It seems the rest of the world is finally catching up to Kunstler. An article in today's Guardian by Paul Harris discusses how rising gas prices may signal the end of the suburbam utopia. The housing bubble is dangerously close to popping. Housing sales have declined for the past nine months in a row. And those are new houses, older houses, refinanced at new housing prices are expected to take a hit if the bubble bursts. If the bubble does burst, it could plunge the economy into a recession.
Which is what the Federal Reserve is seeing in the future. The economy, which the Republicans have told us is booming, has created fewer jobs than expected. The official unemployment rate, that is, people still receiving benefits (as opposed to those whose benefits have run out while still being unsuccessful at finding employment)is at 4.8 percent (here in Michigan, it's at 6.3 percent).But what else has been happening is a widening of the gap between net worth and wage growth. In the period from 1991 to 1996, net worth grew 15.6 percent while wages gained 11.3 percent. From 2001 to 2005, net worth rose 16.6 percent, while wages grew only 2.7 percent.
As I have said here before (or was it at Lose The Noose?), the economy is only booming at the top. The people who are asking for the tax cut the Republicans want to give them aren't feeling the pinch that even Las Vegas is feeling. Trade deficits, budget deficits, just don't ask the upper classes to help their country at all.
I really don't see this country getting out of this. More jobs outsourced leads to more lay-offs, which leads to more outsourcing, which leads to more lay-offs, and until we stop the hemorrhaging of jobs the economy is going to continue to head to a recession. In the meantime, we can expect to see working people mocked by the likes of Paris Hilton on shows like The Simple Life because she knows she's going to get that estate tax cut someday, which the working people will keep working to pay for her (hey, it's not like she could hold down a job anyway)and those like her who feel their entitled to contribute nothing to the betterment of society.
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There are also going to be a lot of foreclosures as the interest rates rise on people who took out one of the new tricky mortgages. They owe more on the house than it is worth in today’s market and if they sell it they still have a debt.
Couple of weeks ago, I think it was on Fox, I heard one of the talking heads say, who cares if gas is three bucks a gallon, the people in the market are making money.
Typical remark from someone who is clueless about any part of society but his own.
Excellent post.
Here in Madison, WI we've been on a huge downtown condo building splurge -- apparently with the intention of filling the downtown with affluent retirees. (Who needs those pesky students? They can live anywhere.) But now one of the biggest projcts is halted midway. Interest rates and money problems.
Just the beginning. As that net worth/earnings mismatch accelerates, there will be hell to pay. Probably the only way politicians in Washington can escape their constituents' wrath is to keep that Forever War stoked and at a fever pitch.
On to Iran! Nuclear bunker busters! Armaggedon! Glory be!
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