Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

U.S. economic propaganda hits fevered pitch

I have been extremely critical of the absurd, and often malicious economic brainwashing being conducted by the U.S. corporate, propaganda-machine. State governments across the U.S. are facing their worst funding crises in history – thanks to Fed chairman Ben Bernanke promising an “economic recovery” every six months for the last 2 ½ years (see “U.S. states crippled by Bernanke's Lies”).

 

The propaganda machine has already declared a dozen “bottoms” in the U.S. housing market, luring in millions more future foreclosure-victims. Yet today the National Association of Realtors reported that the collapse in U.S. house prices accelerated during the second quarter of this year. This continuing collapse comes despite the fact that U.S. banks are keeping more and more foreclosed properties off the market.

 

U.S. foreclosures continue accelerating while the share of foreclosed properties being sold each month has fallen dramatically. As I have pointed out several times, current statistics show there will be roughly 4.8 million housing units sold this year, and somewhere around 4 million foreclosures. It is simple arithmetic to point out that in order for U.S. banks to “clear” their foreclosed properties as fast as they accumulate that foreclosure sales would have to comprise about 80% of all sales.

 

Yet, throughout the U.S. housing collapse, the ratio of foreclosure sales has never risen above 50%, and in the most recent month it was only 21% - meaning that U.S. banks were listing only one out of four foreclosed properties on the market.

 

Unless U.S. banks plan on simply bulldozing the 4 million or so foreclosed housing units they are hoarding (see "U.S. banks bulldozing NEW homes"), then at some point a huge block of foreclosed properties will be dumped onto the market. And with over 20 million empty homes in the U.S., those 4 million units represent only part of the “shadow inventory” hanging over the U.S. market.

 

As I have also noted again and again, with aging U.S. baby-boomers heading for a pension-crisis (see “U.S. pension crisis: the $3 TRILION question”), baby-boomers will have to dump $1 to $2 trillion of real estate over the next decade or so – competing with those millions of foreclosed properties.

 

Lastly, as I and others have pointed out, the U.S. real-estate market hasn't even seen the peak of mortgage-resets in its adjustable-rate mortgages (see“U.S. mortgage-crisis to get MUCH worse in 2010-11”). These adjustable rate mortgages are currently defaulting at over 50%.

 

Yet CNN shrieked “Buy foreclosures now!” in an August 6th headline, literally telling people that if they didn't jump into the market now there wouldn't be any “bargains” left for them. Either this media giant has a totally incompetent cast of “journalists”, or they are deliberately lying to people to induce them to enter this market.

 

Meanwhile, in the broader economy, despite the endless string of lies in the monthly jobs report from the Bureau of Labor Statistics, the weekly job lay-off numbers paint a clear picture. With weekly job-losses still totaling roughly 2.5 million per month, this means actual job-losses are somewhere in excess of 1.5 million per month (see “U.S. economy to lose 20 MILLION jobs this year”).

 

With a consumer economy 70% dependent on consumer spending, the combination of job losses, falling wages, and totally exhausted credit has sapped roughly $2 TRILLION per year in spending power, with the totally inadequate, Obama “stimulus plan” only replacing about 1/10th of those lost dollars. Again, as a matter of simple arithmetic it is impossible for a consumer economy to “recover” with this massive bleeding taking place regarding consumer spending.

 

However, that didn't stop Bloomberg from stating “U.S. enters recovery” in one of its own headlines today. What evidence did Bloomberg present as evidence of this stated conclusion? A survey of economists. These are the same “economists” who were all surprised when the U.S. housing bubble burst – the largest asset bubble in history.

 

Making a sweeping conclusion based just on a survey of incompetent charlatans again seems to go beyond merely reckless or incompetent journalism and demonstrates a deliberate attempt to deceive.

 

The propaganda-machine has already promised Americans to expect a “jobless recovery”. This, of course is an obvious non sequitur – especially in a consumer economy dependent on Americans spending more than 100% of their pay-cheques to be sustained. If Americans don't have jobs they can't spend (or pay their mortgages). And if they can't spend, this consumer-economy cannot “recover”. Period.

 

This doesn't mean that we won't see “economic growth” reported by the U.S. in the months ahead. As I wrote recently (see“U.S. converts inflation into GDP”), with the sudden jump in inflation in the U.S., the government now has some “ammunition” to use to crank out a bogus, positive GDP number.

 

Thus, in the weeks and months ahead, the U.S. propaganda-machine will endeavour to convince Americans that despite housing and labour markets which are at least as bad as during the Great Depression, and a dying retail sector that they are experiencing an “economic recovery”.

 

Americans continue to allow themselves to be deceived into believing that “down” is “up” and “white” is “black”. The problem is that neither false confidence nor self-delusion can pay their bills.