Where to from Here?

SUBHEAD: Raul Ilargi Meijer and Nicole Foss (Stoneleigh) announce changes for Automatic Earth.

 By Ilargi & Stoneleigh on 5 June 2011 for the Automatic Earth - (http://theautomaticearth.blogspot.com/2011/06/june-5-2011-where-from-here.html)
Image above: The logo of automatic Earth - North Pole Sun Moon. From (http://s243.photobucket.com/albums/ff223/dbzgirl2234/?action=view&current=north-pole-sun-moon.jpg).

Unemployment numbers on the one hand, and home sales and prices on the other, are the by far most important trend indicators for the US economy. Without falling unemployment, in combination with rising home sales and prices, there can be no recovery.

And a jobless recovery is no more real than a homeless one. Trillions upon trillions in wealth, capital, earning potential, that belongs to our children and grandchildren, has served only to temporarily soften the deterioration in economic indicators.

This has provided us with an entirely illusory picture, greatly helped along by politicians and media pundits, which serves to make people believe what they want so much to believe: that things have been, and are, getting better.

We can all understand that if you ignore the millions of Americans who drop out of what the government defines as the "looking for work" category, and that if millions of -often foreclosed- homes that sit empty are not put on the market, the indicators will look less detrimental. We understand this.

Still, we all do follow the "polished" numbers, because they are the ones that make the headlines. And if even the polished data start looking bad, there's never a shortage of pundits to tell us it's all just a temporary blip on the road to recovery. All we really need to do, goes their -often unspoken- message, is to look at the stock markets, which are doing just fine.

Or the price of gold, copper, or food commodities. But the largest investors in these items are the very financial institutions that have received your children's money to invest, play, and gamble with. They don't have to fess up their losses, say our invented-on-the-fly accounting "standards", but instead the house supplies them with more and new money, in order to keep the game going. The house doesn’t want the game to stop, because the house is the game.

The house isn't about to shut its doors, and its elected puppets aren't about to join the ranks of the unemployed, as long as access to the capital and earning potential of future generations is available. That is where the financial crisis has long since become a political one. Right there.

In the bankers, industrials and politicians' access to the -fast rising, re: the deficit- interest your children will have to pay on their labor.

The Greeks, Spanish and Egyptians seem to understand this dynamic much better than do Americans, but then the PR industry in these countries is a lot less sophisticated than that in the US. Still, this should be no excuse. It is glaringly obvious, so much so that nobody, when put to the question, will attempt to deny it: there can be no economic recovery with falling home prices and rising unemployment.

There can be a period of confusion, especially when gargantuan amounts of public money are transferred to the private sector; indeed, we have witnessed such a period in the past two years. Confusion sown by tax incentives for homebuyers, for instance, but most of all by manipulation of the data.

By mortgage modification initiatives that are as dead in the water when they start as they turn out to be down the line.

By job creation programs that strip down hourly wages and benefits until what's left is not even enough to feed and house an individual, let alone a family.

By pushing millions of would be workers off the back of the employment truck, and hoping they’ll never be heard from again; even if they are, at least for now they don't show up in the stats anymore.

And don't let's forget: there's always an election somewhere coming up that trumps the interests of those who will vote in it, and those who elect not to. So where to from here? The BLS unemployment report on Friday was once again dismal.

There was supposed to be a lot of growth in the job market that had long since been forecast by the usual suspects, but hasn't materialized. Temporary blip, says White House economist Austan Goolsbee. Just a bump in the road. Looks like the road is nothing but a bump.

Even if the official U3 number went up "only" to 9.1%, and U6 even fell a notch, unemployment duration went up again, and that's a big one. It’ll take many years for the labor market to get anywhere near "normal" numbers, and even then, and even IF it does, it will look nothing like what we have become used to over the past decades. The situation where we had good wages, and strong benefits, will never return, or at least not for decades. For that situation to occur, you need an economy with a solid manufacturing base, with near full employment, and with home prices that are available and affordable for Joe and Jane Main Street with their average salaries.

But homes have only been affordable for Joe and Jane off late because the Federal Reserve and the government pushed down interest rates and made huge amounts of credit available (re: Fannie and Freddie). Ironically, though, these policies pushed up home prices to levels where they were no longer affordable.

And just as ironically, this means that Joe and Jane and all of their families and friends now owe trillions of dollars more to the banks than before Greenspan and Rubin and Summers et al. injected US society with financial steroids.

All these every day Americans may not all realize it yet, but then, home prices are only down 33% so far. Just wait for the real plunge. It’ll come. Soon enough. Pending home sales came in down 11.6%, 27% for the year. Just follow the money. As it vanishes. Where from here?

Looking at all the week's awful stats, it should be clear that a return to business as usual, in case this wasn't clear yet, is out of the question. You need to find a way to make sure your elected leaders', and their financial leaders', fingers, no longer have access to your kids' cookie jars and piggy banks. That is pivotal.

It's also the hardest part; you'll have to snatch it from their cold dead fingers, since it's the biggest prize out there to be had. An infinite claim on the future, which pays out today: the rewards of multiple generations worth of labor used to pay off the gambling debts of the past and present.

There is nothing more perverse than that. We will have to mark down all assets, including our homes, to their present market value. A value that, moreover, will go down enormously simply because we do the marking down. If we don't do it now, it will happen later anyway, but it will then occur beyond our control. Better to keep our hands on the pulse, no matter how painful the experience may be.

And it's from that point that we will have to try and rebuild. It's not going to be fun, not by a long shot, but it'll be our own "not fun", not something contrived for us by psychopaths and perverse narcissists who care not whether we live or die.

Ilargi: Because of all the thoughts, trials and tribulations described above, as well as through the past 3.5 years of The Automatic Earth in its present form, Stoneleigh and I have decided that it's time to change things around here.

Observing the shenanigans of the financial and political world inevitably turns to rubber necking and accident tourism, and we feel it's time to talk more about what comes after the present, what we can supply people with that can help them when what we are witnessing today snaps out of this suspended animation and starts its way down into the gorge for real.

We will continue to comment on the economy, but we will also add sections to our new site on for instance preparation, in all its diverse forms, from growing and preserving food to building homes and energy facilities to keeping your remaining wealth where it counts. In short, all that will serve to make people less dependent on the crumbling infrastructures they presently rely upon. We invite anyone who thinks they can contribute to contact us.

We’ll fill you in on the details as we go along. It may take a while longer to get all the pieces to fit into place, but they will be there. In order to make that happen, we do something today that we haven't done for a long time: launch a fund drive. People have been very generous with their donations in the past, and it's thanks to them that we have been able to do what we have done, and to contemplate doing just that, but more and better.

In order to achieve this, we need a stable funding base; it is the only way we can make future -financial- commitments involved in everything a larger and more elaborate site requires. We have been thinking about setting up a members sections at TAE for this purpose, and we may have to go that road at some point.

However, if enough people sign up for recurring donations, which for members -if we would be forced to go that route- would be maybe $10 per month, we may not need to do this, which would be a relief: it's not really what we're about. We've set the goal for this Summer Fund Drive at $50,000.

We know that may seem like a lot of money to some, but believe me, it's really not; not for what we have in mind. There are several ways to support the Automatic Earth:

One-time donations and recurring donations via Paypal, donations through other means, visits to our advertisers (that’s why they're there!), and clicking on the Amazon box with Stoneleigh’s book favorites in the left hand bar: if, for any Amazon purchase you make, not just those books, you go through their box at TAE, we get a percentage of what you purchase without any extra cost to you. That should be easy... As I said, we will explain -much- more soon. First, here's Stoneleigh's own personal message for you:

This summer The Automatic Earth marks three and a half years of big picture commentary on finance, energy, the environment, resources, carrying capacity, geopolitics, the psychology of herding behaviour, networked systems, crisis preparedness and anything else we have considered to be relevant to helping people to navigate the tumultuous times we are poised to descend into.

While there are many sources of information on single aspects of our predicament, there are few that attempt to truly tackle complexity and render it comprehensible. That is our chosen role and we see it as being of the utmost importance.

The consequences of ponzi finance on the global scale, the peaking of the energy supply that has been our lifeblood as a civilization, environmental degradation and ecological overshoot are set to manifest in our times, and we need to understand what is unfolding in order to minimize the impact on ourselves, our loved ones and our societies. The Automatic Earth focuses first on finance for reasons of timeframe.

As the resumption of financial crisis looms, and bubbles can burst very rapidly once a critical momentum to the downside is reached, people must address the issues of debt vulnerability, control over the essentials of their own existence and capital preservation in order to retain their freedom of action to deal with the other challenges to follow.

However, we must not lose sight of the larger context. Humanity faces an intractable and thoroughly multi-faceted predicament, with no means to continue a busines-as-usual scenario. As the top down structures we have built, which are structurally dependent on cheap energy and cheap credit, begin to fail, we must construct new means of supporting ourselves from the bottom up - at a human rather than an industrial scale.

These community initiatives will need to be funded, and that requires capital to be rescued and preserved for the purpose, rather than allowing it to disappear into a giant black hole of credit destruction or end up entirely in the the hands of the very few.

The Automatic Earth attempts to provide the information ordinary people need to accomplish this critical task. We also exist to warn people as to the dangers of the darker side of human nature that typically manifests when there is not enough to go around, especially when that circumstance can manifest rapidly. When fear and anger are in the ascendancy, societies can turn in directions that benefit no one but a handful of manipulative predators.

One of our goals is to minimize the tendency for people to become embroiled in movements that feed such interests, and maintain a focus on the constructive activities that will be absolutely essential if we are to mitigate the pain of a major economic depression. Fear and anger are extremely 'catching', hence we regard what we do as providing a 'psychological inoculation' against them.

We feel we have a very important role to play in providing the intellectual and emotional tools that people will need in the unstable times that are coming, and we have chosen to undertake that through the vehicle of The Automatic Earth. In order to maintain and expand an endeavour that requires two people to make a full time commitment to the project, and others to play supporting vital roles, we need to develop and maintain a stable funding base.

For this reason we will soon be making a number of changes to our site and the way it is run. We have secured the programming services needed to develop an expanded and more flexible site, outside of the constraints imposed by blogspot, that will be able to offer greater value to our readers.

We will need to maintain programming services and deal with other costs of a more ambitious endeavour. Today we are instituting a summer fundraising drive in order to take

The Automatic Earth to the next level. We ask you to support our efforts on your behalf, so that we can continue to bring you the biggest possible big picture, and help you to navigate the challenges to come.


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