[lbo-talk] anxious

[Cseniornyc at aol.com]

Mark S states: " I thought that the pre-hurricane U.S. economy was  
relatively solid.  
Forecasts for real GDP growth are in the 3.5% range  for 2005 and 3% for 
2006.  Employment data seem to be improving.   A banker at a recent luncheon 
indicated that Finance is fairly happy with  the situation right now.  
Getting back to the original question, it  remains to be seen how serious the 
gas price shock will be to real  growth."
Comment: Boy you could make a lot of money cheerleading for CNN or Business  
Week.The thing to do is,in addition to consider that these figurer's are  
politically constructed,  to ask :well how did the economy supposedly  got there? 
By virtue of what? Which sectors actually grew, where is new  employment 
coming from?. etc.,If you do this you easily see that this  "growth" does not com 
from the real engine of net investment additions  that expand productive 
capacity, employment and income. So where does it come  from? From consumption 
growth. And how is his possible? Because of the growth of  consumer's debt to 
galactic proportion, especially via he housing bubble and low  interest rates which 
in turn comes courtesy the Asians' CBs  massive buying  of UST bonds. What 
about employment? If you examine the data, you'll find out  most of the anemic 
growth in jobs resides in the low wage retail sector,  government and 
construction, which is fueled by a transitory housing  bubble.
Your banker friends are happy? Of course! Finance is the only growth  
industry in the US, but it depends on a shrinking real economy which keeps  
increasing the outsourcing of productive platforms to SEA and China. Also make  no 
mistake, 1-the the US government and Trade deficits, both approaching a  trillion 
dollars guarantee a future of high interest rates and then those  bankers 
won't be so happy, and 2 - even the most hysterical cheerleader can't  avoid 
facing the somber fact that increasing oil prices (an of other  commodities} will 
deliver a severe surge in inflation.
Cristobal senior
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