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Bruce Enberg's Commentary

We know

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Preliminary sales figures show a very low growth rate for retailers this Christmas season that is likely to be the lowest since 2008. It's not too hard to figure out why this is so, people are getting lower wages and so have less to spend despite increased consumer debt.

 

It's not that there isn't enough business activity, corporations are showing record profits and the rich are swimming in cash, they just keep it for themselves. In the old days, when cash hoarding really started to tank the economy, people called this occurrence a 'cash shortage'. Today economists call it a recession when it meets their arbitrary standards of decline.

 

When it got bad enough, people would start stuffing their savings under the mattress which caused a 'bank panic,' we call those 'depressions.' Rich people would then take the cash they'd been hoarding and start buying things for 10 cents on the dollar. The Koch brothers fortune was created that way.

 

Last Updated on Wednesday, 26 December 2012 20:43 Read more...

The Fiscal Bunny Slope, riding the tow rope

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There's been a lot of chatter about the Republicans actually giving in to most of what Obama wants in terms of taxes in exchange for relatively small benefit cuts for the elderly. The very wealthy will get the full tax increase, and low income seniors will be exempted from cuts. This might be something Obama would take, and not the worst that could happen. Programs would stay intact and ages of eligibility remain the same. The new Democratic Congress in 2015 can fix this pretty easily.

 

Economists have been crunching the numbers and it seems that the current budget deficit will evaporate with the end of the Bush Wars, the Medicare reforms included in Obamacare and the tax increases that seem likely. That is, if the economy recovers. It adds up to serious money in terms of the additional revenue that we have been missing since the Bush Depression began along with safety net spending on the unemployed.

 

Last Updated on Tuesday, 18 December 2012 20:14 Read more...

Polishing the rotten Apple

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More jobs were created last month than were expected, with 147,000 created in the private sector and 1,000 public sector jobs lost that need to be subtracted from the number. The unemployment rate continues to fall as that is based on a large household survey, and is down to 7.7%. While the number of people that reported working didn't change, the rate at which the boomers are retiring is picking up. Some economists estimate that we need as few as 75,000 new jobs per month to keep up with the growing millennium generation. The underemployment rate continues in the high teens, with nearly one million reporting that they are not looking for work as no jobs exist for them.

 

Super Storm Sandy has been determined by the Labor Department to not be the the big job killer that it was feared to be. 'Super Storm' is another new word to describe the 'new normal' we are living with. Why don't we just call them 'interesting times' after the Chinese curse? Everything else is made in China.

 

Last Updated on Friday, 07 December 2012 22:16 Read more...

We are warm blooded, we are legion

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Some people on the left are alarmed that Treasury Sec Timothy Geithner is leading negotiations to deal with the Fiscal Cliff (or the Fiscal Bunny Slope) being held between the Obama administration and the Congress. Okay, he wouldn't be my pick, but he does have the expertise and the staff to deal with it.

 

Let's clear up a couple of things, Geithner never worked for a Wall Street bank. He was Governor of the NY Fed, which is largely responsible for riding herd on the the Wall Street banks, but that business was completely out of control before he got the job.

 

Now this doesn't prove anything one way or another, but Geithner was simultaneously on the board of the Bank of International Settlements (BIS). It was this body that pulled the plug on the Wall Street banks transferring money between banks in 2008 over their involvement in the selling of a quadrillion dollars ($1,000,000,000,000,000) worth of un-backed derivatives. This effectively froze the US banking system overnight.

 

Last Updated on Thursday, 29 November 2012 20:33 Read more...

The Real Takers

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Selected numbers appear to show consumer spending is way up, thanks to the 'black' days, cyber day, and on and on with the hype. A closer looks suggests it's really more like a one or two percent increase for the quarter; it's really all about building up a shopping frenzy. Are consumers really spending more at all? Or are they simply desperate to stretch their ever declining incomes to meet pent up demand to replace worn out consumer goods?

 

Then there is the gnawing need to provide the American dream for yourself and your family. It's not that people really feel the need to buy more junk from China, it's that they know deep down that they're in trouble. And they want so badly to kid themselves that they are still middle class. The evidence for this is that consumer debt is way up. The business channel folks actually point to this increase in debt as proof that the economy is turning around, and there is a certain amount of truth to that, in the same way a soap bubble is a new house.

 

Last Updated on Monday, 26 November 2012 22:18 Read more...

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