Economic Turnaround?

Stratfor:

It is always good to hear Stratfor’s calm voice of reason (Turning an Economic Corner, Oct. 29).

While I generally agree with your observations on the American psyche, I believe we are in for a second wave of bad news that is real. The roots were documented in the PBS show Frontline this week. It was titled “Close to Home.” Much of the story was about the tribulations of high-end middle class people who were out of work. But, in the process of telling that story, they told another one about companies that survived for a while by laying off those people. The companies are now reaching the ends of their ropes and as they close their doors there is a second phase of the crisis developing — commercial property foreclosures. Scenes showing rows of closed shops on the avenues of New York’s Upper East Side made it clear that a second big wave is rolling in.

This won’t help consumer psychology.

-Jerry Brown
Huntington, New York
United States



Stratfor:

My economic information indicates that as soon as the U.S. economy begins to improve we will begin to use more oil. As oil surpasses the $85 per barrel rate our recovery will slow; as it surpasses $100 per barrel our economy will collapse again.

Many experts predict $100-plus oil with T. Boone Pickens predicting $300 per barrel. Liquid transportation fuel is the real crisis. With the vast majority of our transportation fueled by oil we have boxed ourselves into a very bad situation. Without a replacement for transportation fuel we are set up for many cycles of improving economy and then collapse as oil spikes. We hit “peak oil” and I predict that we will never see as much conventional oil produced as it was in 2006. Currently oil production is dropping at more than five percent and as soon as demand surpasses supply we will start the cycle again of collapse with improvement only to collapse again.

China and India’s oil demand is increasing between eight and 15 percent per year. Mexico’s oil production is drastically dropping. Please review the energy required to produce oil from the 1930s to today. You will find the ratio was 100:1 in 1930 and 100:11 today and only getting worse. Unconventional oil is even greater. A large percentage of the world’s oil is produced from developing countries. As their domestic demand increases exports will decrease. Following this logic, the oil available for importing countries will in fact decrease at a much higher rate. It could be on the order of 10-18 percent. We are in trouble. All of this can be verified. I would love to see Stratfor do an in-depth piece on the coming liquid transportation fuel crisis. Your readers deserve to know the truth.

-William Brock
Naples, Florida
United States



Stratfor:

Rather than tout an “impressive turnaround,” you should have noted that third quarter GDP was artificially boosted by the “Cash for Clunkers” program that added a full 1 percent to the number, and by increased government spending which added one-half percent but does not represent anything positive for the long-term economic prospects of the United States. Another 1.3 percent of the growth came from non-auto consumer spending. The day after the GDP report boosted the stock market, a report of declining consumer income and spending (the first decline in spending in five months and the biggest decline since December) knocked the markets down 2.5 percent or more. A boost in construction spending which is also likely to be temporary added substantially to the Q3 GDP report.

You stated that the “relatively pessimistic reaction in the United States, however, fits with the contradictory and complex American psyche.” No, it fits with economic reality and an understanding that the Q3 GDP numbers are likely artificial and unsustainable.

Your analysis of the GDP report is among the worst work I have seen out of Stratfor.

-Ross Kaminsky
Nederland, Colorado
United States



Stratfor:

Is the true unemployment rate anywhere near that quoted by the U.S. Bureau of Labor Statistics? I think not.

How long will it take for those of us actually producing salable product to pay for all the so-called “stimulus” money that presumably created all this claimed employment? How long will it take for our children or our grandchildren to pay for it? Keynes was wrong. He did not consider where this government printed stimulus money to offset depression would come from and how all that printed paper money would be redeemed. In his lifetime we still had solid assets such as gold to allow a tangible quantification of value.

-GW Riedeman
Richland, Washington
United States



Stratfor:

Of the 3.5 percent increase in GDP, at least 1.5 percent is from the “Cash for Clunkers” stimulus program. The report of decreased consumer spending and decreased consumer confidence leads me to think that the recession is far from over. By the way, at $24,000 per clunker, the government would have done better to just buy a car for each participant. Car sales are now depressed and likely will remain depressed. Printing new dollars to stimulate the economy by the trillion will lead to a loss of our credit rating as a country and hyper-inflation unless the Fed “pulls a Volker” and raises interest rates to the 20 percent level to suck the money back out of the economy later. Frankly, I don’t see that happening with the proposed $2 trillion health care plan (price from a direct quote by Harry Reid), a cap-and-trade system and all the rest of the wealth redistribution plans of our current administration. Get ready to live in a well-developed third world country that can no longer afford its development and joins the USSR in the ashbin of history.

-Sidney Wohlman
Houston, Texas
United States