A Tour of Baghdad, Sorry, Detroit

Sunday, August 09, 2009

All money figures have become irrelevant as Treasury secretary Tim Geithner needs to come up with historic record amounts necessary to finance a $1.3 trillion - others say $1.84 trillion - budget deficit.
Watching America's economic disaster from a car window may be a better guidance than many other lagging indicators.
The video below may remind you of Baghdad without the military. But this is Detroit without an industry.

VIDEO: This 10-minute drive around Detroit tells me more about the chances that the US will descend into the 3rd millennium Depression (3MD) than any lagging indicators. Can anybody imagine a V-shape recovery here?
This comes at a time when the Fed has run out of interest rate stimulants and president Obama nods off billions of Federal Reserve Notes (FRN) so his bookkeeper Geithner can continue to burn them at 4 times the speed as Paulson did a year earlier, nationalizing everything tabled to Obama on his way of change that looks increasingly different from his campaign promises. The next step? Geithner will ask to raise the debt ceiling of $12.1 trillion.
Reuters reports the next nail in the coffin of a fiscally profligate USA:
...the Treasury is romping up borrowing to unprecedented levels to fund stimulus and financial bailout programs and cope with a deep recession that has devastated tax revenues.
It is expected to issue net new debt of as much as $2 trillion in the 2009 fiscal year ended September 30 and up to $1.6 trillion in the 2010 fiscal year, according to bond dealer forecasts.
Third Millennium Depression = 3MD
The 3MD fighter in the White House looks a bit like the king without clothes as plunging tax revenues and an army build-up in Pakistan (war #3) come hand in hand with record social transfers and record bankruptcy figures on public and private levels.
From the CBO blog:
In the 10 months through July 2008, (fiscal) outlays rose by almost $530 billion (or 21 percent) and (fiscal) revenues fell by more than $350 billion (or 17 percent) compared with the amounts recorded during the same period last year.
Depressed equity prices have shrunk America's wealth invested in the stock market from $22 trillion to $12 trillion. I am not very confident that those people who abandoned Detroit will show up as new consumers anywhere else. Now add the number nobody knows - total negative equity of US home owners/bank slaves - and yep, we can add another couple of $,$$$,$$$,$$$,$$$ (thats trillions) to the debt tab.

VIDEO: Popped bubbles: Hooverville in Fresno, California. This looks like a refugee camp from the so called 3rd world.
Youtube does not yet have a category for European tent cities.
Watching economic implosions in Central Eastern Europe - Slovakia, Czech republic, Latvia, Lithuania etc. and soaring unemployment rates of up to 22% like in Spain I would not rule out such scenes of poverty in the mid term future.
Continental Europe has a higher quota of people renting than buying and social housing is available in most European countries, probably masking fundamental economic troubles to a good degree. Most German unemployed can claim housing benefits.
Predicting an L-shaped economy in the USA, Europe is at best set for a W-recovery and this depends highly on future stimuli. Big remaining problem: Europe has like the USA only empty pockets.

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