Let me start by saying that I’m sincerely happy for those farmers who rely on the price of milk for their survival. This year at least they won’t go under if the prices hold.
But what if they don’t.
Our mainstream media tell us that we are over the recession. Fonterra’s forecast for the price of milk solids is up and the Consumers confidence is up as are the house prices in Auckland but is this justified?
I’m not an economist but I’m not stupid either so let’s have a look at the news we don’t get in our MSM.
Who is still our biggest customer?
As for most countries the US is our biggest customer and it is important for us that this continue to be so. Why?
the US spend 9 trillion last year. That is phenomenal. Compare that with China the other biggest spender which spend only a paltry 1.3 trillion last year and the third biggest spender India which only spend 645 billion and you get the picture.
We have been told that the US is over it’s recession. The GDP has grown and that so they tell us means that the economy is growing.
But it isn’t. The GDP only stands for the expansion of the gross total money lump to keep it simple but where that money is created is not explained in the figures.
The economy, the real economy, that is the one in which people make stuff that other people need is shrinking and when that happens people stop buying.
The reality is that in the US millions of people are losing their jobs, their houses and their future.
The reality is that in the US millions of people are relying on benefits, have no insurance and medical care and that number is rising dramatically every month.
The reality is that all those people will loose their jobs, not until they have found another job but for years and years because all manufacturing jobs have been “outsourced”.
The reality is that all those countries with those jobs outsourced to them relied on Americans to buy their product and with the American economy collapsing that is not going to happen.
In order to understand the magnitude of the above let’s support that with some figures.
According to the official unemployment figures as many as 10% of the American workforce is unemployed but these figures do not take into account the people who are unemployed for more than three months and those who’ve stopped looking for work. Bloomberg predicts that this figure will grow to more than 13%.
The real unemployment figures are more than 17.5% which means that in the near future the real unemployment will be more like 20%. This means that we are not looking at a mere recession but at a full blown Depression of “Great depression” magnitude with some very important differences.
How many real human beings are we talking about?
We are talking about 16 million people in the US alone. 16 million people with even if they were one of two bread winners have dependants which means that you can easily double that figure of people in dire problems.
Over 7 million jobs have been lost since 2007 and the number is growing with about 300.000 a month.
Those people are all going to loose their benefits after a short period of time and foreclosure numbers are shooting through the roof.
We are talking about millions and millions of people with no future, no means of supporting themselves or their families losing their homes.
One in every 6 workers is now unemployed. That is the reality and it’s only going to get worse.
All those people relying on people to spend money in their little shops or in their expensive shopping mall outlets are going to find that more and more people are going to stay home and not spend money which means a new wave of mass layoffs.
And it gets worse
While in the era of the great depression 80% were living on small family farms and produced their own food now 80% live in urban areas with no access to home grown i.e. free food.
While at the time of the great depression the industrial era was in it’s infancy and the huge range of manufacturing jobs was yet to be developed and the resources seemed endless and cars were only for the rich and everybody wanted one now our resources are depleted, cars are everywhere and manufacturing is gone abroad.
So even with the upward glitch because we are now selling our products to Malaysia I hope that dairy farmer will realise that they need to consolidate and keep out of depth because in the long haul we ain’t seen nothing yet.