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Richard Yamarone continues:

“Construction and housing is flat on its back.  Conditions are getting awful.  Unfortunately, the only job creation we are getting are the less than desirable burger-flipping jobs.  These are minimum wage type jobs and you don’t get the economy coming back with that type of hiring.

State and local governments are shedding jobs continually by 10,000, 15,000, 20,000 jobs each month because they don’t have the revenues coming in from the commercial real estate.  There are widespread vacancies.  They don’t have enough revenues and incomes taxes coming in.  They also don’t have enough revenue coming in from the housing sector, which as I said is flat on its back.

So without the incomes and the tax revenues coming in, what do they do?  They have to cut services....

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“So if you thought the Department of Motor Vehicles lines were long before, wait until they are only open one day each week, and there’s only one poor guy standing behind the counter.  That’s going to be a problem. 

We are also hearing that the Chinese landing is much harder than many believed, even three months ago.  So now we have this harder landing or crash landing in China, you have the US on thin ice, and you have most of Europe in a recession.

But what happens when Atlas (Germany), the sole Savior of the entire global economic outlook starts to show fractures.  I’m not saying there is a collapse in economic growth in Germany.  What if they just slip into recession?  No there is no Oasis of prosperity left.

Where does everybody go?  Investment wise I think everyone runs into US Treasuries.  That’s what happens when times get difficult everywhere around the world.  They will buy US Treasuries to such a great magnitude that they push the yields on the 10-Year Treasury Note down to 50 basis points.”

Yamarone also added:  “It’s all up to the elected officials (in the US) because as I mentioned, Fed policy is off the table.  They (the Fed) could do QE3, QE5, QE25, it doesn’t matter.  We’re not responding to monetary policy the way we used to.

We’ve had the big spike in manufacturing, firing up the plants.  Traditionally we would hire or rehire the idled workers.  Now because the productivity gains are so exponential in manufacturing, we don’t take on the hires.  The bottom line is we’re not hiring any workers.

What we went through (in the US), it was a calamitous event.  We had a depression.  People don’t like to use that terminology because they think of the Great Depression, but we had a depression.

What we should have done at that time, if we were going to spend all of that money, was to use the money to repair a dilapidated infrastructure in this country.  It is an extreme thing.  I’m not a big proponent of having the government do anything, but the government was going to do it anyway (spend the money).  The government did do it.

We did have an extension of unemployment insurance, which doesn’t do anything to get the economy going.  Trust me, I’ve been unemployed seven times in my career, and you don’t boost the economy with unemployment insurance.  If anything you are promoting people to sit at home, watch TV and eat bonbons.

So what should have happened (when the economy first collapsed) is that the government should have put the money into the hands of the people that were unemployed (by putting them to work), very much like FDR, not by having them collect unemployment insurance.

In fact my great grandfather, Lee Lawrie, was a sculptor, and he sculpted Atlas in Rockefeller Center.  He was paid by the government to do that (during the Great Depression in 1937). 

Projects like that should have been undertaken because when the depression is over, you have a legacy.  You have art.  You have highways and transportation facilities.  We don’t have that now.  Now we have a bunch of people who are unemployed and looking for more entitlement.”

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The interviews with John Embry and Bill Fleckenstein are available now.  Also, be sure to listen to this week’s line-up of other KWN interviews which include Egon von Greyerz, Nigel Farage, Michael Pento, Dr. Stephen Leeb, Don Coxe ($538 billion BMO), Art Cashin ($612 billion UBS) and Rob Arnott (oversees $100 billion) by CLICKING HERE.

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

Eric King

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