Kevin Price
Major worries about the US economy
By Kevin Price
Recently I stumbled on a fascinating article at ZeroHedge.com on the "50 ugliest facts about the US economy." It paints quite a picture. I suggest you read the article in its entirety, but here are some of the facts that stuck out to me:
© Kevin Price
August 25, 2010
Recently I stumbled on a fascinating article at ZeroHedge.com on the "50 ugliest facts about the US economy." It paints quite a picture. I suggest you read the article in its entirety, but here are some of the facts that stuck out to me:
- "According to the Tax Foundation's Microsimulation Model, to erase the 2010 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent." Obviously, in the real world, we would hopefully have people who are not participating in the tax system at all (roughly half of the population) to get into the action. Still, even the most casual observer can see how such tax rates would wipe out the economy as capital would take flight to safer parts of the world (as it is already doing).
- "In 2010 the U.S. government is projected to issue almost as much new debt as the rest of the governments of the world combined." This one actually made me literally gulp. I would love the source, but the numbers make sense because of the exponential rate of the growth of our deficits. We now do annually what originally took 186 years to accomplish — trillion dollar debts.
- "Total U.S. government debt is now up to 90 percent of gross domestic product." Move over Greece, here comes the good old US of A!
- "Total credit market debt in the United States, including government, corporate and personal debt, has reached 360 percent of GDP." People continually talk about "robbing from the next generation to pay for this." Reality? We are taking from our great, great, great grandchildren.
- "U.S. corporate income tax receipts were down 55% (to $138 billion) for the year ending September 30th, 2009." Capital is taking flight to other countries as the US now has the second highest tax rates of any industrialized country in the world. Furthermore, our prohibitive tax and regulatory policies are causing business to reduce tax revenue generating activities.
- "There are now 8 counties in the state of California that have unemployment rates of over 20 percent." Watch out Cleveland, Detroit, and Camden, here comes California! The Golden State is looking a little rusty.
- "According to a Pew Research Center study, approximately 37% of all Americans between the ages of 18 and 29 have either been unemployed or underemployed at some point during the recession." There is a great old saying, "a recession is when your neighbor loses his job and a depression is when you lose your job." This recession is pretty depressing.
- "More than 40% of those employed in the United States are now working in low-wage service jobs." This is that group that is being tired of being told that "any job is better than nothing."
- "Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008. Not only that, more Americans filed for bankruptcy in March 2010 than during any month since U.S. bankruptcy law was tightened in October 2005." I have interviewed many of these people on my radio show. There are many personal tragedies out there in this economy.
- "In California's Central Valley, 1 out of every 16 homes is in some phase of foreclosure." This is after how much money was spent to reverse this trend? By the way, in that same vein, 80 percent of all homes that received help to avoid foreclosure found themselves in the same situation again, further proving the truth to the statement that you "cannot spend your way out of a recession."
- "For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together." In spite of this reality, politicians are still trying to figure out how to develop more programs to build more houses. I suggest they allow the market to force those in the building industry to do whatever is necessary to make a living where the market bears and not in an obviously glutted housing market.
- "U.S. commercial property values are down approximately 40 percent since 2007 and currently 18 percent of all office space in the United States is sitting vacant." This is a sneak peak into the next major bubble to burst. Which TARP number will this be?
- "In 2009, U.S. banks posted their sharpest decline in private lending since 1942." Interesting and this came after bailouts equaling billions of dollars. Banks did not have to lend as aggressively thanks to an artificial cushion created by Uncle Sam.
- "To make up for a projected 2010 budget shortfall of $280 million, Detroit issued $250 million of 20-year municipal notes in March. The bond issuance followed on the heels of a warning from Detroit officials that if its financial state didn't improve, it could be forced to declare bankruptcy." This may be the least surprising fact of all.
- "According to a National Foundation for Credit Counseling survey, only 58% of those in "Generation Y" pay their monthly bills on time." Another non-surprise, considering the example they received from the generations that came before them.
- "According to a new report based on U.S. Census Bureau data, only 26 percent of American teens between the ages of 16 and 19 had jobs in late 2009 which represents a record low since statistics began to be kept back in 1948." The administration's answer to this was to allow minimum wage to go up to its historic high, even as the economy suffered from unemployment levels we have not seen in over a quarter of a century. It is true, that minimum wage was passed by a previous president, but Obama had the numbers in Congress to put a hold on this job killing legislation.
- "According to an analysis by the Congressional Joint Committee on Taxation the health care "reform" bill will generate $409.2 billion in additional taxes on the American people by 2019." This includes 7 new taxes for those who make less than $200,000. So much for the President's promises to those who make less than that amount.
© Kevin Price
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