Jun 08 2008
RamblerEconomy Freefall
Americans are feeling the pinch. Grocery stores can’t keep SPAM on the shelves these days. Typically, we Americans shun the very thought of food items like SPAM, but canned food is flying off the shelves as Americans search for ways to keep their food costs down.
The Labor Department tells us that core-inflation is up only 4 % but we know this can’t possibly be true. Food prices are sky-high. White bread is up 13 percent, bacon is up 7 percent and peanut butter is up 9 percent. Inflation is rampant and there’s no relief in sight.
Tent cities are springing up around the country as families who lost their homes in the housing fiasco deal with their new realities. Consumer confidence is now at its lowest point since the Depression of the 30s.
The “experts” in the business world are telling us that the “worst is over”. Not true – don’t believe it. The corporate bond market is still frozen, housing is in a free fall, and the banking system is staggering from the overload of bad investments. Corporate defaults are rising and and commercial real estate is crashing.
Oppenheimer analyst Meredith Whitney stated last week:
“The real harrowing days of the credit crisis are still ahead of us and will prove more widespread in effect than anything yet seen. Just as strained liquidity pushed so many small and mid-sized specialty finance companies to the brink, we believe it will do the same to the US consumer. We believe losses will only accelerate further and far worse than the most draconian estimates.”
The real origin of our problems is ideology. It’s roots are in the prevailing “trickle down” orthodoxy which opposes any increase in wages or benefits for working people. If workers aren’t adequately paid for their labor (and wages don’t keep up with production) then the economy won’t grow because consumers won’t have the money to buy the things they make. It’s simple cause and effect.
Our consumer society is in free-fall and is picking up speed and our parachute is malfunctioning.
| 2.5 |
3 responses so far
It is scary that even supposedly economically stable countries are now experiencing this crisis. More so with third world countries. Poverty prevails and the salary of workers remain stationary.
I am afraid of what may happen in the future.
Thanks for sharing a very informative post.
I couldn’t agree more. One of the side-effects of the jump to using off-shore resources is that wages have essentially decreased in this country. I don’t have empirical proof of that statement, but anecdotally, my wife recently found a new job after losing hers to offshore resources over two years ago. Her new salary is $30,000 less than she was making back then.
I was joking with a friend recently that the “trickle down” economy should be renamed “flush down” as we’re all being sent down the toilet. I agree with you, it will get worse before it gets better.