Obama Continues To Be ‘President of Economic Collapse’

As President Obama herds Congressional Democrats to support across-the-board entitlement cuts in a new two-year budget, his “economic recovery” continues to collapse around him. EIR Founding Editor Lyndon LaRouche dubbed him “the President of economic collapse.”

A major New York Times piece published Oct. 19 documented widespread losses of employment, wages, and business in the United States “industrial heartland,” which in the 21st Century has come to mean the combined “oil patches.” The oil and oil service industries have lost 125,000 in employment in 2015, a plunge which is now accelerating and spreading to the steel industry, the Times reported, with steel production down 4% from 2014, according to the Commerce Department. Farm income has fallen 54% over two years, to the third-lowest level since the 1981 “Volcker” deep recession.

“The fall in prices for a variety of products, including crude oil, iron ore, and agricultural crops like corn and soybeans, is reminiscent of the collapse of the technology boom in 2000 or the bursting of the housing bubble nearly a decade ago,” which crashed in 2007-08 to worldwide economic devastation, the Times noted.

The newest report to reflect this is durable goods orders, which in September were 3.6% lower than one year earlier — the sixth consecutive month in which orders were lower than the year earlier. Business capital spending (approximated as core durable goods orders less aircraft) fell 0.3% in September and fell 1.6% (revised) in August.

U.S. Gross Domestic Product is currently estimated by the Atlanta Fed to have grown at a annual rate of just 0.9% in the third quarter and 1.7% for the year to date.

There is still no recovery in the oil price, which is actually falling further now in to the low 40s of dollars/barrel, although there are 70% fewer oil rigs than 18 months ago (594 vs. 1880 in operation), and a drop in reported total oil production for the United States of 6% from the start of 2015. Other commodities are again following the latest drop.

The crisis in commodity-related debt markets has reached the point that the seven largest fund management companies based in the United States lost a combined $725 billion in assets in the third quarter. These are BlackRock, T Rowe Price, Franklin Templeton and the fund arms of BNY Mellon, JPMorgan, Bank of America/Merrill Lynch, and State Street Bank. “Mom-and-pop” investors in energy partnerships have lost $20 billion so far this year.

Where this commodity debt crisis is headed is the subject of an analysis by the “Seeking Alpha” site, Oct. 25, of the threat of a bankruptcy of the world’s largest commodity trading company, Glencore. Analyst Brian Kelly of the usually see-no-evil CNBC-TV is quoted, that Glencore is central to a multi-trillion-dollar web of derivatives bets, its biggest counterparty being Deutsche Bank: “For investors, the most important question is the knock-on effects of a Glencore bankruptcy. Knock-on effects could be significant considering that Glencore’s biggest partner in debt/derivatives crime is none other than Deutsche Bank. So is Deutsche Bank the next AIG?”