarter of what American institutions charged.  That’s a staggering difference.  While the rest of the country had to economize after the financial crash, academic institutions continued to raise their prices for tuition, room and board, as if nothing had happened.

Is it possible that student loans in the US have actually enabled higher education to keep charging more, knowing that the kids can always borrow the money from Uncle Sam?   Never mind the kids, after they get a degree, they will be earning good money and will happily pay it all back!

However, that’s not happening any more.

Millions of young people can’t find a well paid job, can’t afford to buy their own place so they go back to Mom and Dad, can’t afford to marry and start a family, hence the falling birthrate.  Post-WWII expectations are no longer guaranteed.

Student loans are only part of the problem.  But they are a large part of it.

What’s surprising is that the local rate of defaults is only 17.2%.

At some point this bubble is going to burst and the consequences could be worse than when the housing bubble burst in 2006.

US ECONOMY – GETTING IN DEEPER

unemployment-rate-2013

 

America needs a Margaret Thatcher!

Today is the day of her funeral.  It wasn’t broadcast on any of the main channels but I was able to watch it on the Wall Street Journal’s webpage, which I really appreciate.

If you are thinking that the US economy is improving, you should subscribe to the WSJ for the full picture.  It’s not a good one.

Mortimer Zuckerman, editor of US News and World Report and a wealthy real estate investor, wrote the following for the Journal recently:

“The present phase of our Great Recession might be called the Grand Illusion because all the happy talk and statistics that go with it, especially on the key indicator of jobs, give a rosier picture than the facts justify.  We are not really advancing.  We are, by comparison with earlier recessions, going backward.  We have a $1.3 trillion budget deficit.  And despite the most stimulative fiscal policy in our history and the most stimulative monetary policy, with a trillion-dollar expansion to our money supply, our economy over the last three years has been declining or stagnant.  From growth in annual GDP of 2.4 percent in 2010, we bumped down to only 1.8 percent in 2011 and were still down at 2.2 percent in 2012.  The cumulative growth for the last 12 quarters was just 6.2 percent, less than half the 15.2 percent average after previous recessions over a similar period of time.  It is the slowest growth rate of all the 11 post-World War II recessions.”  (“The Grand Illusion”, WSJ, 4/4/13).

What about jobs?  Isn’t the decline in the official unemployment figure a reflection of how much better things are?  Mr. Zuckerman continues:

“Still, can’t we take comfort in headlines celebrating the decline in unemployment to 7.7 percent?  Not really.  If you add in all the unique categories of people not included in that number, such as “discouraged workers” no longer looking for a job, involuntary part-time workers, and others who are “marginally attached” to the labor force, the real unemployment rate is somewhere between 14 and 15 percent.  No wonder it has been harder to find work during this recession than in previous downturns.

“Though last month we theoretically added 236,000 jobs, these numbers are misleading, too, because so many of the jobs are in the part-time, low-wage category.  So the backdrop to the most recent job numbers is the fact that multiple job-holders are up by 340,000 to 7.26 million.  In essence then, all of the “new” positions are going to people who already are working, mostly part time.  It is clearly more important to create jobs for people who aren’t.  Other aspects of the jobs picture deteriorated, too.  The pool of people unemployed for six months or longer went up by 89,000 to a total of 4.8 million, and the average duration of unemployment rose to 36.9 weeks, up from 35.3 weeks.

“Moreover, the decline in the unemployment rate to 7.7 percent is shaky.  It reflects the departure from the workforce of some 130,000 individuals.  A change in the denominator makes the unemployment numbers look better than they are.  The labor force participation rate, which measures the number of people in the workforce, also dropped to around 63.5 percent, the lowest in more than 30 years.  The workweek remains short at 34.5 hours.  Quite simply, employers are shortening the workweek or asking employees to take unpaid leave in unprecedented numbers, and these people are not included in the unemployment numbers.”

So, where is the US headed?

“State and local governments owe $7.3 trillion in promises they’ve made that were never approved by taxpayers”, wrote Steven Malanga in the WSJ, March 29th.  The title of the article was “The debt bomb that taxpayers won’t see coming.”  As Mr. Malanga points out, taxpayers “will ultimately bear the burden of the officials’ misdeeds.”  Most of the problem is unfunded commitments to state employees in pensions and healthcare.

Further signs of a deteriorating economy are reflected in another WSJ headline:  “Use of food stamps swells even as economy improves” (March 27th; article by Damian Paletta and Caroline Porter).  Enrollment in the free food program has soared 70% since the 2008 recession began.  Now, 47.8 million people are food stamp recipients.  Waiting in line at supermarket check-outs, the government issued light orange EBT credit card is now as common as other cards.  Another noticeable trend at the check-out line is the increasing number of people using cash, afraid of over spending on credit cards when they may lose their job next week or take a big pay cut.

Still another sign is the continuing housing crisis.  In our own county, Michigan’s Eaton County, foreclosures are at an all time high, meaning the economy is definitely not improving where we are.  “Eaton County sees record high foreclosures” ran the headline on the WLNS, channel 6 website April 10th.  This figure also disguises the fact that many more people are underwater, where they owe far more on their home than the house is worth.

The above are good reasons for needing a Margaret Thatcher, somebody willing to take unpopular measures to reduce government spending, lower taxes and boost the economy.  Instead, the United States is headed in the opposite direction.