Posted on Wednesday, 1st December 2010 by Lucy Hales
With all the talk in the media and among people that economy is improving, you may start to believe so. I disagree and quite strongly. Listed are 7 reasons why the economy is not turning around and we are not heading towards better times.
Is economy improving? Second Leg in Home Price Declines Underway does not bode well for the economy. I also happen to think, the first leg is still going with no end insight. To me, the best indicator is the number of empty spaces in strip malls, which is not decreasing. But the bottom line is quite simple,
1. No home equity means no real buying power so all the media talk about growing consumer spending is just bunch of baloney.
2. Eight million consumers stopped using credit cards. Let’s assume for a minute, just four millions stopped instead of eight, still quite a disaster for a spending.
3. Unemployment is at 10% and that’s official. Real number is somewhere at 17% if not more. How economy is improving if real wages are down, and the number of folks with money is down as well.
4. All the cash that has been printed by George Bush and Barack Obama has not been put to good use by those who have it. Some of it has, and that is why commodity prices and stocks are up. Commodities still have a very way to go. The rise in commodities will pass through into producer prices, and then to us or rather on us. Three may be four years from now, prices here may just double or triple from where they are today.
5. What will happen if the $ loses its reserve status? Then we see our standards of living plummet indeed. This came just few hours ago from Paul Volcker. US economy is not improving and the debt and deficit make other country worried quite a lot.
6. Economy two-thirds of which is based on consumer spending is not very sustainable, in my opinion.
7. Globalization has hurt this country and will hurt even more. All this talk that globalization is good for economy and creates jobs here are just propaganda. Increased competition with the rest of the world will lower our standards while raising those of others.
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