Global Recovery 'Peaked' in 2013 and Has Been Declining Ever Since As Measured by PMI

Not everyone can become a waiter or a bartender.  And as more disposable income accrues to the top, and is deployed in luxury goods and the pursuit of rents and acquisition, the rest have lest to spend for goods that stimulate the aggregate demand.

As you know I would ascribe this slow decay in economic activity to the 'top down' monetary stimulus being deployed by the Western central banks, and their overattention to the well being of the largely broken and misdirected financial sector that was in fact primarily responsible for the crash in 2008.  That they corrupted the regulatory process along the way for their own benefit is an ancillary cause at best.

As I have been saying since roughly 2008, the Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

Since greed has no limits by its very nature, and since the credibility trap is preventing the one percent and their enablers from engaging in meaningful reform, I conclude that things will continue to get worse until there is a real break in the system that ends the feedback loop of the abuse of power and corruption of public policy.

I believe that the current election in the US, which is surprising to so many establishment pundits, is a clear indication of this.   Now whether it is fruitful change or not is another thing altogether.  We do see that the odds in the post 1930s political changes were a rather mixed bag.

This chart is from Nick Laird at sharelynx.com.

Retail Store Closings and Bankruptcies - Most American Shoppers 'Broke'

"We have almost no GDP growth...We are so overdone...

More chains are going bankrupt than I've ever seen, and more stores are closing.

Half of America doesn't have any money. The financial condition of most Americans is a train wreck."

Howard Davidowitz

"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."

John Kenneth Galbraith

Howard Davidowitz is one of my favorite analysts, and a maven of the retail sector.

And he tends to tell the facts, even to those who do not want to hear them.   But he is so good at what he does, so well known and respected, that they have to let him on.

Those who are profiting from the status quo do not want change, and being completely self-absorbed do not care if there is a recovery for the rest of America.

They do not care, as long as they can keep the music playing, and the economy dancing to their tune.  They've never had it better. 

And their enablers cannot address the problems.  They will not even acknowledge that their IS a problem, because of the credibility trap.

Cartoon source

The US Non-Recovery

When you socialize the losses and privatize the gains for a powerful few, when you reward the perpetrators and punish the innocent and unsophisticated victims of fraud, when you idolize greed, selfishness and deception and vilify simple hard work and honest decency, how can one really expect a healthy, vibrant economy? You are birthing a monster.

Austerity will not improve this picture, and will inflict intense misery on the growing number of unfortunates. They know this, but they don't care. When the oppressed react, there will be calls to put them down, to subdue them, savagely. Provoke and react. Never waste a crisis, and if you need it, create one.

This is the road to hell.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.

Reich: The Problem With the US Economy In Under Three Minutes

As with most summations it compresses much of the complexity and therefore loses information in the process. I know he is a smart man, and is doing this out of necessity to achieve brevity and conciseness.

He never mentions the various unfunded wars, over 700 global military bases, and out of control health care costs, only glosses over the profound corruption in the bloated financial sector, a culture of greed and selfishness, and the government intrusions into private rights of citizens as a reflexive response to their problem with a credibility trap. How can one allow free discussion, disclosure, and transparency during an ongoing widespread financial fraud that has compromised the political process?

He does not address the international trade regime based on mercantilism and 'free trade agreements,' started in the Clinton Administration, that have become predatory killing fields of the middle class workers and their rights.

But it is a good job given the time constraint, and an excellent starting point for the core of the discussion. The current level of inequality of access to power in the US is perhaps the root of much evil.

If only people have the ability to discuss things rationally, without resorting to slogans and caricatures fed to them by a well funded corporatist propaganda machine.

As Herman Hesse said, "When the suffering becomes acute enough, one goes forward." So it is almost a certainty that the pain will become worse before the US moves forward.

But forward into what, only time will tell.

The US Economic Recovery In One Picture

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained recovery.