Great Depression Online Archive Issue:

Obama!  Where Is Thy Stimulus?

Great Depression Online
Long Beach, CA
February 10, 2009

Inside This Issue You Will Discover…

*** A Harrowing Story
*** The Next Liquidation Phase
*** Obama!  Where Is Thy Stimulus?
*** And More

A Harrowing Story

If you still have a job…congratulations.  If you’ve lost your job, don’t take it personal…this economy stinks and a lot of other good people have lost theirs too.

For example, last Friday we received a call from a former client of ours.  She changed jobs about a year and a half ago.  And just before the holiday’s her new employer had across the board layoffs…with the last in, being the first to go.  Suddenly, this highly qualified, highly paid individual, with 20-years plus experience, is unable to find work.

How many times has this harrowing story repeated itself over the last several months?  Say 598,000 times just in January.

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That’s right.  Last Friday the Labor Department reported that 598,000 jobs vanished in January.  This marked the most job losses since 1974 and lifted the national unemployment rate up to 7.6 percent.

“Companies are in survival mode and are really cutting to the bone,” said economist Ken Mayland, president of ClearView Economics.  “They are cutting and cutting hard now out of fear of an uncertain future.”

The Next Liquidation Phase

The stock market, that manic beast, celebrated the news with a commemorative bounce.  The DOW ended the day up 2.70 percent and the S&P500 tacked on a 2.69 percent.  Apparently the market took the ghastly labor department report as further support for a quick and swift approval of the stimulus bill.

How the stimulus bill is going to help the stock market we’re at a loss?  So, too, we’re at a loss as to how the stimulus bill will help much of anything.  Particularly, when it’s up against this…

“Just in the 12 months ending January, an astonishing 3.5 million jobs have vanished, the most on record going back to 1939, although the total number of jobs has grown significantly since then [1939],” explained Jeannine Aversa for AP.

We believe the loss of 3.5 million jobs, and the loss of income those jobs provided, will be too fatal to the economy for some gross spending bill to overcome.  Here’s why…

“Vanishing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench, which has required companies to pull back.  It’s a vicious cycle where the economy’s problems feed on each other, perpetuating a downward spiral.”

Regrettably this downward spiral won’t end until all the excess capacity, which was built out in response to the biggest debt and consumption bubble in history, has been liquidated.  The next phase of this liquidation will emerge in the form of vacant commercial real estate and empty retailers.

Obama!  Where Is Thy Stimulus?

Alas before it has all been liquidated the masses – in America and abroad – may go a little mad.  Over the weekend, the head of the World Trade Organization, Pascal Lamy, said, as reported by AFP, “the global economic crisis could trigger political unrest equal to that seen during the 1930s.”

“The crisis today is spreading even faster (than the Great Depression) and affects more countries at the same time,” added Lamy.

In America, things have been relatively tranquil so far.  But that may change.  For after an election race full of good old fashioned populism, the populace is growing a little restless.

You can hear them from all around… 

From far away, in the deep outback, where the grass grows high, and the corn-rows long…you can hear them.  So, too, in the inner cities, from the decayed ghettos, and the graffiti splattered rubble…you can hear them.  What’s more, if you turn your ear up just right, and stand down wind of the suburbanite cul-de-sac, and the well manicured office park…you can hear them.

“Obama!” they cry out.  “Where is thy stimulus?”

“We intend to deliver,” promises the new President.

Hooray!

Sincerely,

M.N. Gordon
Great Depression Online

P.S.  With all this stimulus and “quantitative easing” money burping its way into the economy, the tide from deflation to inflation could surge faster than a south pacific tsunami.  Of course gold is the ultimate inflation hedge.  What’s more, it’s the ultimate safe haven.  Even in 2008, when practically all asset classes were losers, gold held strong…preserving the capital of those with the foresight to have bought some.  Yes, hindsight is 20/20…you could have loaded up on gold back in 1999 for under $300 per ounce.  Today that some ounce of gold will cost you over $900.  Still, it isn’t too late for you to buy gold.  And with the practical advice in the report How To Buy Gold Low, you’ll discover how the experts buy it below 50% of spot price.  Learn all about it here: How To Buy Gold Low.

 

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