Symptom of Something Bigger
I suppose it's just human nature to look at change and trouble then say "it's just a fluke, things will get back to normal soon". Americans, along with much of the world, are just in denial of the profound and lasting changes that came with the economic crash of 2007-08. Many want to believe that the crash was due to some specific, single event like the housing bubble. But I believe that the housing bubble was a symptom of something bigger and more systematic going on.
Take a look at DOW performance for the period 1969-2010 and you will see the problem. The DOW was roughly 1000 from 1969-1984 then jumped to 2000 in 1985. The DOW then rose to 4000 in 1995, 6000 in 1996, 8000 in 1997, 10,000 in 1999 where it mostly leveled off until the post-911 dive to 8000. In 2006 the DOW skyrocketed again climbing to 12000 and finally 14000 in 2007 before tumbling to 6626 in 2009.
Where did all of this sudden wealth come from? Is the wealth real?
Governments, companies and individuals looked at the DOW and said to themselves, "I'm rich. Let the good times roll". When you're making 14 times what you were 22 years ago, you can justify a lot of lifestyle behavior. If it is real. But is it real?
Median US new house prices were about $20,000 in the 60s and early 70s. By 1985 the median price was $87,000 and by 2006 was $244,000. US income grew from $16909 to $20712 from 1968 to 2008 for the bottom quartile and $66735 to $100,240 for the upper quartile in the same period. So as new house prices grew 10 times, wages grew only 33% for the top 25% of the population. Where is all this supposed wealth?
Governments looked at the numbers and determined that they could grow in relation to this 1400 percent increase in wealth. Federal, state and local government decide they had arrived armed with endless resources. They hired, provided new services and expanded into everything. The train could go on forever with the fuel of wealth that seemed to be growing exponentially.
Those responsible for overseeing pensions and benefits sighed in relief as they saw that growth would solve all their problems. In fact, they decided we could add new benefits, even for people who couldn't or wouldn't work. No problem, the gravy train has arrived. Who knows where it came from. Just get aboard.
Now we're here in post-growth america of 2010 with 20% unemployment and abandoned properties scattered across the landscape. Wealth is deflating and we don't need or can't afford much of what exists. What now? Take back the promises? Fire all those added government employees? Reset our lifestyles to reflect reality?
46 state governments are broke and have total deficits totaling $112B this year. Projections for next year are $180B and another $120B in 2012. And the deficits get much worse if you factor in promised pensions and benefits. New Jersey alone has an $180B unfunded state worker pension liability. The wealth was never real, is "lost" as Biden tells it and will never exist. Where will the money come from to pay for the promises made?
I believe that all of the DOW growth since 1995 is make believe. The value of DOW equity is about $70T and falling. All of the DOW growth since 1995 is imaginary derivatives totaling $700T! It represents nothing real, just wild speculation. No one but me wants to tell you that simple fact. We've been sold a bill of goods that don't exist!
My state is building a bypass around bruigville. To mitigate the effect on the environment they are going to do three good deeds for the environment costing several million dollars. One good deed is to dig 20 feet of peat from a several acre bog, transport the peat 7 miles to another location and build a wetland. Nice stuff if you have the money. But we don't. However that won't stop our state leaders from borrowing and spending that money. After all, it will pay a good wage to a few heavy equipment operators and the firm that does the work.
We have to keep up the appearances that all is normal, all is well and it can go on and on forever. But it can't. Every lie comes into the light eventually. The bigger the lie, the harder the fall. The coming fall will leave a mark on humanity for 1000 years.
Take a look at DOW performance for the period 1969-2010 and you will see the problem. The DOW was roughly 1000 from 1969-1984 then jumped to 2000 in 1985. The DOW then rose to 4000 in 1995, 6000 in 1996, 8000 in 1997, 10,000 in 1999 where it mostly leveled off until the post-911 dive to 8000. In 2006 the DOW skyrocketed again climbing to 12000 and finally 14000 in 2007 before tumbling to 6626 in 2009.
Where did all of this sudden wealth come from? Is the wealth real?
Governments, companies and individuals looked at the DOW and said to themselves, "I'm rich. Let the good times roll". When you're making 14 times what you were 22 years ago, you can justify a lot of lifestyle behavior. If it is real. But is it real?
Median US new house prices were about $20,000 in the 60s and early 70s. By 1985 the median price was $87,000 and by 2006 was $244,000. US income grew from $16909 to $20712 from 1968 to 2008 for the bottom quartile and $66735 to $100,240 for the upper quartile in the same period. So as new house prices grew 10 times, wages grew only 33% for the top 25% of the population. Where is all this supposed wealth?
Governments looked at the numbers and determined that they could grow in relation to this 1400 percent increase in wealth. Federal, state and local government decide they had arrived armed with endless resources. They hired, provided new services and expanded into everything. The train could go on forever with the fuel of wealth that seemed to be growing exponentially.
Those responsible for overseeing pensions and benefits sighed in relief as they saw that growth would solve all their problems. In fact, they decided we could add new benefits, even for people who couldn't or wouldn't work. No problem, the gravy train has arrived. Who knows where it came from. Just get aboard.
Now we're here in post-growth america of 2010 with 20% unemployment and abandoned properties scattered across the landscape. Wealth is deflating and we don't need or can't afford much of what exists. What now? Take back the promises? Fire all those added government employees? Reset our lifestyles to reflect reality?
46 state governments are broke and have total deficits totaling $112B this year. Projections for next year are $180B and another $120B in 2012. And the deficits get much worse if you factor in promised pensions and benefits. New Jersey alone has an $180B unfunded state worker pension liability. The wealth was never real, is "lost" as Biden tells it and will never exist. Where will the money come from to pay for the promises made?
I believe that all of the DOW growth since 1995 is make believe. The value of DOW equity is about $70T and falling. All of the DOW growth since 1995 is imaginary derivatives totaling $700T! It represents nothing real, just wild speculation. No one but me wants to tell you that simple fact. We've been sold a bill of goods that don't exist!
My state is building a bypass around bruigville. To mitigate the effect on the environment they are going to do three good deeds for the environment costing several million dollars. One good deed is to dig 20 feet of peat from a several acre bog, transport the peat 7 miles to another location and build a wetland. Nice stuff if you have the money. But we don't. However that won't stop our state leaders from borrowing and spending that money. After all, it will pay a good wage to a few heavy equipment operators and the firm that does the work.
We have to keep up the appearances that all is normal, all is well and it can go on and on forever. But it can't. Every lie comes into the light eventually. The bigger the lie, the harder the fall. The coming fall will leave a mark on humanity for 1000 years.
Labels: economy, governemnt lies
posted by lugh lampfhota at 10:19 AM
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