Friday, February 27, 2009

Darker and darker

While a good many of us could have told you that things are actually worse than we are being told (and we have been saying so for over a year) there are a lot of folks, mostly fat cat Republicans who still will insist that the economic problems are not that bad and that there were even signs of recovery late last year. For the rest of us, this confirms what we already knew was happening.
The U.S. economy contracted more sharply than initially estimated in the fourth quarter, government data showed on Friday, as exports plunged and consumers cut spending by the most in over 28 years amid a severe recession.

The Commerce Department said gross domestic product, which measures the total output of goods and services within U.S. borders, fell at an annual rate of 6.2 percent in the October-December quarter, the deepest slide since the first quarter of 1982. The government last month estimated the drop in fourth-quarter GDP at 3.8 percent.

The weaker GDP estimate reflected downward revisions to inventories and exports by the department.

The decline was worse than analysts' expectations for a 5.4 percent contraction in fourth-quarter GDP. The economy expanded 1.1 percent in 2008, the slowest pace since 2001, the department said.

Consumer spending, which accounts for more than two-thirds of domestic economic activity, dropped at a 4.3 percent rate, the biggest fall since the second quarter of 1980, as household wealth plunged. That compared with a 3.5 percent fall estimated last month.

Exports, until recently one of the few pillars supporting the distressed economy, tumbled at a 23.6 percent annual rate, the steepest plunge since 1971. That was revised from the 19.7 percent drop estimated in last month's report.
the thing is, I don't think people realize what this continuing saga of bad news and worsening conditions portends. Our "leaders", whether they be in government or banking or manufacturing, have actually had it pretty easy so far. We are still paying them big bucks for failure or reelecting them inspite of their bad governance. There is a strong likelihood that this happy go lucky attitude on the part of the downtrodden masses will shift in a very negative direction.

Worst-case scenarios abound:

The global economic meltdown has already caused bank failures, bankruptcies, plant closings and foreclosures and will, in the coming year, leave many tens of millions unemployed across the planet. But another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps, war may follow.

As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants and ethnic minorities. (The list could, in the future, prove long and unnerving.) If the present economic disaster turns into what President Obama has referred to as a “lost decade,” the result could be a global landscape filled with economically fueled upheavals.

I still remember the downright nastiness back in the 70's when gas was in short supply. Many probably don't remember but that is when you began to see locking gas caps and anti-siphon hardware on the fill caps. It was a regular occurrence to have the gas siphoned from your car even when it was parked in your driveway. Rarely a day went by without someone getting rowdy in a gas line or even having a gun pulled when someone really got angry. It really doesn't take much to send otherwise civilized people over the edge. If gasoline shortages can do it, just imagine what bread lines will cause.

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