[Vision2020] Nov. '08 Jobs Lost: 533, 000: NY Times: "...recession...just gathering steam."

[Ted Moffett]

http://www.nytimes.com/2008/12/06/business/economy/06jobs.html?hp

U.S. Loses 533,000 Jobs in Biggest Drop Since 1974

Not since December 1974, toward the end of a severe recession, have so many
jobs disappeared in a single month — and the current recession, far from
ending, appears to be just gathering steam.

"We are caught in a downward spiral in which employment, incomes and
spending are collapsing together," said Nigel Gault, chief domestic
economist for IHS Global Insight. "With private spending frozen, we have no
choice but to rely on a stimulus package to revive the economy."

---------------------

Two economists I have been following for years, Andy Gause and Bob Chapman,
predicted the current economic crisis years ago.  I was skeptical of their
claims, given they were not among leading academic economists, advocated
"fringe" approaches to economic systems (eliminating the Federal Reserve
Banking system, return to the gold standard) and entertained "conspiracy"
theories about secret cabals (Illuminati or a small group of international
ultra-wealthy controlling the US Federal Reserve) manipulating world
economic/political systems.  Besides, economics is a subject I find harder
to comprehend than Super String Theory.  But even if for the wrong reasons,
they were correct.
There are numerous other economists who years ago predicted the major US
economic decline now under way. It seems that the evidence the US was headed
for a major economic crisis was irresponsibly downplayed, as mortgages were
handed out like candy in an artificially inflated housing market, Wall
Street and banks played shell games with credit default swaps and complex
derivatives, the US government borrowed hundreds of billions from China,
Japan and the Middle East to finance its deficit and the Iraq War, and
consumers ran up credit card debt like a drunken sailor on shore leave.

Why were US citizens not given more warning about the negative economic
trends?  The following article discusses the failures of US government on
both sides of the isle that contributed to the current crisis, and places
some of the blame on the actions of the Federal Reserve banking system:

http://www.globalresearch.ca/index.php?context=va&aid=6750

A short excerpt:

The government as a whole has failed to provide for equal protection of the
laws as specified in the Fourteenth Amendment by allowing so much of the
wealth of the nation to be transferred to the upper income brackets who
manipulate the corporate and financial systems to their advantage. It could
also be argued that the passivity of the government in standing by while
millions of people have lost their homes, jobs, or pensions due to
fraudulent financial practices or speculative bubbles violates the Fifth
Amendment provision which specifies that "no person shall be…deprived of
life, liberty, or property, without due process of law."
---------------------
Links to Andy Gause and Bob Chapman's web sites:

http://www.andygause.com/

http://theinternationalforecaster.com/Bob_Chapman
---------------------
Another economist who had it correct years ago, though I'm not sure the US
will "officially" enter a "depression:"

http://www.informationclearinghouse.info/article21189.htm


*Mikhail Khazin: U.S. will soon face second "Great Depression"
*
Renowned economist Khazin predicted U.S. financial crisis in 2000

*By Yevgeniy Chernyx *

*November 10, 2008 "**KP.RU <http://kp.ru/daily/column/1070/>" - -- **F*ive
years ago, I ran the cultural section at Komsomolskaya Pravda. Publishing
houses used to send me their new releases now and again for review. One day,
after digging through the latest shipment of such literature, I stumbled
upon a book titled, "Sunset of the Dollar
Empire<http://www.hypernews.ru/search/?from=72&id=43827>and the End of
the
Pax <http://www.hypernews.ru/search/?from=72&id=44858> Americana."

I remember reading the title over to myself several times in disbelief. Way
back when, Soviet Americanologists loved to debate the collapse of the U.S.
financial empire. But this book was published in 2003.

I flipped through the pages, skimming over the text. The conclusions of the
author — an economist named Mikhail Khazin — seemed convincing enough. So I
gave the book to our economics columnist at KP Jenya Anisimov, who wrote a
review and interviewed the author later at our editorial offices.

All these years, I kept Khazin in the back of my mind, and followed his
career as he spoke at various conferences throughout Russia. He seemed
certain the U.S. was teetering on the verge of an economic collapse, while
other analysts were quick to refute his theory. Now, as his once
unfathomable prognosis begins to come true, KP contacted Khazin for an
interview.

*Fired from the Kremlin!*

*KP: Mikhail Leonidovich, how did you end up predicting the current
financial crisis?*

Khazin: In the spring of 1997, the Kremlin established the Presidential
Economic Department. I was made the deputy head of the unit. Our first task
was to prepare a report for [former
President<http://www.hypernews.ru/search/?from=72&id=44973>Boris]
Yeltsin about the economic situation. We realized an economic crisis
was pending in Russia and would take place in the late summer or early fall
of 1998 if the country''s economic policies weren't changed.

*KP: What view did the higher echelons take of your report?*

Khazin: They didn't really take any view at all. No one read the text except
for the deputy head of the administration and Yeltsin himself. In the summer
of 1998, we were fired from the presidential administration for trying to
stop a business project titled, "State Treasury Bills— Exchange Rate
Corridor." This was the biggest financial scheme of the post-Soviet era.
Just as we had predicted, an economic crisis gave way that
August<http://www.hypernews.ru/search/?from=72&id=43220>.
Together with my colleagues, I continued researching the reasons behind the
crisis.

After becoming seriously consumed in our studies of the U.S. financial
system, we found an unprecedented parallel. Just as our T-bill market had
sucked all the juices out of the Russian economy, the U.S. financial market
was sucking the resources out of the entire planet. We realized a similar
fate awaited the U.S. financial system. Our article was published in the
summer of 2000 in the "Ekspert" magazine, titled, "Is the U.S. Digging for
an Apocalypse." We concluded that it was just as impossible to avoid an
economic crisis in the U.S. as the financial collapse in Russia.

*Playing the idiot*

*KP: The U.S. obviously didn't listen to the song written by [the renowned
Russian rock group] LUBE during perestroika, "Don't Play the Fool, America!"
Seriously, though, what's the real reason for the economic collapse? Let's
try to do this without any heavy duty financial terms...*

Khazin: I'll try! The economic model that led to the collapse was the result
of a crisis in the 1970s. This was a terrible financial crisis that was the
result of surplus capital. Even the 19th-Century classics in economics
literature concluded that capital grows faster than labor provides
compensation. As a  result, there is a lack of demand. In traditional
capitalism, this problem is solved on account of crises in excess
production. And in an imperialistic system, the problem is solved on account
of capital outflow. But by the 1970s, these solutions had run their course.
However, the international situation demanded the U.S. either make a great
scientific and technological leap forward or lose the Cold War to the USSR.
The administration of
[President<http://www.hypernews.ru/search/?from=72&id=44973>Jimmy]
Carter and the head of the Financial Reserve System Paul Walker
developed a very tricky concept. For the first time in the history of
capitalism, capitalists began helping others, issuing new currency in an
effort to stimulate aggregate demand .

*KP: They decided to switch on the printing press?*

Khazin: Exactly. In the early 1980s, they started to stimulate demand
through state support. For example, they launched the "Star Wars" program.
As of 1983, they placed an emphasis on the household economies.

*KP: You mean, they relied on the average citizens?*

Khazin: Yes <http://www.hypernews.ru/search/?from=72&id=45768>. For an
entire quarter century, households received funds as a result of issuing new
currency in larger and larger quantities.

*KP: In other words, credit?*

Khazin: Yes <http://www.hypernews.ru/search/?from=72&id=45768>. The U.S. was
able to make the next step in technological progress as a result of this
excess demand. They accomplished the collapse of the USSR and numerous other
significant fears. But... The boom took place thanks to resources that were
supposed to provide for future growth. The country ate its own resources two
generations ahead of time. The U.S. built up tremendous debt. This is
clearly seen if we compare the growth of debt in U.S. households with the
entire U.S. debt and GDP. The economy is growing at an annual rate of 2-3,
or at a maximum 4 percent. But debt is increasing at a rate of 8-10 percent.
*KP: Well, let the debt keep growing... The U.S. lived fine up until now
without a problem... Better than we did!*

Khazin: Yes, the U.S. did create a very high standard of living by
stimulating consumer demand. Generations lived without having to experience
poverty. But it's impossible to live forever in debt. Household debt has now
surpassed the national economy — more than $14 trillion. Now it's time to
pay up. Of course, Wall Street tried to postpone this collapse. I won't go
into detail about derivatives and other such financial assets, but this was
just a gasp for air before an inevitable death.

Another problem in the U.S. is that powerful industries were built around
this growing demand. Whatever decision Wall Street takes right now, the
demand is going to fall. What will happen to these industries? In 2000, we
estimated that 25 percent of the U.S. economy would disappear. Today, we
think the number is closest to one-third — if not more.

*KP: That's a lot!*

Khazin: That's an incredible amount! But what exactly does this mean — the
destruction of one-fourth of the U.S. economy? It means an uncontrollable
increase in unemployment, a horrible depression, a sharp increase in the
effect of social services on the budget... Now, the U.S. is jumping all over
the place doing everything its can to rescue this fraction of the economy.
The government is stimulating banks and manufacturing... But regardless, in
2-3 years, the U.S. will face a crisis similar to the Great Depression.

*Who is Who*
* *
*Mikhail Leonidovich Khazin was born in 1962. He studied mathematics at the
Yaroslavl University and Moscow State University. In 1984-1991, he worked at
the Soviet Academy of Sciences. In 1993-1994, he worked at the State Working
Center of Economic Reforms. In 1995-1997, he was the head of the Credit
Policy Department at the Economics Ministry. In 1997-1998, he was the deputy
head of the Presidential Economics Department. In June 1998, he left state
service. At the moment, he is president of the consulting firm, Neokon. *
*----------------------------------------*
*Vision2020 Post: Ted Moffett*
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