The U.S. Economy Headed For A Fall

Future News-The U.S. Economy Headed for a Fall
Bill Tenuto
March 14, 2005

A Quick Economic Forecast
The economy soon will take a downturn, inflation will rise, the Federal Reserve will raise interest rates substantially and unemployment will jump to at least 7%. American consumers will discover that the dollar does not buy as much as it did before. Economic conditions in the U.S. will continue to deteriorate.

China
A critical factor to keep in mind is that for years China has been providing government subsidies to its own manufacturers so they can sell their products to U.S. consumers below market value. Because of this, there is not a level playing field on which U.S. companies can compete. The U.S. Government has allowed China to do this because, in exchange, China has been buying huge amounts of U.S. Dollars and U.S. Treasury Bonds. If China stopped buying U.S. Dollars and Bonds, the U.S. economy, because of the enormous U.S. budget deficit, would decline rapidly and maybe even crash. China has needed a solid U.S market in which to sell its products and the U.S. has needed China to keep buying U.S. Dollars and Treasury Bonds so the U.S. economy won't go under. (According to Niall Ferguson, Harvard Professor and Author of Colossus, in a live interview on Lou Dobbs Tonight, CNN, March 14, 2005.)

That has been the deal. It reflects the very real connection between the out-of-control U.S. budget deficit, China and the precarious state of the U.S. economy.

But the relationship between the U.S. and China has become tense lately, and the U.S. economy, if my vision is right, is at the start of a decline, in spite of China's efforts to bolster it.

If the reader will look out across future time with me, I see that a military confrontation between the U.S. and China looms on the horizon. (See "Nuclear War: A Futurist's View, The Bible Code, Mayan Prophecy and My Vision of World War III.") The conditions for a military confrontation are in the making even now. These conditions will become even more evident as we proceed through 2005 and into early 2006.

Before the start of war comes the fall of the economy.

Government of the Wealthy, by the Wealthy and for the Wealthy: Plutocracy
George Bush has spent so much money that the budget surplus we had before 2001 is gone. George Bush has had to borrow $412 billion. This is Bush's budget deficit.

Yet the very same Bush Administration that even now continues to increase the budget deficit also wants to clamp down on the American people by restricting the bankruptcy law. In the days of Charles Dickens there were debtor's prisons and workhouses. Bankruptcy laws were designed to reform such injustices and give anyone who needed it a chance to start over. Under Bush we seem to be moving backwards.

According to Paul Krugman, Princeton University economist and New York Times columnist:

"The bankruptcy bill was written by and for credit card companies, and the industry's political muscle is the reason it seems unstoppable. But the bill also fits …a steady erosion of the protection the government provides against personal misfortune, even as ordinary families face ever-growing economic insecurity "

"The bill would make it harder for families in distress to write off their debts and make a fresh start. Instead, many debtors would find themselves on an endless treadmill of payments."

Krugman finishes this article with a warning:

"Warren Buffet recently made headlines by saying America is more likely to turn into a 'sharecroppers' society' than an 'ownership society'. But I think the right term is 'debt peonage' society--after the system, prevalent in the post-civil War South, in which debtors were forced to work for their creditors. The bankruptcy bill won't get us back to the bad old days all by itself, but it's a significant step in that direction."
("The Debt-Peonage Society," by Paul Krugman, The New York Times, March 8, 2005.)

Since the 2004 elections, with new Republican seats won in both houses, there is a movement on to transform American democracy into a plutocracy, a government of the wealthy, controlled by the wealthy, for the wealthy. Soon those of us who are not wealthy may begin to feel the effects of a kind of legalized discrimination initiated by the wealthy against the rest of us.

This political movement is powerful and sweeping in its scope. Alan Greenspan, the Federal Reserve Chairman, is an unfortunate case in point. Under Bush, Greenspan no longer gives the sage, objective and impartial economic advice that was his hallmark. Greenspan is a changed man.

According to a recent editorial in The New York Times:

"When Mr. Greenspan ventured into politics in 2001, he gave his blessing for Bush's huge tax cuts. Today, thanks in part to those tax cuts, the surplus Bush inherited is a $412 billion budget deficit, and the president's own budget proposal projects deficits as far as the eye can see."

"He[Greenspan] said repeatedly that the crucial underlying problem for the United States economy was a lack of national savings--the sum of government and individual savings, an important aspect of the nation's standard of living."

"If Mr. Greenspan really wants to increase national savings, he should advocate cutting the deficit."
("What Does Alan Greenspan Really Want," The New York Times, Op-Ed Section, February 18, 2005.)

But Mr. Greenspan will not advocate cutting the nation's deficit. In a manner oddly out of character for Alan Greenspan, he will not speak out against Bush economic policies which have created conditions harmful to the U.S. economy. Greenspan no longer sounds like Greenspan.

Paul Krugman, in his New York Times column, also has noticed Greenspan's unexpected transformation. Writing about a Senate hearing, which took place on Wednesday, February 16, 2005, at which Greenspan read a statement and answered questions, Krugman said:

"…a disturbing thing about Wednesday's hearing was the deference with which Democratic senators treated Mr. Greenspan. They acted as if he were still playing his proper role, acting as a nonpartisan source of economic advice…. But Mr. Greenspan is no longer entitled to such deference. By repeatedly shilling for whatever the Bush Administration wants, he has betrayed the trust placed in the Fed chairman, and deserves to be treated as just another partisan hack."
("Three-Card Maestro," by Paul Krugman, The New York Times, February 18, 2005.)

I believe the Bush Administration has consciously and intentionally brought the U.S. economy to the brink of economic decline.

Economists say that when this economy falls, there are two possible ways for it to hit bottom. Either it will hit bottom with a "soft landing" or it will hit bottom with a "hard landing". Either type of "landing" will bring financial hardship to the lives of many Americans. A soft landing will bring the hardship down on people gradually, whereas a hard landing will seem to come out of nowhere, hitting people with a shock wave.

The Vision
If my vision is accurate, then those of us who are not wealthy need to brace ourselves for a rocky economic road in the very near future, probably just around the corner.

I feel we are on the brink of an economic downturn which will continue through 2005 and into 2006 and which will burden more and more middle income and low income people as time goes on. This downturn will spread worldwide.

Under building pressure from increased prices for oil, natural gas and gasoline, inflation is on the verge of abruptly springing upward. This is already happening. We are just not hearing about it yet in the national media.

We know that the policy of Greenspan and the Federal Reserve has consistently been one of checking the rise of inflation by raising interest rates. Therefore, as inflation goes up, interest rates will go up too. For people with lots of money, a rise in interest rates helps their money make more money. Everyone else will be trapped in a financial struggle, paying higher prices for everything. This is coming soon.

Also, I sense rather strongly that unemployment is on the verge of taking a sudden jump to 7% in the near future and perhaps even higher by the end of 2005 and into 2006. Watch the unemployment figures during the coming months. Rising unemployment is one of the indicators of a sagging economy.

George Bush, Dick Cheney and the Republican dominated House and Senate, as part of their design, seem now in the process of dividing the American people into what I call the three "Ps". The three "Ps" represent a re-ordering of America's socio-economic classes into three levels: the plutocrats (the wealthy who hold all the power), the professionals (whose services the wealthy need) and the poor (everyone else).

Based On What I Have Observed And Read
I have deduced, based on what I have observed and read, that Bush and his associates may have pressured Alan Greenspan into agreeing with Bush Administration economic policies, even though these policies may well lead to a disaster for the U.S. economy. If Bush's people did pressure Greenspan, what did they say to him? As President, George Bush had the power to replace Greenspan as Federal Reserve Chairman. Bush chose instead to reappoint him. After his reappointment, Greenspan, who previously had been known for his independent, rational and objective advice, suddenly started sounding like a member of the Bush team. In addition, Alan Greenspan's wife, Andrea Mitchell, is a veteran correspondent for NBC News. Was Andrea Mitchell also possibly pressured somehow into further influencing her husband to fall in line and then remain in line with Bush policies? Television broadcasting corporations such as NBC are under the licensing authority of the Federal Communications Commission (FCC), and the FCC is under the authority and control of the White House. This is one possible scenario. Maybe we just need to connect the dots.

How realistic is the above scenario? Could such a thing happen in America? Paul Krugman describes the motives and methods of the leaders America now has in office:

"Our current leaders…are prepared to abuse their power in pursuit of their political goals."

"Over the past year we've seen abuse after abuse, from the Texas redistricting…to the suppression of scientific evidence against administration environmental policies, to the smearing of Richard Clarke, the former counterterrorism chief. When Paul O'Neill spoke out about what he had seen, the Treasury Department threatened to prosecute him, suggesting that he might have revealed classified information."
"The ruthlessness of the administration reached its height --so far--when officials outed Valerie Plame, the wife of administrative critic Joseph Wilson, as a covert CIA operative."

"Behind these visible episodes of abuse of power lies a drive by the right to consolidate its political dominance without precedent in American history."

"The drive to achieve that dominance includes efforts to dominate and bully the media; to secure an overwhelming dominance in campaign finance, not just raising lots of money, but threatening businesses that support the other side with retribution; and repeated efforts to shout down any criticism as unpatriotic."
(The Great Unraveling, by Paul Krugman. New York: W.W. Norton & Company, Inc., 2004, Introduction to the Paperback Edition, pp. xx-xxii.)

I believe Bush and his associates have bullied and will continue to bully anyone who might stand in their way.

I also have deduced, based on what I have observed and read, that Bush and his associates desire to financially squeeze the middle class out of existence and financially squeeze all but the wealthy so tightly that anyone who wants to disagree with Bush Administration policies will not have the time, energy or resources to make much of a stir. Because of this, I see America's standard of living falling lower and lower while the tyranny of a plutocratic government increases its power and reach over more and more Americans. The more this goes on, the more pliable Americans will be forced to become and the more the Bush Administration will manipulate and control people's lives.

I see that 2005 has ushered in the disturbing next phase of what appears to be a carefully planned social, political and economic re-design of America. Those of us who are not independently wealthy soon will have to shoulder the burden of an economy in decline.

Copyright 2005 by William L. Tenuto