The IMF released Wednesday its projections for the United States and the global economy. The estimated growth for the US is just 0.5 percent this year, and only 0.6 percent for 2009, which is the worst pace in 17 years.
The combination of the declining housing market, financial markets, credit crisis, dollar dropping and spiking oil and commodity prices are bringing the global economy to its knees. "The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," the IMF declared.
Reference Article: IMF: U.S. 'Epicenter' of World Recession
For the first time, Federal Reserve Chairman Ben Bernanke acknowledged last week that a recession was possible. The US consumer price index is in the toilet and the US job market has declined for three months, shedding over 225,000 jobs in the first quarter of the year.
Reference Article: Recession Looms as Jobs Decline
The county will go bankrupt without finding money from somewhere fast. The politicians will be looking for more creative ways to slow inflation and increase taxes. As the gap between the rich and poor has widened, politicians will use this to increase the tax on the rich to perhaps over 50%. The rich and the savers are about to get legally robbed. The political momentum against the rich is building as the presidential candidates play politics with the votes of the poor (which are quickly becoming the majority) – all the while knowing there is very little they can do to help the poor.
Reference Article: Poor Get Poorer As Recession Looms: Report
Robbing the Rich
But the wealthy are not likely to escape the economic downturn, because many of them work in the financial sector of the economy, which is facing hundreds of billions in losses and has already shed over 200,000 jobs since August 2007.
Equity Hot Potato
The downward spiraling sub-prime market has drastically increases the risk of real-estate based equities, which nobody wants on their books. Selling real-estate securities has become next to impossible with so much distressed commercial paper floating around. It’s like the old game of “hot potato,” except now that the game has stopped and nobody can pass the potatoes onto the next guy down the line. Whoever is holding the equity potato is out of business, completely bankrupt.
That’s fine if a few banks go under, but what about the many hot potatoes that are owned by the largest real-estate firms, Freddie Mac and Fannie Mae? They are backed up by the Federal government – who is backed up by the tax payer. The Fed government doesn’t have any money, and the tax payer is swimming in consumer debt – which means the only ones left that have money will be robbed and middle class will be heavily taxed to get as much as can possibly be taken from their paychecks.
The impacts of a global recession will be disastrous for many of the poor around the world, as they are already starting to protest rising food prices that are necessary for their very survival. As bad as it is in the US, the poor people in other nations will be starving while will are only losing the ownership of our homes.