Age-old Adages (A repeat of Vol. XVII, Art. 30)
The U.S. media is lying to U.S. citizens. The age-old adage, “Forewarned is forearmed” is the attitude expected of those whose responsibility it is to disseminate the news to society, but that isn’t the case with this country’s news purveyors. “What they don’t know won’t hurt … us”, is the twisted approach adopted by U.S. news directors.
In the most serious crisis that has ever been presented to this country, local newspapers and the evening TV news programs continually push the hoax that an eventual economic turnaround will take place sometime in 2009 or, at the latest, in 2010. Either they’re all lying or they’re all stupid. Or maybe just some of them are stupid.
When reporting on developments in the U.S., the overseas media, on the other hand, has been considerably more reliable than news sources in this country. News isn’t being sugar-coated, it isn’t being falsified, and it isn’t being swept under a rug.
The Singapore Business Times, for example, issued these stories within the past week:
1. (December 1, 2008) — “US credit card industry may cut US $ 2 trillion of lines: analyst.
“(REUTERS) – The US credit-card industry may pull back well over US $ 2 trillion of lines over the next 18 months due to risk aversion and regulatory changes, leading to sharp declines in consumer spending, prominent banker analyst Meredith Whitney said.
“The credit card is the second key source of consumer liquidity, the first being jobs, the Oppenheimer & Co analyst noted.
“‘In other words, we expect available consumer liquidity in the form of credit-card lines to decline by 45 percent.’…
“A consolidated US lending market that is pulling back on credit is also posing a risk to the overall consumer liquidity, Ms. Whitney said …
“‘Pulling credit when job losses are increasing by over 50 per cent year-over-year in most key states is a dangerous and unprecedented combination, in our view,’ the analyst said.”
2. (December 1, 2008) — “But who will save the bailer? Next financial crisis could come from huge cost of fighting the current one.
“(WASHINGTON) – With its decision last week to pump an additional US $ 1 trillion into the financial crisis, the US government eliminated any doubt that the nation is on a wartime footing in the battle to shore up the economy. The strategy now – and in the coming Obama administration – is essentially the win-at-any-cost approach previously adopted only to wage a major war.
“And that means no hesitation in pledging to spend previously almost unimaginable sums of money and running up federal budget deficits on a scale not seen since World War II.
“Indeed, analysts warn that the nation’s next financial crisis could come from the staggering cost of battling the current one …
“The spending has had a dramatic effect on the federal budget deficit, which soared to a record US $ 345 billion last year and began the 2009 fiscal year with an amazing US $ 237 billion deficit for October alone. Analysts say next year’s budget deficit easily could bust a previously unthinkable barrier: US $ 1 trillion.
“‘I didn’t think we’d see that for a long time,’ said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. ‘There’s a huge risk of another economic crisis, a debt crisis, once we get on the other side of this one.’…
“National debt is also soaring. The National Debt Clock in New York City ran out of digits in September as the figure ticked over US $ 10 trillion. As a percentage of GDP, it is higher than the 45 per cent it reached at the end of the Great Depression.”
3. (December 2, 2008) — “Obama adviser warns US recession may be worsening.
“(REUTERS) – A senior adviser to US President-elect Barack Obama said on Monday the news that the United States has been in a recession for a year underscored the need for an economic stimulus package.
“Lawrence Summers, tapped by Mr. Obama to become director of the White House National Economic Council, said the slump may be worsening.
“‘While the economy has already lost 1.2 million jobs this year, recent economic evidence suggests that the pace of this downturn is accelerating. That is why President-elect Mr. Obama has set as his top priority passing an economic recovery plan,’ Mr. Summers said in a statement.
4. (December 4, 2008) — “US Treasury yet to address critical issues.
“(REUTERS) – The investigative arm of the US Congress on Tuesday criticized the Treasury Department’s handling of a US $ 700 billion bank bailout programme and urged the Bush administration to get it into better shape.
“The Treasury has yet to address a number of critical issues, including how it will ensure that the programme ‘is achieving its intended goals’, said Congress’ Government Accountability Office (GAO) in a study …
“Some lawmakers have accused banks of hoarding the money, instead of lending it out, and have urged the Treasury to make it clear that government funds must be used for loans and not to buy healthy banks or pay higher dividends.”
5. (December 4, 2008) — “US economy takes turn for worse, Fed report says.
“(REUTERS) – The US economy took a distinct turn for the worse in recent weeks, with labour markets weakening, consumer spending slumping and price pressures easing, a Federal Reserve report showed on Wednesday.
“‘Overall economic activity weakened across all Federal Reserve Districts since the last report,’ the Fed said … Labour markets softened as firms in many districts reported accelerating layoffs … Consumer spending declined, with retail sales narrowing and vehicle sales falling off sharply … Adding to the gloomy picture, the Beige Book described weak housing markets characterized by reduced selling prices …
“Credit conditions remained tight and business and consumer lending activity slowed in most districts … Manufacturing activity had declined ‘noticeably’…
“Comments gathered by the Fed suggested businesses across the country are feeling a high degree of pain. A Boston contact described the credit squeeze as ‘murderous’. A housing products manufacturer in the Philadelphia region called the industry ‘at a standstill’. A West Virginia car dealer said he had gone from selling an average of 250 cars a month to six in November. Corporate meetings were being cancelled in Southern California and tourist visits and spending have dropped sharply in Hawaii, the report said.”
But now it’s getting sticky. What couldn’t be swept under a rug was Friday’s AP announcement from Washington that a shocking number of jobs were lost in November. Analysts had estimated that layoffs of some 320,000 could possibly take place, but figures released by the Labor Department on Friday had some grim news for the holidays.
“Skittish employers slashed 530,000 jobs in November, the most in 34 years,” the report stated, catapulting the unemployment rate to 6.7 percent, dramatic proof the country is careening deeper into recession …
“The unemployment rate would have moved even higher if not for the exodus of 422,000 people from the work force. Economists said many of those people probably abandoned their job searches out of sheer frustration”, the report stated.
“President-elect Barack Obama said the dismal job news underscored the need for forceful action, even as he warned that the pain could not be quickly relieved.
‘There are no quick or easy fixes to this crisis … and it’s likely to get worse before it gets better,’ Obama said.
“‘At the same time, this provides us with an opportunity to transform our economy to improve the lives of ordinary people by rebuilding roads and modernizing schools for our children, investing in clean energy solutions to break our dependence on imported oil, and making an early down payment on the long-term reforms that will grow and strengthen our economy for all Americans.’”
We wrote in an earlier commentary that “Two and two equals four, everywhere … except in the maritime industry”. But that isn’t so. The misguided maritime industry is more like the rule, rather than the exception.
NOTE: For example, a rare exception among the many analysts and economists writing about our economic woes is Meredith Whitney at Oppenheimer & Co. She seems to be one of the very few who correctly understands the relationship between cause and effect.
“The credit card is the second key source of consumer liquidity,” Ms. Whitney stated above, “the first being jobs.” She’s the first one who got it right. That’s the “sine qua non” in our downward spiral, because without a job (the cause) there’s no money to be spent (the effect).
NOTE: “The strategy now – and in the coming Obama administration … to spend previously unimaginable sums of money and running up federal budgets … Indeed, analysts warn that the nation’s next financial crisis could come from the staggering cost of battling the current one …”
But there’s no need to spend “unimaginable sums of money” and “running up federal budgets”. There’s no need for “staggering costs” and our nation’s “next financial crisis”.
Consider the ideal alternative. Compared to the “unimaginable sums” spoken about above, the cost to set up a Manhattan Project-type shipbuilding program is relatively minuscule. Restoration and revision of 100 U.S. shipyards, at an average cost of $ 100 million per facility, would cost about $ 10 billion. Paying 30,000 U.S. workers in each of these yards to build our patented container ships in these 100 yards would cost – at $ 100,000 annually per worker – another $ 300 billion.
Each of our 100 yards could easily punch out at least two dozen of these unsophisticated, and duplicated, vessels in the course of a year. Those 2,400 vessels – at an overly generous 0 million per vessel – would cost $ 240 billion. So for approximately $ 540 billion we could end, for all time, the financial mismanagement that is threatening this nation’s very survival.
Let’s look at that $ 540 billion expenditure as a “cause”. Here’s what the “effect” would be.
First of all, we’d be creating 30,000 jobs in each of the 100 shipyards we set up. That’s 3 million purposeful jobs right there. And haven’t economists determined that each shipyard worker requires the support of 16 offsite workers? That brings the total number of created jobs to more than 50 million — and can you just imagine the dramatic “effect” 50 million weekly paychecks will have on our country’s heretofore waning buying power?
But wait. There’s more. Each of those 2,400 container ships will be purchased by U.S. maritime interests – for at least the $100 million spent to build them – and each of those U.S.-owned vessels will generate handsome profits every year for U.S. interests who own, operate, and utilize them.
[So instead of being “at sea” in our thinking, why can’t we be “at sea” in our operations? Want another age-old adage? “He who builds ships builds worlds.”]