Tag Archives: economic crisis

“What recession”…after the economic crisis..

happy shopper

For most people the readjustment has already happened, for some they have lost half of their worth but still are worth more than most people will earn in their lifetimes, sometimes many lifetimes over..

Its only numbers on a screen or a piece of paper and that’s the way it was before the credit tsunami hit so what is different..for some if not all it is not much, for others a few they felt it in reality, they lost their job or had to sell their house(s) but strangely enough the Mercedes or BMW was still in the garage and the general feeling is it is all a blip!, something to endure for awhile then everything will get going again, we have put off the holidays (vacation) this year (tourism and airfares are going through the floor), we won’t splash out on a new (Kitchen, extension, spa bath or holiday home) and so on “times are hard” they mutter under now only two caffe lattes a day instead of the usual ten “i needed the total energy to get me through the day” cups.

things are well not that much different, the rich are still rich but poorer, and the poor are well still poor so no change there, the bankers are doing fine thank you very much now that the rest of us have fixed their equity problem but credit is still in short supply and new projects are being shut down or canceled and for ongoing projects the money has been found to finish them off and any other projects that are very advanced into the construction and planning stage they are still being advanced to their next phase, life goes on and very well thank you we still have to eat and shop so things will continue as normal, even that petrol thing has gone away so we are able to run our 4×4 at a reasonable cost again that won’t break the bank so “whats your problem”.

Well the deeper problem is that most people say “oh by 2010” next year by the way?, “that things will be on the up and up again so no problem”, their attitude is that the money they have lost will return with a golden egg, their job will reappear in some flash of light, “that house on Banksia Court is a great price now, so why don’t we put in an offer”, the investors (remember them) are gobbling up the Real Estate (read cheap) bargains at a ferocious rate and ready to sell off to the raising hordes of cashed up buyers that can gain by the exceedingly low interest rate its really wonderful this economic crisis, “best one for years and years” as the “opportunity abounds in the return of the markets and good olde cash” and its “nothing like the one in 1930 something”, this is a “new type of recession”, and remember that “9/11 event we all cruised through that and so this one will be be just like that” so “why worry”.

So with things going so swimmingly I don’t really want to spoil the party in fact it would be a shame too as I for one want things to be good and people not suffer or struggle which a lot do and one thing that is right is the fact we do still have to eat and put petrol in our cars and well “go shopping”…but to do all of this we need money and a big bite of optimism that things are fine, to which to a point things are…

…But except for the realisation that this is it, yes it, the “new new”, the recession the “real deal” and its not going to get better in fact the sooner we all except the situation the sooner we can all move forward, so lets get real shall we.

The level we are at is the real level, not a hyper level or the old (last years) level, that wasn’t a real level at all it was simply an inflated “lets not spoil the party”, level…

…a level that was so way “out of the ballpark” as the Americans put it that it was a stack of cards that was stacked on a stack of cards that was…well lets say we were living in a world of fools, we still are as the fools still believe it will all come back..the ones that will survive and prosper will accept the fact that there is a reality of now and start to live in the new world and not hope it will all come back tomorrow not because it can’t but because it shouldn’t, we won’t survive if it did because all we were doing was wasting everything on trivia, I’m not going there in this journal as that is a bigger picture, yes there will be slow growth as it should be but finance needs to more evenly balanced between classes, there will always be rich and poor, but the fall, if not the devastation of the middle class is the biggest disaster that is facing us all, it doesn’t allow people to live a better life as the gap to being rich is now too great to be bridged, and the rich only look after their own while pushing the gap even further upward, while pushing middle class lower to poverty and worse to minority spending.

And here is the real problem for as the recession deepens the middle class people spend less, why, because they will have less to spend so as they slip more to the poor end of the demographic their basic needs override the so called disposable income and with their basic needs costs rising at a rate of higher than inflation the flow on to anything else goes well down, what was a treat is then a luxury and now a luxury they can’t afford, and so on it goes, for the rich they have now a really big problem because it is this small area that they gather their fortunes, say for instance you are an upmarket clothing manufacturer and things are going great and your profits are $20 million a year, then the spending crunch hits and it will be your clothes that will take a dive first as people switch to cheaper clothing, so you cut your margins which really means your profits as remember the clothes still cost the same to make, you can only cut back so far in costs and labour and your factory bills are going through the roof which you have already done to maximise profits, so then how soon will that $20 million profit be a deficit, Airlines have already seen the reality, profit has gone through the floor and that is with cheap fuel in the tanks as well, and its not the poor Airlines either its the British Airways and Singapore Airlines that are stunned at the numbers coming out of their paperwork, once healthy they are suddenly begging for customers but it will be the small to medium profitable businesses that will really be hit and hit harder and many will go to the wall.

And of course the layoffs will continue, as these medium businesses shred their workforce (the first thing to go) it is also the larger companies that are also shredding smaller ones just to survive, the car industry is a case in point, just watching the General Motors debacle is like watching the Titanic sink..slowly with a large loss of life or in this case livelihoods and many of these new out of work company people are investing in small franchises to guarantee income but only so many can survive and many will turn to the Internet, the clever ones will make money the others won’t as the Internet is strange beast and for someone who can sell cars wouldn’t have the technical knowledge to build a really clever web site and will only copy a successful idea just like a million other out of work non-technical savvy entrepreneurs and so with their millions of sites of the same product they will fail in the giant big Internet ocean and on it goes.

But there is good news too, Real Estate will finally bottom and find its real level and so what you buy will be the value price of your property and not a hyped up price, however if your thinking of making a big profit on the property like in the good olde years then you and all those investors holding their cards close to their chests are in for one big almighty shock, and it could still go down further, but only by not much!, but still downwards and then the investors are going to panic and flood the market with properties they can’t off load as for now they have to pay for them and their expensive up keep and still lose at the sale, that is their fault as they couldn’t afford to buy them in the first place for really they just wanted to stimulate the market back into their favor and big profits, it worked very well before because as the hyper hype of pushing Real Estate prices into somewhere around Mars, investors and middle incomes could “spend spend spend” the huge margins coming their way with a sale of the higher inflated price or with a loan from the bank on well “really nothing”, suddenly now you are faced with your property being worth 15% or worse 25% less of its value in 12 months, however there is nothing wrong with this at all for now you are only back at the reality factor, in other words “It is only now what your property is really absolutely, X my heart and hope to die is really really worth”, and if you have taken out a $50 thousand dollar loan to buy a 4×4 tractor on that inflated price then well “brother your in deep shit”.

The really great news is that we are now all back on Planet Earth but its not over yet and not by a long shot, it will get far worse yet as the public spending and the severe job losses come home to roost and hit hard, and it will take years to climb out to a steady income, and make no doubt the party is well and truly over and anyone who wants to keep up the lifestyle will find themselves left behind as the world will change in a way that everyone can have a good time and not the excess of a few, yes we will still can have fun and so we should but being real with ourselves and our perception of the world will give more back than the take take mentality that has brought us to our knees, we are in a very different world than the depression of the 1930’s as we are now a global economy, we rely on each now more than ever, but right now we need to stop and really think of what sort of world we really want, and only then will we go forward..

..but for now to go forward we will go backwards and everything will settle down, somethings will be better because you will be able to afford that house at 25% off the cost and travel will be cheaper, clothes too in fact a lot of things will come down to a new realistic level, in other words the price they are today and customers will be more discerning and want quality and things that last than the cheap throwaway years of olde and with that many pricy cheap companies will fold because if you don’t adapt you will disappear, but finally things really are better than you really think as to have everything back into reality you can now plan and save and that a economic crisis is really the best thing that could have happened to you, I was so happy when it all fell down, really happy nothing has made me smile more, and I want it to continue as long as possible, mad..no, common sense because this planet needs time to recover from our continuous development, stripping of resources, over population, garbage and a million other things associated with greed and trivia.

…the economic crisis has saved us from oblivion, from killing ourselves, Its a warning to be responsible to ourselves and our home, its showed us our ugly side and it is not pretty, so heed the warning and enjoy the shortage of money instead of too much of it.

Person of the Year 2008….George W Bush?

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Every media will proclaim the victory of Mr Barack Obama as the wonderkind of 2008, change and the future, however the person that had the most impact on the year was really George W Bush…Bush!, I can see you already pulling your face in disgust and picking up your shoe,  but the story is that George W is the reason Barack is now President-elect and not anyone else, as timing in Politics is the same as in comedy, it is knowing when to say something or when to shut up, or when to be in the right place at the right time and when not too be, Barack was the star performer, Bush the worst….and because of the collapse of his Administration, his office, and that he created such a vortex of catastrophic failures during his two terms and as they all came to a decisive conclusion at one single point in time,  he was the Person of the year 2008…the one person who had made the biggest impact on the world in that single year.

As Harry Truman said “The buck stops here”…at the desk of the President, and George W was sitting at that desk.

But it is the tragedy of George W Bush that will haunt the world for many years, right down to you and me on the street, and proves that not everyone with the wish should or could be a President of a major superpower, at least we are still here, George at least didn’t do the really really stupid thing, but the feeling is that is only because some West Wing staff member locked the nuclear keys in a drawer, then forgot about them and went home, and because of that, Iran and us can now breath a little easier at least in the new year.

This Journal is not here to Bush bash or anti American bom bahing, but facts are facts and we and history will have to live with the created mess everyday, but the reality of the last eight years has brought the world to its knees, its time to look at how and why it happened and make sure it doesn’t happen again..and how Barack Obama can thank his lucky stars, that the 43rd President was George W Bush.

Every country has several faces it shows to the world, I am of British decent and is proud of its achievements, its history and its people, however we as a nation had some dark spots, Colonialism, Slavery, Cricket to name a few, we also introduced the Industrial Revolution and created the advancements that made the modern world it is today, but at the same time created atrocious housing and inhuman working conditions to fill the employment of the Northern Mills, and just to make the proprietors rich…and so what George W Bush created was the other side of the American Dream, the dark side..it was always there, it just needed the right vessel to become mainstream, hopefully these lessons will be absorbed not only by the new administration, but by all Americans in that we all have several makeups to our characters, its just some should be repressed or dissolved for good..we the British have to live with some aspects of our past…but we have learn’t from the mistakes and made our country stronger.

But Bush created almost something new, the aspect of uncontrol by doing things that would seem right but are dangerous to unleash, most decisions were made by one dimensional thinking, not taking stock of other outcomes, weighing up the for or against, they are almost all reactive in their conception,  if i do this, this will happen, but in this world there are several aspects or more to every situation, most politicians understand this, that is why most decisions are compromises not the whole ticket. So how did a man that thought this way or could be persuaded to simple logic to allowed to run for such an important office..

Carl Rove, Bush’s maestro Campaign manager is a master of manipulation and demographics, and found that if Bush used most minority extreme groups like the Christian Evangelical Right, Gun Lobby, Pro Life and every other party angry about their extreme minority causes he could get elected, dangerous, of course it is, but there was some very powerful people behind all this rabble as well, and we will get to them soon, This and a hand on the heart of extreme patriotism got George W to the line but but not quite over it in the November 7th 2000 election, because some discause had broken out in Florida, were his brother Jeb Bush was Governor, that after the 3rd recount that had went back and forth from the Florida Court to the US Supreme Court, the tally from the final machine recount stated that Bush had won the Florida vote by a margin of 537 votes out of six million cast, but many voters were not allowed to vote or others were not even counted, fair in an democratic country, and most of the abstained votes were black, isn’t that racist?..but George however was over the line and into the office of the President of the United States Of America…power not a vote had bought George W Bush to office, but the problem for W, was the fact he was now in a situation were as there were a lot now of people saying to him,” your in kid, now you are going to do this for us”, and the…them were the dark side of everything that should be kept under control, in other words they had control of the country and not the President,  So you had a Supreme power not incontrol of his power, a recipe for disaster and so what slowly unfolded over the last eight years was…power out of control.

The Republican Party did control the senate as well, helpless Democrats were reduced to fractions and the one thing Republicans do well is big business, corruption and adorn themselves with every trophy they can shower upon themselves that their elevated position can deliver, plus they could use all the power they could muster inside the White House and in Washington generally, power inside the White house was cornered by not the President, but by the Vice-President Dick Cheney, Donald Rumsfield, Newt Gingrich, Grover Norquist, Carl Rove and Ralph Reed and be the “them” of other powers that put George W in the Oval Office, Cheney is a hawk in the extreme, or a bully would be more of a description, Cheney consumed power like a nuclear bomb consumes cities, and all that was needed was a spark…and it wasn’t long in coming..Sept 11 2001.

The details of the terrorists involved are debated in another blog coming, but here it was an excuse to show American arrogance to the extreme and an opening in the  darker side to the American Character, Cheney, Dept of Defense Head Rumsfield and their merry Neo-Con band were not interested in Al-Qaeda and Bin-Laden, they were to them mere pebbles on a beach even though they had left a large hole in lower New York City, Iraq was more to their liking, and for many reasons, one was its Oil, which is a giant money exporter and a desirable consumable in the USA, so why not just hand it over to the Texans to which George W was one of their kind, The Saudi’s were getting more difficult in their demands everyday and getting use to using their rising power; and it left the world’s most gulping consumer vulnerable and exposed to their demands,  Second was that to eradicate Saddam Hussein and to put a puppet government in control would also strengthen Israel’s precarious position in the Middle East, Third, Cheney’s former post was as Chairman of the Board and Chief Executive Officer of Halliburton, a so called energy company that had its fingers in many pies, including the US Military.

So now you have to understand how the US goes to war in this day and age to see the big picture on how Iraq was a great business deal first and a moralistic help on saving the Iraqi population second, first the strike was done,  Shock and Awe was started March 20th 2002 and completed with a victory on the 1st May…then the corporations moved in, their task was to rebuild Iraq, at a cost to the American Tax Payer and to the ownership of the Iraq’s themselves, everything in the American Logistical Command is put out to private tender, so the people working in Iraq are not Military but civilians, even security firms were not soldiers but civilian armed guards, the rest were builders, suppliers, truckers, fast food joints, IT workers,  just ordinary Americans just doing a very well paid  job in an Middle Eastern Country or now the 53rd State of the Union, making not peace but money, and a lot if not all of it went went back into the Republican Party’s Senators coffers and their large Company Banks, including Halliburtons or KBR.. a major construction company which was another subsidiary or Brown & Root Services another division and so on…The War is and was only about profit for America and not peace, but the problem was The White House didn’t expect the Iraqis to fight back and why shouldn’t they, it was imperialism in its extreme, and so a prolonged tactical insurgency took hold and pulled the Americans down into a quagmire of incompetence, complete loss of authority and loss of respect of American Military Might.

Now at the same time that Business Iraq was opening its doors, The Bush Administration decided that there was still way too much regulation around Wall Street, Bullish that the markets had survived the greed of the Dot.com bubble, and hoping it was not going to spread too far (down) in losses,  there then was the de-regulation for the markets, de-regulation was started by the Clinton Administration to create a smaller more efficient Government,  but it was soon seen more as a cash cow by the Bush Administration, so they put their foot on the accelerator, Energy was one that was ripe for picking, and soon it was game on, it lasted a year with Enron already in court for the so called accountancy misdemeanors, then came WorldCom, a few…no a lot more and more were then hauled before the courts including Halliburtons, and for more and more infringements of corporate law.

From The White House there was nothing but silence…Greed is good, don’t rock the boat, now all was in place for everything to go stratospheric, and it did…for years…Alan Greenspan the Chairman of the Federal Reserve first dropped interest rates from 3.5% to 3.0% then again then again to 1.0% after the self inflicted energy accounting scandals to try to stimulate the housing market, fair enough but with no real checks and balances from Washington, Wall Street then went on to the biggest bull boom of its life, so Wall Street started its Sub-Prime lending boom, almost giving loans and credit away, and reaping billions in rewards, companies thrived in an free market place with no restrictions…Oil was so cheap it was thrown away, Credit so available that children could get credit cards (A couple of dogs got their cards dropped in the mailbox too)…it was hysteria in a buying spree like no other, and Americans and the world lapped it up…..it was almost like George was on the street handing out $100 bills, but only to the very rich, and they gave them unreasonable Tax breaks too…Under Bush to be rich was good, to be very very rich was better. Continue reading