The American Recovery, Lots of Puff But No Substance
Ok, ok, if one reads the US post and watches Wall Street, not to mentions listens to the "honest" American government, one "knows" that everything in America is perfectly fine, economy is thundering along and the Empire is back to full strength....or is it?
Behind the daily charade, the endless cheer leading are very unforgiving currents that ca not be hidden from an expert eye, no matter how much the Obama Regime and the rest of the American One Party Two Branch system wants it. Lets review:
American housing continues to be a disaster, absolutely and all the time. The second wave of resets, these in the Alternative-A category, that is, houses much more expensive than the Subprime, is just starting to crest and the full weight of this disaster will not hit until some time in late 2010, early 2011. All resets will not be out of the American system until 2013. So why the "good" numbers?
Well, first, it is hard to figure out what these numbers are. Every month, early in the month, one reads about issues and problems with continued worsening of the sales figures. Some of this is hidden by only comparing the numbers against the previous year's for the same month. Rather ridiculous comparison that does well to hide trends. A trend requires comparisons over a longer time period and more than a single data point. Further, by only comparing to last year's, a year already down sharply, it hides how far the numbers are down all together from the start of the Great American Collapse. Then there are the revisions, such as today's news that "Pending Home Sales Rise Sharply In February"....but wait, today is the 5th of April, and this news, revised and printed, is driving another bought of American stock inflation?
Then there are the numerous attempts to forestall the true state of the problem or hide it. One American program after another to keep the people in their houses, those who can not pay, are all sponsored by that single real American export, debt. But the cost of that debt has risen sharply, just in the past week, a full half of a percentage point. How much is that? We'll assume it is compounded only once for the year and we'll assume that we are only dealing with half a trillion, for nice round numbers. That's $2.5 billion in additional service fees, a pittance of a rise for the American printing machine. Of course, the problem is, this is a trend in itself. More on this later.
Furthermore, there is a year's worth of housing that is so far been kept off of the books, by the mega banks, who see no reason to put it on market since they will not sell anyways. Foreclosures, though with all government programs, continue to increase both in quantity and dollar volume. Prices continue to fall or are kept from falling by artificial means. Even the level of new house construction is done by artificial $8,000 stimulus, that is a credit, which is cutting into already lowered tax revenues.
2. Commercial Real Estate
Just like the residential real estate markets, commercial is also over built, but unlike the residential, the Americans are still building commercial. Already this market has a 15% vacancy rate and growing, as small business and even large key stores go out of business. The latest in a long chain is Hollywood Video, leaving large store fronts empty in numerous strip malls. Unlike the residential debt, which was primarily held by giant banks who own the American regimes, the commercial debt is held by small family and company banks, banks the Washingtonians have no quams about shutting down, one after another. The government than sells these small fry to their big financial owners on Wall Street.
3. Cost of Financing
This is what will finally sink the Americans, surer than any iceberg. The costs are already increasing, on a long term trend. The 10-year bond notes are up, up and away, with interest rates rising to 4.01%, up .51% over the past 5 or 6 trading days, alone. There is no sign of this stopping as not only does the American regime have hundreds of billions more to sell of new debt, just for this month, but refinancing of old debt is needed and that refinancing is picking up steam.
Further, programs like Social Security (what passes for government pensions for the non-government workers) are finally bankrupt, 6 years ahead of schedule and will require some $30 billion in the first year alone. This sum will sky rocket over the next two or three years.
4. Infrastructural rot
As for America as a whole, its rotting, quite literally. About 5 years ago a major bridge collapsed and killed over 30 people. Follow on investigations determined that over 700 major bridges were close to collapse. After billions of dollars wasted and stolen, none have been repaired.
The cities though are rotting to. Detroit, the former #3 city and main industrial center, is a total third world hell hole, where the average house sells for under $11,000 and no one wants them. Why? To live on abandoned streets, surrounded by feral dogs, feral peoples and Islamic lunatics? Or New Orleans, still rotting and the murder capital of America in body count, even while military police patrol it. Or LA, half of which is a war zone. Little Rock with a worse per capita gang problem than LA? Phoenix Arizona? Second kidnap capital of the world? Or maybe Atlanta, Chicago, Baltimore, Philadelphia, Miami and Reno, all crime ridden hellholes, just like Washington DC, once one leaves the government sector and the ultra rich chenovnik neighborhoods.