[How I Look When I've Been In A Fight]
Kong Sez

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[The Economy Sucks!]

The Economy Is Now

Sucking !

Kong Sez:

    Folks, if you look at the happy-faced mainstream media and the numbers on the stock market, you'd swear we were in a major recovery! Yet, you have no job and neither do any of your friends, and the prices keep rising in the grocery store and at the gas pump, and all the big employers seem to be laying off still more workers. And these same companies that just laid off a massive amount of workers declare a profit and their stock prices increase! What gives?

    Your editors searched through all the little known newsletters and blogs, the ones that tell the truth that nobody cares to hear, and found that the real story isn't about "green shoots" or the "recovering housing market," or even the so-called "economic recovery."

    The real story seems to be far, far worse, and we wonder why they seem so determined to tell us pretty lies. Can they actually believe that simply by thinking it's so, we can make it so? Or are they trying to keep us quiet while new laws get shoved through Congress and more of our freedoms vanish into the morass of bureaucracy?

    Let's see what some of our sources have to say.

    Former Secretary of Labor, Robert Reich, gives his opinion on the strange disconnect between the real economy and the stock market (http://www.robertreich.blogspot.com/):

What's pushing the stock market upward? Mainly, unexpectedly positive second-quarter corporate profits. But those profits aren't being powered by consumers who have suddenly found themselves with a lot more money in their pockets. The profits are coming from dramatic cost-cutting -- including, most notably, payroll cuts. If a firm cuts its costs enough, it can show a profit even if its sales are still in the basement.

The problem here is twofold. First, such profits can't be maintained. There's a limit to how much can be cut without a business eventually disappearing -- becoming, in effect, a balance sheet in space. Secondly, when businesses slash payrolls to show profits, consumers end up with even less money in their pockets to buy the things businesses produce. Even if they hold on to their jobs, they're likely to fear that they won't have the jobs for long, which causes them to retreat even further from the malls.

Most companies that have reported earnings so far have surpassed analyst's estimates, but that only means that earnings have been less bad than analysts had feared. According to the chief investment officer at BNY Mellon Wealth Management, if the companies that haven't yet reported earnings show the same pattern a the companies that have reported so far, overall corporate earnings will have dropped 25 percent over the past year. That may not be as much of a drop as analysts had expected, but it's still awful. Operating income for companies in the S&P 500 that have reported so far has been almost 29 percent lower than last year, more than 80 percent lower than 2007, according to Standard and Poors.

    From The Daily Reckoning, The Weekend Edition - July 25-26, 2009, we learn:

The jobless rate hit a 26-year high of 9.5% last month - and many economists are betting for the jobless rate to hit 10%.

"Of the June total," reports the Labor Department, "1,235 mass layoffs were reported in the manufacturing sector."

"All the indicators in the real economy," said Bill Bonner in his final speech at the Agora Financial Investment Symposium in Vancouver, "are actually getting worse."

And is it any surprise? What exactly does America make anymore? We have been a nation of consumers for the past decade, spending and borrowing to buy the gee-gaws and gadgets that our friends in the Far East have been so busy producing. But now, consumers are saving...they aren't buying flat-screen televisions...or new cars...or much of anything for that matter.

And it goes without saying that since the housing bubble has popped, the one sector that was actually producing - the building of residential and commercial real estate - is failing miserably as well.

Caterpillar announced its results for the second quarter too. Profits were down 66%. In other words, while the banks were making money speculating with taxpayer's money, Caterpillar was trying to make things and selling them to customers. Caterpillar not only makes things; it makes things that help other companies make things. Things with motors...big things...things that make noise and give off exhaust...things you use to dig holes and move dirt...things you need if you're going to have a real economic recovery. Unfortunately for CAT, these things aren't selling.

So what does this tell us? Well...it suggests that there is no real economic recovery at all. The real economy is suffering...sinking...and shutting down.

The banks are not earning their money helping Caterpillar expand. They're making their money not because of a recovery, but because there isn't one. In other words, they're profiting from the financial stress of the early stages of a depression. There's a post-crash bounce...and the government is sending a lot of money their way.

As for a real recovery - forget it. There's no evidence of it. Unemployment is getting worse. Housing is still going down. Profits are going down. Those aren't the things that presage a recovery...they herald a deeper, darker depression.

The depression darkens because people are not just being laid off - their jobs are disappearing. They do not get called back to work. Instead, they stay unemployed until they run out of unemployment benefits...and then the statisticians in Washington drop them off the unemployment rolls. Currently, the first batch of those people to reach the end of their benefits came this week. Last we looked, the Pennsylvania legislature was passing a law so they could continue drawing benefits for a few weeks more.

Unemployment, trade, defaults, foreclosures, bankruptcies, prices, manufacturing...you name it and you have to go back to the end of WWII to find similar numbers. Of course, at the end of the war, the wartime economy shut down. Millions of people who have been in uniform...or making tanks and airplanes...were suddenly out of work. Economists thought the economy would go right back into the Great Depression. Instead, it boomed.

But what was normal for so many years is not normal any more. Now, consumers are paying off debt faster than any time since 1952. The government, however, is making up for them. Goldman may no longer be able to push more credit onto the public; but it can push one heckuva lot of debt onto the public sector. Wall Street firms helped households ruin themselves in the Bubble of 2003-2007. Now they're doing the same for the government, helping the feds raise money on a scale never seen before in human history.

    Gary North neatly summarizes all this in the conclusion to his Realty Check weekly newsletter of July 24, 2009, entitled "Mass Layoffs: The Continuing Devastation:"

We are in the midst of a disaster. The economy is still on its back. Economic growth requires capital, but the government is absorbing savings. The banking system is not providing the funds that businesses require.

Unemployment is rising. Foreclosures are continuing. Moody's senior economist testified before the Senate Finance Committee on July 21 that the financial system's $1.2 trillion in losses so far will be followed by $1.4 trillion. He said that almost 1,000 banks are at risk of failing. (http://tinyurl.com/m5on9z) No one noticed.

There is a discrepancy between investors' assessment of the economy and businessmen's assessment. They continue to have mass layoffs.

Profits come from accurately forecasting future consumer demand. Unemployed consumers are not the source of profits.

Kong Sez:

    There you have it, folks. The real economy is in the toilet and likely to stay there for the foreseeable future.

    Furthermore, our sources say that, coming up in 2010, another major section of mortgages come up for an interest-rate reset, which means another big swath of foreclosures and bad assets on the banks' books, which, in turn, means more big-bank bailouts and more ridiculous programs that claim to keep people in their homes that nobody can qualify for.

    Get ready, folks. Distant drum beats tell us that 2010 will not be a good year.

    Do you have a garden growing...have you planned for a fall garden? And you want to have started by fall a Backyard Flock.

    If all this is confusing folks...then look at the economy this way:

It is three French fries short of a happy meal!

    And somewhere over the rainbow we are going to get out of this mess, when we wish upon a star, and where blue birds fly, and dreams really do come true.

[Learn & Apply This Motto!]

Use It Up !
Wear It Out ! Make It Do !
Do Without !


It's Still Coming!
Subduction: One Plate Goes Under Another As The Other Goes Over The Former.

Interestingly...Early Church Saints Said: "Mountains Will Roll Over Another." This Sounds Like They Saw Subduction.


The Second Ammendment!

Learn This...Memorize This...Let It Become a Part of You! Bring It Back When The Terrible Chaos Is Over...If There Is Something To Come Back To.

[Running For Your Life]

In The Meantime

Run For Your Life

From now on, Folks, it's gonna get pretty rough! In fact, downright cussed.
Mr. Ugly Is Showing Now!

But For Now...

[Running For Your Life]

Keep Running

Keep Your Purse and Scrip With You—Luke 22:36

And Now

Get Two Guns—Luke 22:36–38

Before The New Dude Won't Let You Have Them

Times in America will change rather abruptly.
Your WebMasters suggest you check your
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We Feel This Is Going To Be A Long, Hard Siege
Get Prepared...Time Is Short Now...
Other WebPages of Interest:

Purifying Water ¦ When The Hell Breaks ¦ Gun Page

Galactic Plane

Soon..The Rocks Will Fall...See The Galactic Plane

[When The Rocks Fall]
The Impact and Its Consequences

Ronking & Gronking In Distress
Press Play To Start
Mass Extinctions Occur Around This Time Of Passing Through The Galactic Plane
The Earth Is Also Coming To The End Of An Age, As The Precession Ends

The Rocks Are Coming

[The Rocks Are Coming]

A City Being Stoned

[A City Being Stoned]

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