Most struggling Americans looking for work in a dead job market or toiling in some factory to meet mortgage payments, aren't familiar terms like "Volatility Index", "quantitative easing" and "bond spreads". They don't know the price of silver and gold. But it doesn't require a degree in economics to know that we've just entered a depression, and every time Wall Street rallies, that big neon sign in the sky lights up bright with the words "Insatiable Greed and Corruption".
America knows these Wall Street rallies aren't because of corporate earnings; America knows the latest meager corporate profits are the result of slashed expenditures, and top to bottom workforce reductions. And Americans, whether they're employed or unemployed, are doing precisely the same: they shop at Good Will and second-hand stores, have dumped their cell phones, eat at home and save leftovers, refuse to purchase big ticket items like cars, trucks, washers, dryers, and refrigerators, get fewer haircuts, skip auto tune ups, cut to basic cable or give cable up altogether, smoke less, drink less, cut coupons, and carpool.
Americans may be saving more but they're still only a couple of paychecks from the street. "Forty-nine percent of employed adults interviewed in a nationwide poll conducted for Country Financial said they wouldn't be able to pay their bills on time if they went more than a month between jobs. Half of those surveyed said they would tap their savings to cope with a shortfall in income if they lost their jobs, according to the poll results. Another 16 percent said they would use their retirement accounts, while 8 percent said they'd need bank loans and 7 percent would rely on credit cards."
And this massive consumer retrenchment is across the board. Unlike most other recessions, this thinking is resonating loudly with more affluent Americans..., said Pam Danziger, founder of research group Unity Marketing. Denzinger studies the habits of people with incomes of $100,000 or more, which represent the top 20% of U.S. households, says FILife's Jennifer Waters. She calls those consumers "the economy's heavy lifters" because they account for some 40% of consumer spending.
"These consumers are very drastically pulling back spending," Danziger said. "They really are defining more precisely what they need versus what they want and the wants are coming up short." In a recent Unity Marketing study, she said 80% of respondents agreed with this statement: When the stock market was rising fast and the values of their homes were hitting unprecedented levels, those households felt free to spend, spend, spend because, well, they could. "Now that all that perceived wealth is gone, they're back to having to spend their earned income," Danziger said.
Two-thirds of the U.S. economy is fueled by consumers and this economy is out of gas.
The Denver Post reports:
Defaults on credit cards rose to a record 10.76 percent in June and may continue to climb through the middle of next year, according to Moody's Investors Services. Delinquencies, a signal of future charge-offs, fell for the third straight month to 5.81 percent, the lowest this year, as measured by Moody's Credit Card Index. Analysts have attributed the decline to seasonal forces such as a rise in income-tax refunds as well as consumers being more cautious and the injection of federal stimulus money into the economy.
Now that corporations have downsized, restructured, and maximized what little profits they've been able to suck from a U.S. economic dried turnip, who do they think will be buying the products they make that no one can afford or even wants to buy? Emerging markets? That's a laugh. No one wants or can afford what Wall Street has to offer but Wall Street fascists, and our mac daddy Congress. Those who claim unemployment-- 20 percent and climbing -- is a lagging indicator are either breathtakingly stupid, impudent Harvard pundits, or propaganda architects for Wall Street. The beast will devour itself, IS devouring itself.
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