The Bear Facts

I think I’m going to rename my blog to “The Bear Facts”.

Sometimes I feel like I shouldn’t be a bear – the sun is still shining, the coffee is still warm and bitter, some cool technology continues to be made in the USA. But then I read the facts and notice the mass delusion and denial that abounds and cannot help but be a bear. At least until the next administration gets its bearings…

Today’s op-ed by Thomas Friedman is a case in point. Here are the highlights of “Anxious in America” (rearranged by me):

“My fellow Americans: We are a country in debt and in decline — not terminal, not irreversible, but in decline. Our political system seems incapable of producing long-range answers to big problems or big opportunities. We are the ones who need a better-functioning democracy — more than the Iraqis and Afghans [a bit exaggerated perhaps...]. We are the ones in need of nation-building. It is our political system that is not working.”

“Up to now, the economic crisis we’ve been in has been largely a credit crisis in the capital markets, while consumer spending has kept reasonably steady, as have manufacturing and exports. But with banks still reluctant to lend even to healthy businesses, fuel and food prices soaring and home prices declining, this is starting to affect consumers, shrinking their wallets and crimping spending. Unemployment is already creeping up and manufacturing creeping down.

The straws in the wind are hard to ignore: If you visit any car dealership in America today you will see row after row of unsold S.U.V.’s. And if you own a gas guzzler already, good luck.”

“On top of it all, our bank crisis is not over. Two weeks ago, Goldman Sachs analysts said that U.S. banks may need another $65 billion to cover more write-downs of bad mortgage-related instruments and potential new losses if consumer loans start to buckle. Since President Bush came to office, our national savings have gone from 6 percent of gross domestic product to 1 percent, and consumer debt has climbed from $8 trillion to $14 trillion.”

“If the old saying — that “as General Motors goes, so goes America” — is true, then folks, we’re in a lot of trouble. General Motors’s stock-market value now stands at just $6.47 billion, compared with Toyota’s $162.6 billion. On top of it, G.M. shares sank to a 34-year low last week.”

Well said.

For those of you who think the current housing crisis (let alone the consumer debt, fuel and energy crises), will be solved by a government deus ex machina, see this article from the New York Times (“As Bill Evolves, Mortgage Debt Is Snowballing“). Here are the highlights [italics are mine]:

“When Congress started fashioning a sweeping rescue package for struggling homeowners earlier this year, 2.6 million loans were in trouble. But the problem has grown considerably in just six months and is continuing to worsen.

More than three million borrowers are in distress, and analysts are forecasting a couple of million more will fall behind on their payments in the coming year as home prices fall further and the economy weakens.

Those stark numbers not only illustrate the challenges for the lawmakers trying to provide some relief to their constituents but also hint at what the next administration will be facing after the election. While the proposed program would help some homeowners, analysts say it would touch only a small fraction of those in trouble — the Congressional Budget Office estimates it would be used by 400,000 borrowers [out of the millions!] — and would do little to bolster the housing market.

“It’s not enough, even in the best of circumstances,” said Mark Zandi, chief economist of Moody’s Economy.com. The number of people who will be helped “is going to be overwhelmed by the three million [conservative estimate] that are headed toward default.”

I am renaming my blog. These stats are just ridiculous.