Global Economic Crisis Deepening

America’s Misery Index at All Time High!  What’s Wrong Here?

by Stephen Lendman

In the 1960s, economist Arthur Okum began calculated America’s Misery Index by adding the unemployment and inflation rates for a sense of public pain or lack of it in good times.

In May, it hit a record high exceeding 25, surpassing the earlier June 1980 21.98 top, based on how both measures were then calculated, not today’s methodology, manipulated to hide painful truths.

At issue is:

• over 22% unemployment, including discouraged workers and the so-called “birth-death model” estimate of net non-reported jobs from new businesses minus losses from ones no longer operating; during hard times, painful truths are hidden by creating non-existent jobs out of whole cloth instead of subtracting them to reflect fewer, not additional new businesses;
• double digit inflation, including soaring food, energy, healthcare, college tuition, and other costs omitted or understated in core figures;
• rising poverty, more than one in seven affected according to way understated Census Bureau figures, using threshold measures developed 40 years earlier;
• record numbers on food stamps;
• record measures of food insecurity – Feeding America.org reporting one in six American facing hunger;
• predicted record 2011 numbers of home foreclosures, estimated at 1.2 million after one million lost last year;
• record homelessness numbers up to 3.5 million on any given night, needing refuge wherever they can find it or face life on city streets; and
• other measures of worsening conditions during a Main Street depression, affecting Europe, Japan and elsewhere like America.

Economic recovery? Explain how to millions unemployed or underemployed, foreclosed homeowners, bankrupt business owners, impoverished legions, and many others food insecure at a time US and European leaders enforce austerity when massive social stimulus is needed.

Across Europe, large deficits and public debt crises are spreading, an Economist April 29 article highlighting “a moment….when events spiral out of control. As panic sets in, bond yields lurch sickeningly upwards and fear spreads to shares and currencies.”

It happened in September 2008, a decade earlier when Russia defaulted, and similar past events. “When the unthinkable becomes the inevitable,” contagion and panic follow like a tsunami sweeping away everything in its path.

Numerous European countries are deeply troubled, notably Portugal, Ireland, Italy, Greece and Spain, entrapped in debt, locked in a Eurozone straightjacket. Perhaps heading for default, they’ve inflicted painful austerity on working households, rallying them en masse in protest.

On May 30, financial expert and investor safety advocate Martin Weiss said:

“Never before have I seen so many threats to your safety and wealth converging in one time and place,” citing:

• deteriorating bank safety, evident from increasing failures and other systemic risk measures;
• a deepening housing market depression with no end in sight;
• a worsening European sovereign debt crisis; and
• most worrisome, the contagion spreading to America.

According to Weiss:

“If you thought the debt crisis of 2008-2009 was a harrowing experience, wait till you see what’s coming next.” Last time, corporations were affected. Sovereign states are getting hammered now, including America.

On May 16, the Global Europe Anticipation Bulletin (GEAB) headlined, “Global systemic crisis: Confirmation of a Major Alert for the second half of 2011 – Explosive fusion of world geopolitical dislocation and the global economic financial crisis,” saying:

As it predicted in February 2008, GEAB again believes conditions now suggest a later in the year “explosive fusion….(a worldwide) geopolitical dislocation on the one hand and (a) global economic and financial crisis on the other.”

Combined they show major economic trauma coming, extinguishing economic recovery hopes, notably in debt entrapped America, “represent(ing) the end of an era (in which the) dollar was the currency of the United States and the rest of the world’s problem.”

Ahead, it’s becoming “the main threat weighing on the rest of the world” and America. Summer 2011 “will confirm that the Federal Reserve has lost its bet: the US economy has, in fact, never left the ‘Very Great Depression which it entered in 2008 despite” massive money creation.

As a result, interest rates will rise. Government deficits will explode. Economic decline will intensify. Equity valuations will decline. The dollar will behave erratically “before suddenly losing 30% of its value” as earlier predicted.

At the same time, “Euroland,” BRIC countries (Brazil, Russia, India and China) and “commodity producers will rapidly strengthen their cooperation while launching a final attempt to salvage” the remnants of Bretton Woods and a US/UK dominated world.

“(I)t’s unrealistic to imagine (Obama) who has shown no major international stature so far, proving himself” statesmanlike enough to take risks ahead of the 2012 election cycle.

Under his leadership, America “is completely in dreamland. Whilst the country has reached unsustainable levels of debt, (its leaders) have made this topic an election issue.”

Moreover, America today is seen as the “sick man of the world in which any sign of weakness or serious inconsistency can trigger uncontrolled panic.”

In addition, the combination of “(c)razy central bankers, world leaders without a roadmap, economies at risk, inflation rising, currencies in trouble, frenzied commodities, uncontrolled Western debt, (high unemployment), (and) stressed societies” leaves little doubt about looming trouble ahead as early as second half 2011.

A Final Comment

In late May, Gerald Celente highlighted “the most trend-significant story” getting little or no coverage in Western media reports. The combination of weather, economic, and geopolitical events portend “far-reaching and disastrous” socioeconomic consequences.

“Farming, shipping, seafood, food supplies and petroleum refining will be among the foreseeable casualties, accompanied by massive population displacement. But the ensuing chain reaction (inflation, shortages, unemployment, etc.) will claim many other victims,” so far unquantifiable.

Middle East and European protests “signaled a major turning point, (an unstoppable) “Off With Their Heads” mega-trend, America’s media don’t notice or explain.

Celente calls the European bailouts failures, creating higher unemployment, more debt, draconian austerity, and “a wholesale sell-off of valuable public resources,” asset-stripping national wealth to enrich bankers, producing painful consequences.

As a result, “(e)conomic conditions will continue to deteriorate for most European nations. The worse they get, the louder and more heated the protests….” Repressive crackdowns will follow, producing greater protests this summer into 2012 and beyond as conditions worsen.

However, a potential wild card deserves watching – one or more terror strikes likely derailing angry protesters temporarily, uniting them behind national security issues, the way 9/11 worked.

More worrisome is a possible major false flag, even a nuclear one targeting a US and/or Western European city. If so, all bets are off short term, but sooner or later unmet needs will take precedence, perhaps when hungry people blame Washington for their misery and react angrily for help. It bears watching and may happen sooner than expected.

ABOUT THE AUTHOR: Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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John McMurtry is an internationally recognized moral and political philosopher who is an elected Fellow of the Royal Society of Canada and University Professor Emeritus at the University of Guelph, Ontario. His volumes on Philosophy and World Problems for UNESCO are globally published, and his widely translated works include the influential books, “Unequal Freedoms,” “The Cancer State of Capitalism,” and “Value Wars.” McMurtry is also an active public advocate for global justice, world peace, and international law.

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