I live in the Seattle area, which so far has managed to avoid the worse effects of the current economic downturn. This makes it easier to think things aren't so bad. With the US dollar shrinking faster than a wool sock in the dryer, exports from companies like Boeing & Microsoft, along with our state's agricultural products, are looking like pretty good deals to foreign shoppers. Our property values have not yet collapsed as in many other parts of the country.
But no matter where you live, the extent of the rot in the US economy is being systematically hidden from you. After reading an article on the Globalization Research site, I'm starting to grasp just how dire things are. Follow me over the fold...
In his piece The Real State of the US Economy author William F. Engdahl points that Treasury Secretary Henry Paulson has lost control over US finance, and that the government has been hiding the depths of the recession for some time now.
It's not just financial entities like Citigroup, Lehman Bros., Morgan Stanley, Goldman Sachs (Paulson’s old firm) and Merrill Lynch (the inventor of securitized sub-prime loans) that are teetering -- the entire retail sector is rapidly contracting. Consider the following recent developments:
Ann Taylor closing 117 stores nationwide.
Eddie Bauer to close more stores after closing 27 stores in the first quarter.
Cache, a women’s retailer is closing 20 to 23 stores this year.
Lane Bryant, Fashion Bug, Catherines closing 150 stores nationwide
Talbots, J. Jill closing stores. Talbots will close all 78 of its kids and men's stores plus another 22 underperforming stores. The 22 stores will be a mix of Talbots women's and J. Jill.
Gap Inc. closing 85 stores
Foot Locker to close 140 stores
Wickes Furniture is going out of business and closing all of its stores. The 37-year-old retailer that targets middle-income customers, filed for bankruptcy protection last month.
Levitz - the furniture retailer, announced it was going out of business and closing all 76 of its stores in December. The retailer dates back to 1910.
Zales, Piercing Pagoda plans to close 82 stores by July 31 followed by closing another 23 underperforming stores.
Disney Store owner has the right to close 98 stores.
Home Depot store closings 15 of them amid a slumping US economy and housing market. The move will affect 1,300 employees. It is the first time the world's largest home improvement store chain has ever closed a flagship store.
CompUSA (CLOSED).
Macy's - 9 stores closed
Movie Gallery – video rental company plans to close 400 of 3,500 Movie Gallery and Hollywood Video stores in addition to the 520 locations the video rental chain closed last fall as part of bankruptcy.
Pacific Sunwear - 153 Demo stores closing
Pep Boys - 33 stores of auto parts supplier closing
Sprint Nextel - 125 retail locations to close with 4,000 employees following 5,000 layoffs last year.
J. C. Penney, Lowe's and Office Depot are all scaling back
Ethan Allen Interiors: plans to close 12 of 300 stores to cut costs.
Wilsons the Leather Experts – closing 158 stores
Bombay Company: to close all 384 U.S.-based Bombay Company stores.
KB Toys closing 356 stores around the United States as part of its bankruptcy reorganization.
Dillard's Inc. will close another six stores this year.
For anyone familiar with American shopping malls and retailing, this represents a staggering part of the daily economic life of the nation, from furniture stores to clothing to video rentals to leather.
Starbucks is also closing 600 under-performing stores, (we hear about that in coffee-loving Seattle).
The above list also represents the evaporation of many thousands of American jobs. There are the cooked government unemployment figures to hide the extent of the hard times workers are facing. Economist John Williams of California has meticulously tracked such "data revisions" for more than 25 years and found the manipulation of reality so alarming that he founded an independent subscriber service titled "Shadow Government Statistics" , where he makes best estimate calculations of the reality not the official mythology.
The economic reality is not reflected in official US Commerce Department or Labor Department statistics. There the data is constantly being "revised" to hide the grim reality in an election year.
The reported "official unemployment" is the very narrowly defined U3 which stands at 5.5%. However, as Williams notes, U6 is the real measure and that officially shows 9.7% unemployed. His calculations put the figure at 13.7% actually unemployed and seeking work.
Will getting Obama elected fix the economy? Obama’s National Campaign Finance Chairman is Chicago real estate billionaire, Penny Pritzker. It was Pritzker together with Merrill Lynch ten years ago who first developed the model for securitizing "sub-prime" real estate, the trigger for the current meltdown. Small world, huh? Let's not expect too much. I'll be happy if he can get us out of Iraq and pointed towards a sane energy policy. In the meantime, the rest of us had better get ready for more hard times to come.