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Friday, July 30, 2010

We Are In A World Of Hurt And The Future Does Not Look Good

Here are the dots for you to connect.

*70% of the Gross National Product is created by consumer spending.

*Consumer spending grew at 1.6% in the last quarter.

*Consumer spending would have to grow something around 3.0% just to create enough new jobs to absorb population growth.

*15 million Americans are currently unemployed.

*5 million Americans have been unemployed for over two years and have no further unemployment benefits.

*There are currently five applicants for every job opening.

*A very large, but exactly how many is not known, number of the unemployed cannot move to seek new work because their homes are under water.

*15 million Americans are currently under-employed, or have stopped looking for work.

*So Americans are not spending money (some don't have much to spend)and saving it for the unknown future, or paying down current debts.

*Small businesses have created about 70% of all new jobs for the last thirty years.

*Small businesses are not hiring new employees because they don't have sales enough to pay for new employees.

*Small businesses are going broke, or out of business at (record?) high rates because of a lack of sales.

*The administration does not have the faintest clue about what to do about this.

*They want encourage small businesses to hire new employees by giving them looser credit while the last thing any small business wants to do is borrow money and increase their debt load and payments.

*On the other hand, major U.S. corporations are sitting on record amounts of cash, some of which they are spending to improve operations, but not to hire new employees.

*The administration's response to this problem is offer large borrowers the lowest possible interest rates, but they don't seem to understand that major corporations don't need to borrow money because they have cash.

*Wall Street bankers, however, love the low rates since they have practically "free" money to work with and their record profits demonstrate that fact.

*Obama was in Detroit today bragging about the fact the $61 billion we invested in Detroit saved 900 jobs!!! We need about 18 million new jobs. He also doesn't understand that the auto industry is very healthy, but is no longer located in Detroit.

*Congress is saying all the stimulus money is used up and no more should be expended.

*So the net result of all of this is that high rates of joblessness will stretch out into the future, and the Great Recession will get deeper and deeper.

*But the Fed is printing money right and left, and all that cash will lead to inflation for sure.

*If, however, the government would give the mayors and the state highway departments the recovered TARP money to use to repair and replace infrastructure problems in their jurisdictions we could put 15 million Americans to work in a matter of weeks. Just do not fund new projects, period.

*This would put people back to work immediately and would put cash back into the economy. It would also have what economists call the "multiplier effect". That means the dollars spent at the supermarket would go to the farmers and then to their seed companies, and so on.

*It would people back to work in their own areas and avoid the underwater problem.

*And here is the Great Good News. We will have to pay for our infrastructure repairs sooner or later. This way would produce some really good effects.

*For more details, see, or read it as a Kindle book.

*But if you can see a brighter side to the dots above, please let know and I will share it with everyone who reads this rant.

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