"Economy Worse Than You Think"... Mort Zukerman 7/13/2009

Discussion in 'Economics' started by Scataphagos, Jul 14, 2009.

  1. (Excerpt)

    "... Next year state budgets will have depleted their initial rescue dollars. Absent another rescue plan, they will have no choice but to slash spending, raise taxes, or both. State and local governments, representing about 15% of the economy, are beginning the worst contraction in postwar history amid a deficit of $166 billion for fiscal 2010, according to the Center on Budget and Policy Priorities, and a gap of $350 billion in fiscal 2011.

    Households overburdened with historic levels of debt will also be saving more. The savings rate has already jumped to almost 7% of after-tax income from 0% in 2007, and it is still going up. Every dollar of saving comes out of consumption. Since consumer spending is the economy's main driver, we are going to have a weak consumer sector and many businesses simply won't have the means or the need to hire employees. After the 1990-91 recessions, consumers went out and bought houses, cars and other expensive goods. This time, the combination of a weak job picture and a severe credit crunch means that people won't be able to get the financing for big expenditures, and those who can borrow will be reluctant to do so. The paycheck has returned as the primary source of spending.

    This process is nowhere near complete and, until it is, the economy will barely grow if it does at all, and it may well oscillate between sluggish growth and modest decline for the next several years until the rebalancing of excessive debt has been completed. Until then, the economy will be deprived of adequate profits and cash flow, and businesses will not start to hire nor race to make capital expenditures when they have vast idle capacity...."


    I believe it's "worse than Zukerman thinks"...

    The middle-class wage jobs we've lost to low labor cost countries will never, NEVER have the chance of returning to America until either (2) US implements strong protectionist policies... which will piss-off our trading partners... the ones we're dependent upon to buy our bloated debt, or (2) the $USD is devalued ENOUGH so that US workers are competitive with low-labor cost countries... BUT THAT WOULD MEAN BANKRUPTCY FOR NEARLY ALL AMERICANS...

    No genuine relief in sight AT LEAST until the Boomers die off... 30-40 years?

  2. As much as personally dislike Zuckerman, he's absolutely correct in his basic statement that the economy is far, far worse than most people believe.

    This will result in something that I believe will come to be called 'The Great Crash of 2010.'
  3. None of that matters. As long as the Great Illusion can continue, and people can drop their kids off at daycare, go to their 9-5, buy a six pack on the way home and American Idol is on when they get home, what difference does it make?

    No one will care. You can post all these negative news reports, but the market still goes up!
  4. pismo10


    When they have no 9-5 to go to anymore that is when things change.
  5. Yes, but until then, up- up up and away.

    Rainy day posts are hard to fathom in the bright sun.
  6. Swine flu, set to target healthy boomers!!
  7. sosueme


    What has Main street got to do with Wall street anymore

  8. Britain's had 16 deaths so far, and the infection rate is just about doubling every 7 days. The last 2 deaths were a 7yr old otherwise healthy girl and a 60 something Dr. who apparently got it from treating the sick.
  9. Why are you prolonging the matter? There are 5.5 months, and over 100 market days remaining in 2009. Did you buy a glass of Kool-aid?
  10. Are you saying there is no linkage between the market going up and people's spending/saving behavior?
    #10     Jul 14, 2009