What European Recovery? Unemployment at record high and debt only keeps reaching more unsustainable levels. Italy’s Debt to GDP crosses 125 percent.
I never understood why so many people bought into the notion that the European Union was recovering. If recovery means that a handful of well-connected bankers are bailed out with financial smoke and mirrors instead of facing reality while placing crushing austerity on the public, then yes, maybe a recovery is what was experienced. As of the writing of this article the EU is facing its highest unemployment rate on record. How is this even remotely positive or perceived as a recovery? In Greece, the politicians and some in the public are trying to go after people that accurately stated that yes, there is in fact too much debt. In Italy, a party led by a former comic did surprisingly well and it appears that there is no clear path ahead for the country. The amount of debt in the EU is comical so it is apropos that a comedian should do so well. There is nothing remotely resembling a recovery in the EU if we look outside of the banking sector which does a very poor job at reflecting the true state of the economy.
Part-time America: How we increased our part-time for economic reasons workforce by 4 million people since the recession began. Healthcare costs encourage low wage employers to hire more part-time employees.
The rise of part-time employment in the United States is part of the low wage system that is spreading throughout the country. Part-time workers are cheaper to hire and easier to fire. You also avoid paying benefits from a healthcare system that is seeing skyrocketing costs. Prior to the economic crisis, the number of Americans working “part-time for economic reasons†was roughly at 4 million. Today, in this supposed recovery it is up to 8 million. While the stock market is taking off many companies have figured out that it is cheaper to have a large number of at-will workers instead of bringing on full-time employees and providing additional costs. As we have discussed, the recession has been used as a cover to slash middle class wages and inflate profits that have filtered to a very small portion of our population. Part of this problem is structural and we are seeing the impact of higher healthcare costs hitting the employment market.
Crossing the debt Rubicon. Does debt even matter? Over $5 trillion in Federal debt now held by international and foreign investors.
In most economic literature there seems to be a tipping point at which a nation enters a precarious state in which too much debt has been taken on. A typical point occurs when a country hits a point where annual GDP is surpassed by total outstanding debt. We recently crossed that threshold. Another long-term trend we are living with is depending on the lending and willingness of international investors to put their money into the US. Today over $5 trillion of Federal debt is now held by international investors. In essence, we need their money to keep going at our current rate. While the economic contraction has put the albatross of austerity on the necks of most households, banks and the government continue to spend as they once did. Speculation is rampant again. If you listen to some you would think that debt simply does not matter anymore. If that were the case, we wouldn’t be jumping from one crisis to another dealing with our level of obligations. At a certain point there is no more can kicking.
The difference between investing in the dollar store economy and living in it: 20 percent of Americans now receiving food stamps. Dollar stores become a growth industry and top one percent gobble up all income gains after recession.
Lost in the tireless cheerleading for the stock market which in reality, is largely a sophisticated sham for most Americans, we had a report from the Department of Agriculture that should put things into perspective. In the latest release of data for November 2012 (released in February 2013), the report noted that 141,067 Americans were added to the food stamp program known as SNAP. This is a massive increase at a time when the stock market is soaring to near record highs. For the record, the S&P 500 went up 0.28% for the month of November while we added a stunning 141,067 Americans in the same month to the food stamp program. This brings our current total to 47.69 million Americans that now rely on food stamps.  To highlight our growing structural issues we now have a mind jarring 20 percent of our civilian non-institutional population on food stamps. What does this truly say about our economy?