As Americans’ ADHD turns to the ratings-driven, needless spectacles of the national political party conventions (the almost perfect characterization of a Dog and Pony Show) serious economic factors loom with impending ramifications to the U.S. completely lost on 75% of the American public. The recession in Europe, particularly Spain and the UK, grew stronger in the second quarter of the year and is anticipated to get much worse as austerity measures introduced in response to the euro zone debt crisis cut into demand for goods and services dramatically.
A rush by consumers and firms to withdraw their money from Spanish banks intensified in July, with private sector deposits falling nearly 5 percent, to 1.509 trillion euros at end-July from 1.583 trillion a month earlier. That’s a difference of $74 billion of depositors funds withdrawn in one month, just in Spain.
Analysts believe it is inevitable that Spain will soon have to call for a European rescue package to help bring its debt costs down as austerity measures designed to slash the public deficit push the economy deeper into recession. The same is happening across Europe and the UK . Should the Republican Party in the U.S. win the election this November and take control of the Senate or the White House, the slow economic growth in the U.S. could quickly turn into a deep recession as well. This would be the worst possible scenario which would in all probability lead to a global depression.
Facing growing impossible hurdles, Spanish Prime Minister Mariano Rajoy will meet European Council President Herman Van Rompuy in Madrid later on Tuesday, a week before the European Central Bank discusses new measures to help debt costs in European nations hardest-hit by the crisis. The ECB meeting on September 6 also coincides with a visit by German Chancellor Angela Merkel to the Spanish capital and a key longer-term bond auction. And the longer Germany and the UK force the failed austerity method of addressing deficit reduction, the worse it will get.
“With much more fiscal austerity in the pipeline and unemployment at astronomic highs, the risks are clearly tilted towards a more protracted recession,” said Martin van Vliet, an economist at ING. “With 27% unemployment and 51% unemployment for the 18-35 yr old segment, Spain in a full-blown depression already, with more to follow.”
Spain’s economy fell back into recession in the first quarter of the year, when output fell 0.3 percent, and government estimates show GDP will probably fall this year and next.
The Specter of Dwindling Demand With Christmas Season Coming
These declines in Spain, are representative of all of Europe. China is also building inventories at an alarming rate but continues to produce to avoid the lay-offs or wage reductions necessary to continue the torrid pace of growth they’ve experienced in the past decade. A restless workforce is already demanding wage hikes with riots breaking out daily.
To further demonstrate the growing lack of global demand, a decline in U.S. petroleum deliveries for June is emblematic of a weakening overall economy, the American Petroleum Institute said.
The API said that, for June, gasoline demand declined 2.5 percent compared with the previous year. Most other fuel types declined as well, though jet fuel demand increased in June 0.7 percent compared with the previous year.
API Chief Economist John Felmy said the decline in demand is, “consistent with falling retail sales and contraction in the U.S. manufacturing sector.”
“A weakening economy requires less fuel and this, by most measures is a weakening economy,” he said in a statement. “A Congress focused on debt reduction and not creating jobs is crushing the demand for goods and services and that equates to less fuel.”
Adding to mounting evidence of a global downturn, sources recently confirmed third-quarter production reductions in paper and plastic goods after producers failed to implement initiatives of 20 cents/lb, with some price decreases of 5-10 cents/lb having begun to surface among coatings and paper makers and plastics compounders.
“Demand stinks, and there was greediness last year,” a buyer said. “Because of that, nobody in North America was going to accept the July hikes. And there is lots of product.”
Most buyers anticipate full-market reductions, but decreases have not yet been broadly confirmed. “I think the producers are all trying to forestall the impact of a further reduction in demand,” said one buyer. “My largest domestic suppliers have cut prices by 5-10 cents/lb within the last two weeks. “At first, pricing was steady on July 1,” the buyer said. “Then producers said the initiatives were delayed. Then I got the first notice [of a decrease] about a week later. It snowballed from there.”
Quietly, the Center for Retail Research has made the following sobering assessment of the coming 2012 U.S. Holiday season,
“Consumer confidence is shot. There is tremendous pessimism at home and abroad and a feeling that nothing will ever be the same again. There is no evidence that many governments know what they are doing. Contradictory economic signals and government austerity make it hard for businesses and households to plan for the future. Even in countries which have avoided financial crisis are being adversely affected by the stagnation of trade and the uncertainties about the future. ”
And from Euromonitor International ,
“As the developed western regions continue to flounder in low or negative growth rates by failure to not only provide stimulus, but to choke demand to negative growth, the impact on emerging markets is increasing. China is succumbing to weakened demand in its external markets; as a result the country is inching closer towards a hard landing as the weak external sector transmits a slowdown into the domestic markets. Declines in oil prices have affected Russian economic growth while Brazil’s economy is expected to cool in 2012 thanks to slowing industrial activity. Should the U.S. succumb to this seemingly self-defeating prophesy, the impact of economic policy in the west will no longer be isolated to the developed world but is in danger of creating another global economic slowdown.”
Republican Obstructionism is Crippling America’s Recovery Regardless Who Gets Hurt
It seems very clear to me now that Republicans will continue to wreak havoc at every possible turn in order to win this November’s election. The laundry list of dirty politics, ends justifying means, and wealthy mega-moguls are making a power-grab unseen in American History:
- Voter Suppression
- Promises of Jobs from the 2010 election but Personhood and attacks on women’s’ rights from outright denigration from the likes of a filthy liar in Rush Limbaugh and his unnecessary attack on Sandra Fluke to Todd Akins’s insanity=-riddled anti-spermicidal secretions from women victims of “legitimate rape” are indicative of the end of American civility and honest debate.
- The rise of the Republican Branch of politics portends the desire to return to Civil War by the Neo-Confederate Party.
- The Goal of annihilating the U.S. Middle Class
- The Impossible Mathematics of the Romney-Ryan Budget Plan
- The Republican Platform that includes dismantling Social Security and Medicare
- The relatively easy fixes being totally ignored for Social Security, Medicare and the U.S. Deficit spelled out in detail in previous entries on this very blog.
- Assault on any and every person of color, but especially Hispanics.
All of this is easily avoided pain and suffering so that a few wealthy, privileged Americans can grab even more power, more advantages and more of our money.
I have lived in and fought for this country. I used to believe in its inherent goodness and respect, not to mention love of their fellow Americans. But it has become a circus of politicians vying for votes, not fighting for what is right for all Americans, only for Americans who think like they think.
Entire “News? Organizations coordinating efforts with a chosen political party to advance their ratings and elect those that support them. They are like vultures eating each others carcasses. NBC News has become as slanted towards conservatives as any registered Republican. MSNBC is taking the side of the liberals, at least in prime time, for ratings as well.
The only difference between the two is that MSNBC stretches the truth occasionally and FOX simply makes up whatever suits their agenda. It’s “professional wrestling” 24/7.
I will be selling fiddles at selected polling stations this November so that I can grant as many voters as possible the opportunity to fiddle with me as America burns.