Three weeks later [after early June 2010] the celebrated property rebound, along with the stock market, ran out of bounce. After the hefty government tax credits that had propped up sales expired in April, May purchases of new homes fell 33 percent to a record low, the fewest sales since 1963. Note that the US population stood at 190 million in 1963, compared to 310 million in 2010 … a 60 percent increase.
Rebound? In the first quarter of 2010, private business paychecks shrank to new lows, representing their smallest share of personal income in US history, while government provided benefits (social security, unemployment, food stamps, etc.) rose to record highs.
With private sector jobs being lost, incomes declining and tax bases shrinking, the increases in government spending were both unsustainable and destructive. More was being spent by the government than earned by the private sector. Not only were taxes not covering expenses, impoverished states with insufficient cash on hand to meet obligations were holding back tax refund checks!
Note: Who, other than government, could pull off such a stunt — issuing IOUs to be paid when convenient? Taxpayers and borrowers who are unable to meet their obligations lose houses, have paychecks garnished and assets seized. Students, saddled with massive loans (often $100,000 or more), earning meager wages or unemployed — and prevented from declaring bankruptcy by the prolender federal law — become indentured servants.
Some 8.5 million people (7.4 percent of the workforce) lost jobs since the Great Recession began, while local governments cut only 141,000 workers … less than 1 percent.
As the private sector contracted, government employment barely declined. By 2010, a record-low 41.9 percent of the nation’s personal income came from private wages. Moreover, government workers, traditionally earning less than private sector counterparts, were now earning double in wages and benefits; $120,000 public vs. $60,000 private.
Not burdened with competition, unconcerned with the next quarter’s profit, and with no obligation to satisfy shareholders, governments continued to keep their largely unproductive bureaucracies intact. Only the “too big to fails” — be they Big Business or Big Government — cashed in on the bailout/rescue package/stimulus plan bonanza.
As the private sector contracted, state and local spending rose 2.3 percent, and federal spending was up 3 percent.
Covertly, the United States, staunch champion of “free enterprise” and harsh critic of Europe and other nations with bloated and entrenched bureaucracies, had become what it so despised: a bloated and entrenched bureaucracy.
Gerald Celentefor The Daily Reckoning
[Editor's Note: The above essay is excerpted from The Trends Journal, which is published by Gerald Celente. The Trends Journal distills the ongoing research of The Trends Research Institute into a concise, readily accessible form. Click here to learn more about and subscribe to The Trends Journal.]
Gerald Celente is founder and director of The Trends Research Institute, author of Trends 2000 and Trend Tracking (Warner Books), and publisher of The Trends Journal. He has been forecasting trends since 1980, and recently called "The Collapse of '09." Also a Close Combat practitioner and black belt trainer, Celente has made many media appearances including Oprah, CNN, The Today Show, Good Morning America, NBC Nightly News, C-Span, and CNBC. He has been cited in the Economist, Chicago Tribune, LA Times, Entrepreneur, USA Today, and many other publications.
Once again, well put Mr Celente.
I certainly despise the bloated, entrenched bureaucracy that the United States has become. It is nice to see you on the Daily Reckoning: a marriage made in heaven. If only I could talk the woman I married into selling out and moving to the country before the SHTF…
Thank you Mr Celente! Your voice is like cannon fire across the bow to those parasites that now comprise the US Government. Of course,,, their too stupid to take your warnings but it’s pure joy to watch them squirm when your prophecies materialise…
Our friend Richard Duncan believes the U.S. economy requires credit growth to survive. Here, you’ll see what he thinks will happen if the U.S. doesn’t continue expanding credit. You’ll also find exclusive footage we shot in the Daily Reckoning’s studio explaining how the U.S. could lose it’s global dominance… and how programs like Social Security or Medicare could go bust...
The hum of the printing presses and the steady drip of cheap credit over the past five years made it easy to believe the U.S. economy was in a true recovery. But what happens when the excess liquidity begins to dry up?
The Americans who voted for Obama were expecting some big changes. But, six years later, the government he acquired has only spied harder, the drones have flown lower, and the weapons have gotten bigger. But don’t blame Obama. Read on…
All paper currency has a shelf life. It could be 5 years or 500 years, but at some point, the value of any paper currency eventually reaches zero. That's why, for centuries, people have turned to one shiny metal to safeguard their personal store of wealth. And, as Jim Rickards explains, you still have that option. Read on...
Bad things have a funny way of happening in October. Remember October 1929? It raised the curtain on the Great Depression. Or maybe you recall the infamous Black Monday crash in 1987. The Dow tumbled 22%— the largest single day loss ever. Guess what? That was in October, too. The 19th to be exact. Notice a trend here? Fast forward to this October... You know what happened this month. And if all that wild market action kneeds you in the gut, here’s what you should do now. Greg Guenthner explains…