Bill Bonner of "The Daily Reckoning" said it best on Jan. 6 of this New Year and decade when he posed the question: "are things really getting better?"
"Well, it's sort of true, "he said. "The recession is over … the depression continues."
In order to really make a "royal mess of things, you need taxpayer support" and additional contributions from the Chinese, willingly for now. "The federal authorities are busily making a bad situation worse," he quips.
We had some GDP growth in the third quarter of 2009, perhaps courtesy of the "Cash for Clunkers" program, and those being thrown out of work were down to merely a non-descript number just above 80,000 in December, keeping the "official" unemployment figure at 10 percent. However, it was also reported 661,000 people just gave up looking for work, so they are not even considered in the equation any more.
All this talk about improvements to the bottom line (whose bottom is anyone's guess) reminds me of an article I read several years ago while perusing the archives at the Arizona Historical Society. It was headlined "Depression to end in July, says Dawes, and proves it!"
Charles G. Dawes was a retired U.S. army general and banker, as well as having been a former vice president of the United States, and having survived the panic and following depressions of 1873 (when he was probably knee-high to a weed) and 1893, felt he had enough background to positively announce, in no uncertain terms, the 1930s depression was heading to a spectacular ending and that there would be a "great sustained demand for durable goods" by the spring or summer of 1935.
He would be proved right, of course, but the big consumer spending spree would not start until 15 years later, when those little rascal boomers were still soiling diapers and long after his death. And this same spending binge would come to a phenomenal end nearly 60 years later, when the bubbles created by so much credit would begin to pop, first with the dot.com and then housing. We still have a few more bubbles to go before this thing really hits bottom, as it was in the 1930s, but with an even greater light show since the population is twice the size it was before World War II and also due to the government's incredible appetite to run up smoking mounds of deficits and debt. There are more people on food stamps today then were living in this country at the time of the Civil War (1860 census 31,443,321 versus year 2010 when 39 million people need taxpayer help just to eat).
Dawes believed the Great Depression was about to end because the populace had gone more than five years without purchasing new vehicles, appliances, and all kinds of doodads. Unlike today, the American population was not anywhere near as debt-laden and the dollar was actually able to purchase much more. What is so amazing is in 1912, an American with a dollar in their pocket could still purchase the same amount of goods an American could while watching the burning of the capital during the War of 1812. A dollar truly was worth its weight in gold. And yet 98 years later you can barely purchase 3 percent of the same goods with your dollar; bummer.
The American public has been spending far beyond its means for so many years our landfills could be mined for useful products. That is how wasteful we have become, a big difference between our current economic woes and those in Dawes' 1930s. Even during the boom years of the 1920s, people did not waste. Today, far too many people think you can tax or confiscate from those who produce to sustain those who do not. Is there really enough to go around? Even if we do have a work force of nearly 139 million, how many of them actually pay enough taxes to prop up the ever-expanding reaches of the government, from local levels to federal?
The total national assets of this nation come out to be about $79.3 trillion, yet the total US unfunded liabilities is now approaching $106.9 trillion (that's Social Security, Medicare, Medicaid, and Lord knows what else that has been promised to the American public, not including plans for national healthcare). That comes out to about $346,571 per citizen. So there are so many rich people in America that they can carry a tax load like this? Get ready, middle class, this puppy is coming your way. And with personal debt approaching $16.7 trillion, there is not going to be any resurgence in consumer spending anytime soon. And since this economy is still more than 70 percent dependent on consumption, where will the recovery actually find a foothold?
The U.S. national debt on the eve of World War II was $49 billion, or $718 billion in 2008 dollars. Dawes' declaration the Depression was going to end in mid-1935 was probably more realistic than what we are being told today. The truth is we are more likely to resemble the Japanese economy for the next couple of decades than the big V-shaped recoveries of past recessions since WWII; double bummer.