Wednesday, September 14, 2011

Shredding the Safety Net

Back in June 2011, upon recognition that Primary wave [3] down is in progress, I had made a number of forecasts concerning social events that are expected to unfold from 2011 - 2016. One of them is the fate of unemployment benefits, which I bring up here.

Extended unemployment benefits will not continue beyond the end of 2011.

Turns out the forecast is going to be fulfilled. The increasing desire for more austerity is not just in the realm of the GOP, even President Obama is participating in the austerity trend as well. The new jobs bill proposes to link unemployment benefits to job training with potential employers. While it appears to be relatively harmless at a first glance, the legislation will have a cataclysmic effect on the unemployed once the effect of "The Great Deflation" is factored in, namely, the fact that major depressions result in the destruction of 90% of corporations and businesses through a cascade of debt defaults.

Another consideration is that in bull markets, people focus on progress and production, while in bear markets, people focus on limits and conservation. This is also true for employers and consumers as well. An increasingly bearish social mood results in consumers cutting back on spending and employers laying off workers. When an increasingly bearish social mood is unfolding, employers won't hire more workers even with tax credit incentives and incentives to hire workers for free. It takes an increasingly bullish (positive) social mood for employers to have the willingness to hire more workers.

President Obama's proposals on unemployment benefits will amount to ending unemployment benefits altogether for all practical purposes. This development is very shocking. Talk about turning the clock all the way back to 1932. I had been predicting that unemployment benefits would be completely purged in 2017, during the Bachmann Administration Period. This move is comparable to Rep. Paul Ryan's "kill Medicare" plan in the sense that in both cases, safety nets end up getting shredded.

The unemployment rate (U6) is expected to hit 60% by the end of "The Great Deflation" in 2021. It's hard to imagine the impact that purging unemployment benefits will have on such a large portion of the United States population. Many of these people will end up being unemployable during the "Green Technology Age" as job creation is expected to be very sluggish (about 80,000 a month for 21 years). We will be reaping the consequences of shredding safety nets in ways that are very hard to imagine.

The austerity trend is relentlessly in force. If the job creation bill does not pass, extended unemployment benefits stop at the end of the year. If the jobs bill passes, say kiss goodbye to unemployment benefits -- even before Michele Bachmann wins the presidency in the 2016 presidential election.

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