Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

“Large oil companies have for a decade artificially shorted the gasoline market to drive up prices,” said FTCR president Jamie Court. “Oil companies know they can make more money by making less gasoline.” The following article was written by Paul Joseph Watson. He is t

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Canadian government admits recovery never happened

Canadian government admits recovery never happened

“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. "Most of us were shaking our heads in disbelief early last year w

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How Western society is brainwashed and crumbling

How Western society is brainwashed and crumbling

"The cultural embrace of illusion, and the celebrity culture that has risen up around it, have accompanied a growing system of casino capitalism, with its complicated and unregulated deals of turning debt into magical assets, to create fictional wealth for us, and vast wealth f

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Will we see double digit interest rates from the 1980s?

Will we see double digit interest rates from the 1980s?

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson Spending is

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Greenspan: credit crunch “by far the greatest financial crisis”

Greenspan: credit crunch by far the greatest financial crisis

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.” Greenspan just said that the current credit crunch

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economist at street sign is unsure of recession

Looking at economics as a discipline, it would be fair to point out some of the issues with what mainstream, government economists are saying. To begin with, no economic model can predict the future. Economists who do try to predict the future are as likely to be right as Helicopter Bernanke. They are a discredit to the discipline, but they are doing it because they see an opportunity to make money from people who want a prediction. Quite simply, they see demand in a market and they look to supply it (which is proper economics).

Economic models are, by and large, meant to be descriptive rather than prescriptive. That’s not to say that we can’t, with a reasonable amount of accuracy, model the local effects of a particular type of behaviour; the problem with prediction on a macro level is that there are so many unknown variables it becomes impossible to always adequately account for them. An Economist can say, with confidence, that a tax or a subsidy is inefficient, or that market quotas or tariffs are inefficient, or that an increase in demand will cause upward pressure on price in the short-run, but likely downward or equilibrating pressure in the long-run.

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However, we can’t know, for sure, what other variables may enter the picture or how they will affect the model. Long story short: Economists are necessary to explain why things that have already happened have happened the way they have, and for modeling the likely way to avoid or bring about a similar outcome in a similar circumstance in the future. But we can’t know; and those of you who look to economists to tell you the future are just asking for trouble, so stop it.

Looking at unemployment

It is important to note that the US has a couple of measures for unemployment rates (from U1 to U6). The official rate is the U3 which was 9.7% for March 2010. If you take the most encompassing measure, the U6, which also includes:

  1. “discouraged workers”, or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
  2. “marginally attached workers”, or “loosely attached workers”, or those who “would like” and are able to work, but have not looked for work recently.
  3. Part time workers who want to work full time, but cannot due to economic reasons.

The U6 unemployment rate was 16.9% for March 2010 which means that an additional 7.2% were unemployed for the other reasons listed above but are not “officially” reported!

Bottom line is that you can’t take any of these statistics at face value: If the numbers look bad, just change the standard of measurement and hope that nobody looks into the details.

The following link gives a good explanation:

http://portalseven.com/employment/unemployment_rate.jsp

The following link is the official Bureau of Labor Statistics if you want official verification of the figures:

http://www.bls.gov/news.release/empsit.t15.htm

On Canadian – US dollar currency parity

While most economists would agree that a high Canadian Dollar could detract people from purchasing Canadian goods, this is not necessarily true in the long run. Products are made by consumer demand and such pressure is good in the long run. Companies should produce goods in a way that is attractive for the buyer, for example: has the features consumers want, are of good quality and are durable. A high currency helps to pressure companies to ensure these things rather than rely on cheapness. This is why European and Japanese Cars tend to dominate (minus the recent Toyota downfall events) because they offer these qualities, but they are still expensive; but also because many Asian car makers have their currency tightly linked to the US dollar. In essence, Chinese manufacturers get an unfair advantage on Canadian and American manufacturers. This was also the case in the 1980s when Japan had its currency pegged to the US dollar.

An expensive currency also presssures companies to become more efficient and competitive. Why? They must manufacture goods that are innovative and get more out of a worker for how much they work. If labour will cost you so much, and if you have to pay a more expensive currency, companies must become more competitive. You can see this with competitive indexes. Canada ranks $9 behind Switzerland, US, Singapore, Sweden, Denmark, Finland, Germany, and Japan; Countries on the most part, more expensive than Canada.

Canadians should not rely on how cheap their products are but rather on things that people want. Research In Motion’s Blackberry devices were not built on how cheap it is to buy but rather it’s practicallity in the office. However, we shouldn’t forget that many of their products are constructed in places like China and not domestically. Indeed, If the Chinese would stop pegging their currency below par in order to undercut North Amercian jobs, the USA would not be in as much pressure to devalue its currency. The US owes the Chinese a lot of money but due to Chinese unfair trade practices, internet attacks, software and literature plagiarism. Therefore, the US shouldn’t give a dime of it back to those thieves who probably have already stolen more through these practices than the US owes them.

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