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Saturday, July 7, 2012

Austerity From Glass Houses Doesn't Work

It is a myth that governments are ready to face the economic, social and political fallout standing austere as their economies implode, which they will. Jim Sinclair

Source: jsmineset.com

Jim's absolutely correct.  Anyone giving him heat about this position has not studied history.  Any serious student knows that nothing opens a can of whoop ass on the status quo faster than edicts of public austerity from audacious glass houses.

The economic recovery in the US is an illusion based on liquidity and rising asset prices.  The real world is struggling because the working class, unlike global capital and speculators, cannot profit from liquidity-driven fluctuations in value.  All they have is their labor and skills which cannot be hoarded during times of financial and economic turmoil.  So, while the world depreciates their currencies to fend off a debt collapse, prices rise, and economic growth stagnates, the wage-earner lacking the flexibility of profit suffers the most.  While the certain interests in the world extol the benefits of austerity, they would be wise to recognize the consequences of rising unemployment and deteriorating confidence (chart 1 and chart 2) on the status quo.  Nothing is more certain than social and political change during periods of economic upheaval.

Chart 1: University of Michigan Consumer Expectations (CE) and Gold:  A Correlation Study



Chart 2: Civilian Unemployment Rate


Supplemental Source: shadowstats.com


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