The Great Depression Online




Great Depression Online Archive Issue:

Election Day Hangover

Great Depression Online
Long Beach, CA
November 07, 2008

Inside This Issue You Will Discover…

*** One Word of Advice
*** A Friendly Conversation
*** Election Day Hangover
*** And More

One Word of Advice

Following Tuesday’s election we have one word of advice: Panic!

Obama’s plans to increase taxes on the “rich” – those making $150,000 a year – will painfully exasperate and prolong the economy’s plunge into the abyss.  Not that it isn’t rapidly taking on water already…

“Total U.S. automobile sales in October slumped 838,156 cars and light trucks, a 32% decline from the same month last year,” reported Ken Bensinger for the Los Angeles Times.

“General Motors Corp. led the charge to the bottom.  The largest U.S. automaker reported a 45% decline in sales for the month compared with October 2007, dropping to 166,744 vehicles sold.  That’s the first time the automaker’s monthly sales have fallen below the 200,000 mark since 1975, when nearly 100 million fewer people lived in the U.S.

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But it’s not just cars people are no longer buying.  From Reuters we find that “U.S. consumers slashed spending in October, shunning purchases of items over $1,000… according to figures released on Wednesday by SpendingPulse, the retail data service of MasterCard Advisors.”

A Friendly Conversation

“You have to look at more than just taxes,” explained an old friend.  “You also have to look at spending.

“George W. Bush cut taxes, yet increased spending…he added more to the national debt than all of the presidents before him, combined.

“The real tough love thing to do would be to increase taxes across the board and reduce spending.  Of course the supply-siders would argue that increasing taxes reduces government revenue because it constrains growth.”

“We’re all for reducing government revenue,” we interjected.  “We just wish the government wouldn’t have to increase taxes to do so.  Then again, we’ve always been flummoxed by Washington’s inability to reduce both taxes and spending.”

“At any rate,” finished our friend, “look for revenue shortfalls, surging deficits, and rising unemployment to be a hallmark of the Obama Presidency.”

Election Day Hangover

It was ‘buy the rumor, sell the news’ on Wall Street this week.

After a delightful Election Day run-up of 301 points, investor excitement and the ballot casting bender ended abruptly in a crash landing – the DOW plunged 477 points on Wednesday and another 438 points on Thursday. 

All that was left was an aching hangover, including the nauseous stomach, dry throat, and throbbing brain.  And a reality that screams “sell!”

In short, corporate earnings are in freefall, credit is still hard to come by, the consumer has stopped consuming, and unemployment’s going parabolic.  In fact, October unemployment numbers will be released this morning.  Look for the number crunchers and spinmeisters to fashion a payroll number that’s reported as ‘slightly better than expected.’

Don’t be fooled by the humbug, unemployment’s on a trajectory to hit double digits by this time next year…whether the contrived numbers say so or not.

Sincerely,

M.N. Gordon
Great Depression Online

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