No Punches Pulled

(Image: source)

In a must-read interview with King World News, Bloomberg Brief senior economist Richard Yamarone doesn't pull any punches:

When asked what’s really happening with the US economy, Yamarone responded, “I think people are just running out of money.  We have contracting, real disposable incomes.  Most of the job creation that we have is from minimum wage type jobs.”

“I’m fortunate enough to travel and speak to chambers of commerce with 300 to 500 people in the audience.  They all tell me, ‘Hey, listen, I am letting go of workers.  I’m hiring them back at a fraction of what I used to pay them.’

You hear from the other side, ‘Hey, I finally got a job after two years of being unemployed.  I used to make $100,000 (each year), now I’m making $45,000 or now I’m working part time.’  Or (you hear), ‘I used to make $500,000 and now I’m making $200,000 or making $125,000.’....

“So you are actually seeing this collapse, contracting on a real basis, of real disposable personal incomes.  If you don’t have the money, you can’t facilitate expenditures.  So that’s the core of the problem.  That’s what’s really going on in the US economy.

Wow, I'm impressed -- an economist who makes me feel like a bit of a softie!

(To read the rest of "Yamarone - We Are Literally Witnessing a Collapse," click here.)

Comments

[roger]

Yes they are running out of money,
Yes wages are contracting,
Yes workers are fired and re hired at a much lower price.
NO.. that is not at the core of the problem,these are the results
not the cause.
The core of the problem is political and structural.

[Joseph Gitter]

It's apparent to anyone whose head isn't stuck in the sand (i.e. those lucky enough to still be employed) that America is a far different place economically, socially and politically than it used to be. The real trick now is figuring out we can prepare ourselves for this new environment and learn how to survive and prosper in it.

[Dave K]

Go to the FRED site, select Establishment Survey Data. Add Service providing employment, then go to Goods-Producing and add All employees: Goods producing industries. Flip the latter to the right side of the graph and you'll see that this goes all the way back to the early 80s. Up until then, S-P and G-P employment growth tracked each other fairly well but afterward, G-P employment went basically stagnant while S-P employment ramped up. G-P employment got a brief bump near the end of the dot com boom but has been in steep decline ever since. It's not just about weaker orders as an indicator, it's about all the blue collar living wage jobs that went *pfft* and haven't returned since 2000.

[Binko Barnes]

Sure, as individuals we can, if we are smart and adaptive, learn to survive and prosper in this new environment. But unless we are able to build a society that makes it possible for everybody who makes an effort to prosper then the fabric of life around us will continue to disintegrate.

Employers now know, across the board, that there is an vast abundance of people who are desperate for a job. So they can just keep beating down the wages and dropping the benefits. It's absolutely mind-boggling to see some of the high skill jobs out there that now just pay minimum wage or a jump over minimum.

With the exponential growth of networking, artificial intelligence, automation, robotics as well as the skill big companies have developed in shifting work around the globe in search of cheap labor, this trend is not going away.

So how do we, as a society, distribute our societal wealth in even a moderately equitable manner? Previously the capitalistic and competitive scramble for the many available good paying jobs served to parcel out the wealth. But that system is now broken. What will replace it? This is the most significant question of our time.

[Tom]

Don't expect things to improve as time goes on, as you'll be disappointed. We've been warned of dire consequences due to our continual use of fossil fuels and the pollution that results therefrom. When the Industrial Revolution began with cheap, easily accessible oil, Earth's population began to increase too. Now that we have 7 billion humans on the planet (and growing) we've reached the peak of this "easy oil" and now it gets ever harder to extract it and the costs increase dramatically (not to mention the risks and environmental damage). The part that we missed, overlooked or ignored is the environmental part. We've destroyed our fishbowl with pollution and at the same time increased the global temperature enough to melt the ice sheets of the Arctic, Greenland and Antartica which is raising global sea level. At first it was simply CO2 that we were somewhat concerned about, but the continual increase in temperatures have unleashed vast stores of methane that has been locked up in permafrost, tundra and under the colder seas of the northern climes. Methane is much more damaging to the environment and it's effects are much worse for life on Earth.

Now while we've been doing all this damage simply by living the way we do, the heat has been absorbed largely by the seas and moreso in the coldest places first. So we haven't bothered about it thinking it's all okay. Well, someone mapped it out and we're heading for extinction.

Take a look:
http://arctic-news.blogspot.com/p/global-extinction-within-one-human.html

Meanwhile, politically and socially people that aren't in the privileged class have awoken to the fact that they've been had by the economic systems they participate in and don't like it. We're seeing unrest and regime change all over the place and governments getting ever more militaristic in response (to keep the status quo).

Economically, the Wall Street TBTF banks have created toxic "financial products"
that have caused widespread damage to the global economy. The banks have been bailed out while the citizenry has been sold out.

Resources are becoming scarce, weather has become unpredictable and chaotic so that it's becoming increasingly hard to grow enough food for everyone, and societies are beginning to collapse.

All of this is only going to get worse because there is no "leadership" anywhere regarding actual changes to counteract the effect of climate change or anything else. It's business as usual - meaning we're toast in the "long" run (which may not be as long as we'd like to think).

[Dave K]

Tom, the Industrial Revolution predated the proliferation of fossil fuel usage. The site you link to is speaking of a natural occurrence, not anything caused by humans. Maybe not in a generation but yes, humans are likely headed for extinction at some point in time. We've prospered for the last 10,000 years in a global climate that suited our expansion but there will come a day when this planet will become either too hot OR too cold to sustain the population we have now. If it gets warmer, society will expand northward. If it gets too cold, they'll migrate towards the equator. If they don't adapt one way or the other, they will perish. Unfortunately, modern humans aren't migratory by nature. It's happened to previous species throughout history and humans are not exempt from the rules of nature.

It is good to see people finally waking up but until the frauds are brought down and the whole system resets, there's not much to do about it but be prepared for when it happens.

[Hall of mirrors]

Jim Grant explains how Central Banks are Waging War on Supply and Demand

http://www.youtube.com/watch?v=ZxiwmzeCbhw&feature=player_embedded

[wild]

Once was incentives for self employment that included 'national pride & support' you know... supplying my national/state/religious/local community & sustaining myself & family thru sole proprietorship. I happily started & operated a very small repair shop business thru many years. But I sold out due to several reasons, I dumped a thriving business on purpose (2003), I now refuse to work any further than subsistence, primarily because I refuse to support the current & past leadership/direction of the USA government.

I could create another new business at any time, but I refuse to add one single dollar of value from me...to them.

wild;)

[Real Deal]

Definitions:

Leverage - n. Borrow money to make one spend like a wealthy person. When the whole country does it, everybody feels like a millionaire.

De-leverage - n. Repaying debt to the point of stripping wealth. When the whole country does it, everybody feels poor.

So simple. Yet so complicated. Man fooled by man-made money to violate physical and economic laws. And dumb enough not to know it.

[Doable Finance]

I am sure there are a whole lot of other economists who feel the same way.