SHARK INFESTED ECONOMIC WATERS

Just when you thought it was safe to read the economic news you discovered that these troubled waters are still under threat by ravaging sharks. As President Bush signs what many economists say is a waste of money, an anathema to economic theory; the news from the Street is not encouraging. In case you were busy this weekend, here are some of the headlines and quotes you may have missed:

“…investors believe the package will only be a baby step in the long road to economic recovery.”
"At best, we can hope that it stems some of the more intense risk from the credit crisis.”
“Brace yourself. The credit squeeze that almost every financial expert has warned about is here.”
Economy sheds most jobs since 2003, more cuts seen
Payrolls drop by most in 5 years; more pain ahead
THE LATEST: Employers slashed 159,000 jobs in September, the most in more than five years and the ninth month in a row of nationwide job losses.
Factory orders drop by 4 percent in August
…the credit strains began to hit manufacturing with full force.
Jobless claims pushed to 7-year high
Durable goods orders drop 4.5 percent in August
Stocks end lower amid worries after House OKs plan
Sting in the tail on US bailout day
NEW YORK (AFP) - US stock markets fell sharply Friday after the Congress passed a huge financial rescue plan
SEC short-selling ban to expire Wednesday night
Congress passes bailout, focus shifts to fallout
Stocks drop on economic concerns despite bailout
…the $700 billion financial rescue package may not unblock credit markets and stave off a U.S. recession.
Even with Congress' unprecedented $700 billion financial bailout, the faltering economy and the jobs market probably will get worse

The signing of the Bailout Bill is the equivalent of Economic Appeasement that will ultimately be compared to that of Chamberlain and the Nazis at Munich. Driven by fear, innuendo and out right lies, the majority of American politicians appeased the Wall Street threats of economic collapse. Like Hitler who kept saying, “One more, that is all and then I will stop,” Congress and the President have allowed Wall Street more “Lebensraum,” living space. Making a fear based and not a reasoned based decision, politicians have allowed the money forces to launch their final assault on the consumer in their efforts to control the entire monetary system.

What is being said now? The above quotes and headlines tell it like it is. The economists say that the bailout will have little effect on the credit crunch. There will still be foreclosures. Jobs will still be lost. Hiring will come to a standstill. Things will get worse. Reports also now indicate that until housing prices start rising, the bailout will not end the credit crunch. Banks do not want to make loans for cheaper houses. Pardon my ignorance but if homes are cheaper, are they not more affordable for more people? The ‘greenbacks’ are still dripping with ink and the refrain is that the bailout is not enough. How could so many politicians ignore the proper decision making process? Why did they not have hearings? Why did they not consult a broader base of experts? We are not talking thousands of dollars, but hundreds of billions of dollars. Is that not cause enough to pause, take stock and properly evaluate the alternatives?

Finally, for the moment, we have this wonderful news story: “An American member of al-Qaida pointed to economic troubles in the United States as proof that "the enemies of Islam" face defeat…” Not too long ago I wrote an article asking if the American economy was under terrorist attack. My assumption was that foreign elements were manipulating markets to cause havoc for the West. What I should have guessed is that the terrorists are not abroad, they are within our very borders and their name is Wall Street.

WORLD IN CRISIS: THE UP SIDE

What follows is a brief snapshot of some of the events that have been occurring around the world. Add to these events political, environmental, social unrest and the looming food crisis and the picture looks pretty bleak. But as you will see, the news is not all negative.

NEW YORK - Wall Street tumbled Friday, taking the Dow Jones industrials down nearly 400 points, on a pair of alarming economic developments: oil prices that shot up by more than $11 a barrel and approached $140 for the first time, and the biggest gain in the government's unemployment reading in more than 20 years.
And those weren't the only stunning numbers of the day: The government also reported the nation's unemployment rate zoomed to 5.5 percent in May, a monthly rise of half a percentage point, the biggest in 22 years.
Friday's Labor Department report was filled with sobering numbers:
• Employers eliminated 49,000 jobs in May, the fifth straight month of nationwide losses.
• The number of unemployed people grew by 861,000 — to 8.5 million.
• Job losses for the year reached 324,000.
Longer unemployment lines mean even more angst for those seeking work.

EMMAVILLE, Minn. - Strong storms smashed houses, deluged neighborhoods, toppled trees and left thousands without power across the Midwest on Friday in the latest round of fierce weather.

Scientists have discovered their first icequake, if you will - a movement of a huge stream of ice in Antarctica that creates seismic waves, just like an earthquake, and can be felt hundreds of miles away.

WASHINGTON (Reuters) - U.S. home foreclosures and mortgage delinquencies hit record highs in the first quarter as the sharp housing downturn put more American households under financial strain, data released on Thursday showed.
Nearly one in a hundred homes, or 0.99 percent, were driven into a foreclosure proceeding in the first quarter, the Mortgage Bankers Association said, up from 0.83 percent in the fourth quarter and the highest on records dating to 1979.
As the pace of failing loans quickened, the trade group said the overall share of homes in foreclosure rose to an all-time high of 2.47 percent from 2.04 percent. At the same time, the mortgage delinquency rate rose to a record 6.35 percent, suggesting foreclosures are likely to continue to mount.

HONOLULU - The Caribbean monk seal has gone extinct.

MADRID: Auto plants in Spain were paralyzed and Portugal's main airport banned planes from refueling on Wednesday as a third day of strikes by thousands of truckers caused heightened chaos and shortages.
Haulers in Thailand also threatened to strike next week while their counterparts in South Korea plan to stop work on Friday, as the outrage over soaring fuel prices intensified around the world.

Tens of thousands of truck drivers launched stoppages in France, Portugal and Spain on Monday to demand government help to cope with the rising price of fuel caused by rocketing oil prices, which last week reached almost 140 dollars a barrel.
The protests have paralyzed roads, causing huge tailbacks, and left supermarkets short of fresh produce and some petrol stations without supplies.
The Spanish auto plants of Seat, Nissan, Renault, PSA Peugeot Citroen and Mercedes Benz said they had cut or halted production as the strike left them short of parts.

In Belgium, the Volvo and Audi auto plants said they would be forced to close from Thursday due to the strike in Spain.

In Portugal, the strike hit air transport as fuel shortages forced authorities at Lisbon airport to ban planes from refueling, except those on high priority flights.
Portuguese police stepped up patrols after a striker manning a picket line north of Lisbon was run over and killed by a lorry on Tuesday. Long queues formed at many petrol stations as motorists sought to fill up in case the pumps run dry. Several supermarket chains in both Portugal and Spain expressed concern over the shortage of fresh products.
In Spain, the blocked roads meant wholesale food markets in large cities suffered shortages of fresh fish, milk, fruits and vegetables.


Elsewhere in Europe, around 50,000 Polish truckers staged one-hour protests across the country on Wednesday, although without blocking roads, the organizers said.

The British government is also finalizing contingency plans to cope with a four-day strike by oil tanker drivers this weekend.

And Dutch truckers announced plans to block roads at 18 points across the country for 30 minutes on Thursday.

Across the world, Thai truck drivers threatened on Wednesday to go on strike next week and block roads to the capital with 400,000 lorries unless the government helps them pay for soaring fuel costs.

Truckers in South Korea have voted to go on strike on Friday.

In Malaysia, the opposition has planned a series of rallies culminating in a July 12 demonstration which they hope will attract 100,000 people following the government's fuel price hike of 41 percent last week. - AFP/de
AP (6-14-08) G-8 officials, both this weekend and in July, are facing a host of issues that threaten to destabilize the global economy.
Oil spiked to nearly $140 a barrel last week, and several Asian countries, including India, Indonesia and Malaysia, have slashed fuel subsidies, raising prices for millions of consumers. The world is also facing a potential food emergency as prices of corn, wheat, rice, soybeans and other agriculture products rise. The price hikes have set off riots and protests from Africa to Asia and elevated fears of a global food crisis that could cause millions of people to suffer malnutrition. It was unclear whether the meetings produced any concrete measures to address the issues.

So what is the good news? History tells us that there are “early warning” signs when empires are about crumble, the environment is gearing up for a change, and even if revolution is in the offing. Most of the time, people do not see the “signs’ of the times because they are otherwise preoccupied or even too caught up in the changing events. Few Romans believed that their empire was about to collapse. Species that fail to make minor adaptations tended to go extinct. The British and French Kings should have known that revolution was a spark away. Did the Czar of Russia have no warning that he was about to be overthrown? Were World Wars I and II really that much of a surprise? Does the earth give warnings when she is about to erupt? Do the birds not go quiet when the massive storm approaches? When the rivers begin to run dry, or the glaciers melt, are these not early warnings that something is about to change? Usually, the signs come early and then grow in intensity. What is interesting is that once the warnings have run their course, change is often swift and abrupt. When the tipping is reached, the completion of the event occurs rapidly.

The good news is that we, humanity, have been given ample warning that the world as we know is about to reach the tipping point. Change is in the air and little that we do will alter the course of that change. Knowing this, we can prepare to meet change in a state of readiness. There does not have to be political, economic and social disasters as we approach 2012, the year many predict is when tipping points in all aspect of life will be reached. The climate is changing, but millions do not have to suffer as a result. We cannot greatly alter the current climate change, but we can ensure that millions do not perish. We will run out of oil, but we can ensure that alternatives are available to meet needs. Supplies of food are beginning to run short, but we can change our policies and prevent starvation. The list could go on but the point is, we can not only survive change, we can also embrace and use change to our benefit.

All of the events of human history have brought us to where we are now. There is no turning back and we cannot stop the major changes that are currently happening. We have been given the “signs” to adapt, to alter our thinking, our lifestyles, technologies, politics and our relationship with each other and our planet. The warnings have been plentiful, clear and precise.
“Adaptability is defined as the capacity to change oneself to new circumstances easily and to accept new conditions well. Stupid people are not adaptable and the Wise ones are -- they can always avert disaster by changing their circumstances or adapting to changing circumstances. Thus do the Wise survive in the face of repeated adversity.” (http://awordtothewise.info/content/view/536/1/)

Is humanity wise? Will we adapt? Those that do not may well go the way of the dinosaurs who once ruled the planet, but who failed to meet the demands of a changing environment. Maybe they had no choice, but we do.

THE "MOTHER OF ALL COURSE CORRECTIONS?"

The world economy may well be headed for the “Mother of all course corrections.” Economists use the term “course correction” to talk about things like the overall direction of the economy, changes in economic policy, changes in the specific plans of a major corporation, or a group of businesses forming a segment of the economy. Think of a corporation deciding to focus its marketing on the aging ‘baby boomers’ as a course correction. A nation trying to create a more favorable balance of trade by reducing or increasing tariffs would be a policy course correction. These are conscious decisions aimed at affecting some part of the economy or market.

The term, “course correction” is rarely used regarding consumers. You will hear reports of consumer spending, consumer confidence or consumer preferences, but not “consumer course correction.” The implication is that while consumers might respond to economic conditions by either spending or saving more, consumers are not thought of in terms have having any kind of unified consciousness like a corporation. Their decisions are seen as a reaction to something, rather than a planned and coordinated response to direct a change in the economy. According to standard economics, if credit is tight, the consumer spends less and if credit is loose, the consumer racks up their credit card balances. The consumer is seen as sheep who are led by their collective noses by mass advertising and they will buy just about anything if the marketing is done right.


Historically, this has been true. Consumers have jumped at the latest fads, fashions and gadgets in a system designed for perpetual consumption. Credit has flowed freely and the consumer has almost enjoyed its courtship with corporations. Awards for best commercials attest to this marriage and ads for new products and ‘sales’ are read religiously. The shopping frenzy around holidays is an embarrassment. The consumer is the follower that has been led by the nose by big corporations.

We are all familiar with the status of the current economy. The sub-prime mortgage crisis is playing havoc with businesses and consumers. Oil prices have and will continue to climb robbing precious dollars from the already precarious economy. Food prices are rising and banks and lending institutions are scrambling for survival. The Dow, which is really based on only 30 companies, is trying desperately to stabilize. All in all, not a pretty picture as consumer confidence wanes and retail sales decline. Keep one thing in mind, all of this economic uproar is because you, the consumer, are not buying as much as ‘they’ want you to. Our economy is based upon buy, break and throw away and buy again. It is here that a “consumer course correction” may occur.

Could this be the end of the Age of Consumption? Is it possible that the light at the end of this economic tunnel is that the consumer will finally ‘decide’ what it wants rather


than being ‘told’ what it wants? As prices for the basic, food, clothing and shelter continue to skyrocket, reckless consumption will have to come to an end. This is a positive event. The planet is hurting. We are raping it of its resources, destroying the natural balance and web of life and altering its climate. In the wake of growing natural disasters, the time of reckless use of resources to feed an insatiable business appetite must come to an end. Remember, the bottom line of business is to get you to consume for the sake of consumption. It has nothing to do with socially conscious or ‘green’ buying. However, the consumer will soon find itself in a position to dictate what it wants for products. Consumers will have to make choices between disposable garbage and products of true and lasting value. The consumer can demand quality and chemical free food. The consumer can demand high mpg, non-polluting vehicles. The consumer can demand the elimination of poisonous plastic food containers. The consumer can demand products that last and that are made according to high safety standards. The consumer can demand a rapid change to alternative, clean and renewable energy resources.

How does the consumer cause a course correction? It merely spends it money on those items that meet socially responsible goals. The consumer can only buy those products packaged in glass. They can buy the higher, albeit foreign, mileage cars. They can stop wasting money on poor quality fast foods. It can stop taking their children to worthy events and activities and save gas. After a while, pressure will build for change.

They can stop attending social functions and meeting and hearings. By using their spending and their time in a socially conscious way, the consumer can take control of the economy.

All of this may sound like wishful thinking. But as the dollar is reduced in value and as travel becomes too costly, decisions will have to be made. The economy will never again be ‘business as usual.’ The consumer cannot afford it and the planet cannot afford it. Does this mean suffering and sacrifice? No, it means that the consumer will soon be in a position to do what politicians and businesses have been unwilling to do, to create a sane and rational world where humanity and nature live in harmony and balance.

ECONOMIC BANDAGE WILL NOT HELP ECONOMY!

When you get a cut you add a little antiseptic and seal it off with a bandage. All these treatments do is prevent infection; the actual healing is done by the body and not the treatment. It is a shame that this is not the case with the economy. The FED may cover it with a bandage, but the system is not self-healing.

The sub prime mortgage crisis began in 2006 and just hit its peak, according to some economic analysts. In my opinion, it has been long in coming. The basic issue was that lenders issued mortgages at low rates that were adjustable. At the low rate, home buyers were able to squeak out payments. But, when the interest rates rose and monthly payments rose, the consumer was unable to pay. Many loans were given to people at the economic margin and anyone with an elementary education should have seen that those consumers could not afford a doubling of their payments. Anyone looking for details can easily Google “mortgage crisis” and get more financial information than you could probably use.

One may also recall the savings and loan crisis of the late 70s and early 80s which, according to some, led to the recession in 1991-92. Again, the approach was a bandage in the form of a bailout. And today, we see another bailout, but not a cure. Economic news has seen the current financial woes spread across the world thanks to globalization. The economic markets have become so entangled that if one suffers, they all are affected. This is kind of reminiscent of the web of tangled alliances that led to WWI or the “domino theory” of the Vietnam War era. We all know that markets have been consolidating and control of the economies in the world is spiraling into the hands of the few. Perhaps we should take a lesson from nature.

Diversity is a key for ecological health. As species diversity decreases, an ecological system may collapse. While this is actually happening in the environment today, it should serve as a mirror of our economic systems. As conglomerates grow, diversity is lost and economic systems face collapse. They talk of a tipping point with respect to climate change, the same hold true for economic systems. We are fast approaching the time when the bandage will not work because the system cannot heal itself.

Perhaps the primary reason that the system is in deep financial is “greed.” The powers that be continue to insist that we purchase things that we do not really need and that we do so whether we have the money or not. In one of my articles, “You Are Pre-Approved to Go Deeper into Debt,” I tried to show that we are deluged with offers to take out low interest loans or get starter low interest credit cards in order to purchase that new car, fix the house or take a vacation. Daily offers received in the mail or by email to buy now and pay later are very attractive to those who might be faced with financial difficulties. The offers of thousands of dollars now are even attractive to those with steady incomes who feel that that will be able to keep up in the hopes of growing incomes. Even with the current financial crisis looming over everyone’s head, these cheap credit offers still pour in.

The world cannot sustain wanton consumerism. It is one thing to produce and to purchase products that will enhance the quality of our lives or to decrease our dependence on vanishing fuel systems. It is quite another thing to buy for the sake of buying and to keep up with the latest trends in fashion, the newest junk toys and other products that will soon hit already overburdened landfills. It has been clear that large corporations are not treating consumers and the environment in a responsible manner. We are now in that “pay later” of the buy now syndrome and the question is, “Can we afford the price?”