The U.S. Mall-Vacancy Nightmare

Last November, when it had become apparent that the U.S. consumer-economy was having another dismal, Christmas shopping-season, I wrote a commentary about what that portended: the death of the U.S. consumer. I pointed to a “generational shift” in U.S. consumer behavior (i.e. lower spending) – which even U.S. retailers themselves have clearly acknowledged.

The underlying reason for this reversal of behavior is that U.S. consumers are drowning in debt. In other words, this change in habits has been forced upon them, and as I detailed in that previous commentary, to “de-leverage” themselves from all that debt will require many years of thrift – and likely (at least) a full generation.

This is among the many reasons that I have utterly rejected the myth of a “U.S. economic recovery” as being merely a fabrication of government and media. As I have pointed out in many previous commentary, all that is required to change the real (negative) GDP that the U.S. economy is actually experiencing is simply to understate inflation – since every percentage-point of inflation which is swept under the carpet can be added to GDP. Thus, when people like John Williams of Shadowstats.com conclude that the U.S. government is always understating inflation (and by a large amount), this is the same thing as saying the U.S. government is always exaggerating its Gross Domestic Product.

This perennial pretending when it comes to the underlying health of the U.S. economy has now reached its “day of reckoning”. As Average Americans begin to open their eyes, reality begins to seep in: the U.S. has feigned “prosperity” for the last twenty years by simply piling new debts on its old debts – at a rate never before seen in any major economy.

Carrying roughly $60 trillion in total public/private debt, U.S. interest rates our now permanently frozen at 0% - as even a 1% increase in its interest rates translates into an extra $600 billion per year in interest payments alone. This equates to a 5% drop in GDP by itself, even before factoring in the “multiplier effect” of withdrawing that massive amount of capital from this decaying economy.

Since the U.S. cannot “borrow” the trillions it needs to finance its debt – at the lowest rates in history – it it forced instead to simply print-up vast quantities of dollars to “buy” its own bonds. To hide this fact, U.S. bond “auctions” have become so convoluted that even bond-experts with decades of experience have absolutely no idea who is actually “buying” these bonds. As I explained in a previous commentary, the bankers themselves have acknowledged that such “quantitative easing” works better if you lie about it – and pretend that you're not doing it.

While the U.S. government is obviously pleased with itself at being able to dupe most of the chumps (i.e. “experts”) in the market with their statistical chicanery, the lying has come with a terrible price-tag. Deluding U.S. state and local governments into believing that the U.S. collapse was not as severe as it really was, and then inventing a “recovery” (while the U.S. economy continues to flounder) meant that these other two levels of government didn't begin their own cost-cutting until their coffers were totally empty.