THE REALITY OF COLLAPSE DESTROYS THE FANTASY OF RECOVERY

The following article will appear in the next EIR. Mike

THE REALITY OF COLLAPSE DESTROYS THE
FANTASY OF RECOVERY

by John Hoefle

July 31--Here we go again! Headlines are blaring that the
recession has ended, and that the recovery is on. The hype
machine is all revved up, pushing the line that the worst is
over, the economy stabilized, and poised for a recovery that, if
it hasn't already started, is just around the corner.
The nominal reason for this giddy burst of propaganda is
that the rate of collapse of U.S. GDP has slowed significantly.
That means, according to legions of experts, that the uptick is
on, just as they predicted. These are, of course, the same
experts who have been telling us, constantly, since the crisis
began, that the worst was over and the recovery had started. And,
we should add, they are the same economists who assured us,
before the system died, that the fundamentals of the economy were
sound.
We bow to no one in our admiration for experts and their
statistics, but we would be a little more confident in believing
them if once, just once, reality would follow their fine
theories. Unfortunately, reality does not seem to share their
lofty views of their own competence, and in fact seems determined
to disagree at every turn. Maybe that's because these so-called
experts are a collection of idiots, incompetents and whores, who
can't see a collapse even as it crushes them. They are little
more than well-paid cheerleaders for a recovery that never comes.

- It Is Gross -

We've debunked the statistic known as gross domestic product
(GDP) thoroughly over the years. GDP is a number which purports
to represent the dollar value of the nation's output of goods and
services. It has two devastating flaws: First, it makes no
distinction between productive and overhead activities, and
second, it is denominated in dollars rather than in physical
units. GDP makes no distinction between, say, the steel industry
and the derivatives casino. Both add to the nation's dollar
output, so both are treated as useful. GDP does not discriminate
between the dog and the flea. Good thing, too, since if it did,
it would be falling like a rock.
The keepers of the GDP are the folks at the Bureau of
Economic Analysis (BEA), of the U.S. Department of Commerce.
Commerce is largely run for the benefit of big business, the
giant companies and cartels which dominate the global economy,
and the financiers which control those companies. They are a
rapacious bunch which expects the government to give them what
they want, and Commerce does its best to please them. If they
want statistics which hide the damage they are doing to the
economy, that's what they'll get.
It's getting harder and harder for them to hide that
destruction, but they do try. So they tell us that GDP fell at an
annualized rate of just 1% in the second quarter of 2009,
significantly less than the 6.4% in the first quarter. That's
practically no collapse at all, and no collapse means the
recession is over, and that means the recovery is on! Simple,
once you non-think it through.
Of course, it helps if you overlook the fact that, at the
same time, the BEA reports that it has revised its past
statistics to show that the "recession" was far worse than
originally thought, in fact the worst "recession" since the
Great Depression. But just because they got it wrong before,
doesn't mean they've got it wrong again! At least until next
month.

- The "-Less" Recovery -

We've already been told that this is a jobless recovery, but
it appears that there are quite a few other "-lesses" as well.
Production-less, trade-less, and profit-less, just to name a few.
Let's start with jobs. When Lyndon LaRouche declared at his
July 25, 2007, webcast that the financial system was dead, the
official U.S. unemployment rate was 4.7%, and it has doubled
since, to 9.5% in June 2009. The real unemployment rate is
probably around 30%, but even the official figures show a
disaster. During that period the official number of unemployed
persons has jumped from 7 million to nearly 15 million. During
that same period, the initial claims for unemployment insurance
have also doubled, going from some 308,000 for the week of the
webcast to 584,000 the week of July 25.
These job losses have occurred across the spectrum.
Manufacturing employment, which was already at historic lows, has
dropped another 15% since LaRouche's webcast, and is down 39%
from its 1979 peak. On a per capita basis, manufacturing
employment is at levels not seen since the Civil War era. Given
the importance of manufacturing production to an economy, this is
a unmitigated disaster.
Jobs are also disappearing in the service sector, which had
shown virtually uninterrupted growth since the 1940s. Some 2.4
million jobs in the "service-providing industries" have been
lost since July 2007. Also hard hit--no crocodile tears,
please--is employment in the financial sector, where employment
has dropped 7%--563,000 jobs--since LaRouche's webcast.
Manufacturing production itself has fallen 17% since
LaRouche declared the system dead, according to the manufacturing
production index, while the production of durable goods has
fallen 32%. Sales of autos and light trucks are off 37% over that
period, and down 56% from their peak in October 2001.
Imports and exports have fallen off the cliff, with imports
of goods down 27% since July 2007, and down 39% from their peak a
year ago. Exports of goods are off 14% since the webcast, and
down 30% from their peak in July 2008.
These elements are just a sampling of the level of collapse
in the economy over the past two years, and given the nature of
official statistics, they probably understate the losses. They
are, however, sufficient to blow the claim that a recovery is
underway, or even on the horizon, out of the water. We are in a
death spiral of collapse, one which can only be halted by
adopting LaRouche's recovery plans.

- Not Even Financial -

Not even in the financial sector, where banks are claiming
to make big profits and the financial markets are said to be
improving, is there a recovery. The bank profits are an illusion,
the result of accounting tricks, lying about losses, gouging
customers, and apparently even stealing. If the big banks told
the truth about their financial condition, they'd have to shut
their doors. This, despite the trillions of dollars poured into
them via the bail-out swindle.
The Dow Jones (post-)Industrial Average has climbed back
above 9,000, but the rise is largely the result of the criminal
activity known as high-frequency trading. Goldman Sucks is the
leading culprit.
There are other bodies waiting to surface, as well. AIG
remains in deep kimche, as do Fannie Mae and Freddie Mac, and a
company named Capco appears poised to take its place on the roll
of disasters. GE Capital is also in big trouble, and will likely
require huge amounts of government funds.
Years ago, when Enron was imploding, we noted that the
difference between Enron and GE was just a matter of time. Most
people took that as a joke, but we were serious.
It is high time to quit listening to all the fools and
cheerleaders, and start listening to the man who has been on the
mark all along, Lyndon LaRouche. Listening is not enough, though.
What is required is to act on LaRouche's ideas, and to force the
implementation of his policies.
We are rapidly running out of time, and every moment we
delay the damage grows, and the nation and the world draw closer
to complete collapse. By mid-October civilization itself could
disintegrate, and even before then, as the panic of impending
doom sets in. There is a solution, but we must act. Will we rise
up and meet the challenge, or become just another failed
civilization? It is up to us. johnhoefle@larouchepub.com