Wednesday, August 5, 2009

Compare and contrast

Greetings good citizen,

Are you wondering (as I am) what happened to yesterday’s exuberant investors? Not only was the economy ‘all better’ but the markets were poised to roar off into the stratosphere (again.)

I’m sure I’m not the only one thinking this is a ‘funny’ market (and I don’t mean ‘ha, ha’ funny either) I mean funny as in weird!

So it is that we arrive at tonight’s offering and an apparent ‘rebuttal’ to yesterdays’ declaration of sunshine, lollipops and rainbows breaking out everywhere…

If you remember yesterday’s piece, investors claimed that the consumer was ‘playing possum’ but today it looks like someone did a ‘reality check’…

Higher Costs Spur Rise in U.S. Consumer Spending

Published: August 4, 2009

The broader economy may be testing the bottom, but for American consumers, there appears to be no end yet in sight for falling wages and higher living expenses. [no kidding!]

That was the picture painted Tuesday by the government’s monthly report on personal incomes and consumer spending. While consumers spent more in June, they did so because prices of food and energy were rising, and not because they were ready to spend freely again.

Personal incomes sagged as employers continued to cut wages and reduce working hours. And the personal saving rate, which had been rising, dropped sharply from a month earlier as one-time transfer payments from the government stopped arriving in people’s bank accounts.

“Consumers are not spending any more money,” Steven Ricchiuto, chief economist at Mizuho Securities, said. “They’re still consolidating.” Personal income fell back 1.3 percent in June, just a month after a one-time $250 payment to Social Security recipients lifted it by the same amount. And in a sign of continuing troubles for American workers, private wages and salaries fell for a fourth month, slipping a seasonally adjusted $28.6 billion after a $11.3 billion drop a month earlier. [So here we are good citizen, with most of us being clubbed like baby harbor seals while the investor class misinterprets the facts on the ground (again!)]

Private wages and salaries have fallen for each of the last 10 months as businesses trimmed costs by freezing pay, imposing salary cuts and reducing the work week. Personal income has dropped by a seasonally adjusted $372 billion since September.

“Wage and hour cuts are big right now,” Adam York, an economist at Wells Fargo, said. “The economy remains fairly weak, and the labor market even weaker. We’ve lost 6 million jobs, and unemployment is rapidly heading toward 10 percent. There’s just not a lot of wage pressure out there right now.”[And these stooges are calling this a ‘recovery?]

The Commerce Department’s report showed that while consumer spending was no longer falling precipitously, shoppers were still extremely cautious with their money. Personal spending rose by a seasonally adjusted 0.4 percent in June, but factoring in price changes, real consumer spending slipped 0.1 percent.

Economists said a strong response to the government’s “cash for clunkers” auto purchase program was likely to lift spending in July.

The personal saving rate dropped to 4.6 percent, from 6.2 percent in May, reflecting how people had saved their one-time Social Security payments.

Since the recession began in December 2007, the national unemployment rate has risen to 9.5 percent, and economists are expecting it to reach 9.6 percent when the government reports its July jobs numbers on Friday. Forecasters expect that the economy lost an additional 328,000 jobs last month after shedding 467,000 jobs in June. [Okay, weren’t the numbers for last WEEK over 550,000? If I recall correctly, there wasn’t a single week in July under 500,000 so where the fuck does this 328,000 number for the whole freakin’ month come from?]

A report on home sales that have gone under contract, but not yet closed, offered a bit more cause for optimism. The National Association of Realtors’ index of pending home sales was higher for a fifth month in June, rising 3.6 percent in another sign the country’s housing market might have hit bottom.

Economists were expecting a monthly increase of 0.7 percent.

Lower mortgage rates, falling prices and a tax credit for first-time homebuyers have ignited new activity in once-foundering local housing markets. Last month, a closely watched gauge of housing prices showed some of its first positive moves in years, and sales of new and previously owned homes are beginning to stabilize.

Not only is the government ‘temporarily’ subsidizing, er, ‘first time buyers’ but the huge amount of slack in the realty markets have driven prices down to roughly half of their peak values.

Worse, our pal ‘flipper’ is still trying to make that Tom Vu real estate seminar they took back in the 80's pay-off. They are looking at the plunge in real estate prices as a ‘second chance’ to cash in on ‘distressed’ real estate.

Flipper, like other investors, isn’t paying attention to what’s happening in the ‘real world’. With wages being slashed across the board, few will be able to afford the rent flipper is planning to charge residents of their new real state ‘empire’.

And Flipper will get foreclosed upon…again, sticking the banks with another load of bad loans, forcing yet another government bailout of the banking system and causing even more money to ‘evaporate’ out of the economy!

Face it good citizen, none of these idiots currently working in the banking system can even spell, much less perform ‘due diligence’.

Now that the other shoe has been dropped, how about those damn price increases? You can’t get a raise but the assholes can raise their prices!

How the fuck does THAT work?

Bizarrely, this is the sort of shit that ‘jobless recoveries’ are made of. Companies jack up their prices AND slash what they pay you so they can show a profit.

This is a double fuck you…but what are you gonna do?

Seriously, what are you gonna do?

Thanks for letting me inside your head,


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