Financial, Economic and Social Mood Update (April 2, 2025)
The USA has been effectively bankrupt for some time now – in other words, before the time of the current administration, its immediate predecessors, before the time of Barack Obama, and before the time of both Bush Presidencies. The national debt of the USA (USD $36.6 TRILLION) and especially the off-balance sheet items including unfunded liabilities for pensions, social security, healthcare, Medicare, Medicaid and the like (USD $281.5 TRILLION) cannot be paid off in any “normal” way. This will be done through a form of bankruptcy which must necessarily involve payment in the form of physical assets to the holders of debt.
Even financially healthy companies and entities “downsize” with short term staff reductions of 30 percent or so. What the US Department of Government Efficiency (D.O.G.E.) is doing is necessary and had to be done sooner or later – and better sooner rather than later. Employment at the US Federal Government reached an all-time high in 1990 with a FTE (full time equivalent) civilian staff of 3.4 million employees. The initial level of current reductions equal at least 331,780 individuals which include those not yet meeting one-year probation (200,000) and those accepting an early cash buyout – many of these people being already close to retirement (75,000 people). Of the remaining 2,260,000 employees a reduction of 30 to 40 percent of this total will be “downsized” in the coming years (this is the stated goal of D.O.G.E.). The ripple effect in the general US economy due to government contracts paid outside of the government is a multiplier of 8.4 which equals a total sum of circa 8.5 million to 10.4 million jobs to be downsized in the public and “near public” sector of the economy.
The entire US workforce of full-time and part-time employees (public and private sectors) is about 163.4 million people. Labor force statistics as of February 28, 2025 already showed a net decline in public sector employment (largely due to DOGE), a decline in foreign born people employed in the USA (due to the decline in net immigration) but corresponding increases in private sector employment (especially in the all-important manufacturing and in the automotive sectors) and a net increase in employment for people born in the USA.
In sum, the very necessary DOGE cuts equal less than 7 percent of the entire US labor force and this is currently being offset by employment growth in the private sector – which is the goal of DOGE. Furthermore, the global stock market “corrections” to date a mere 4.52 percent of all time high nominal value.
As mentioned in last month’s update, asset prices & service prices (the overall cost of living) are so high that most people can no longer afford to purchase either a new home (with a mortgage) or a new vehicle (with an auto loan). The problem here is NOT interest rates – is the inflated prices. If asset prices were to collapse by 50 percent only 44 percent of people could purchase a home with a mortgage (double the amount right now). If asset prices were to collapse by 75 percent this number would increase to 88 percent – much more in line with the historical average going back more than 250 years.
None of what I describe above is unusual. Recent asset market crashes did similarly. The crash of January 2000 to October 2002 crashed prices by 41 percent. The crash of October 2007 to March 2009 crashed prices by 63 percent. The “Great Depression” of 1929 to 1941 (beyond to 1949 when prices actually recovered) did even more – circa 90 percent.
Downsizing employment is never fun, but often necessary for long term maintenance of financial and economic health. Most of us (including myself) have been there more than once. What does one do? You pick yourself up, you improve your attitude and you move forward. It is all part of life which cannot (and should not) be avoided.
The legacy media is also making too much “noise” with respect to tariffs. The Trump Administration is merely “threatening” tariffs equal to what respective countries have been charging the USA. These countries can simply lower or eliminate their tariffs and then there will be no tariffs on either side.
Global Geopolitics
The “trade wars” in the news today will not (and should not) last long especially with the most major global players such as the USA and Mainland China. Smaller players such as the European Union and Canada need to wake up, smell the coffee, face the music and reach mutually acceptable deals so that the tariffs need not last.
Every single hot war must be ended – no exceptions. The noisiest ones right now are those in the Ukraine and in the Gaza Strip. Put your politics and all religion aside because all civilian human beings need to be treated with respect.
As Vice President J.D. Vance said, the European Union needs to wake up, be reasonable and accept reality. They must forever give up their idea of “rearming” (with money they don’t have) and confronting Russia, Eurasia and beyond. And for what purpose might I ask? They are good people over there and need to be lived with (and traded with) in peace and prosperity. Forget about your so-called political, religious, ideological or cultural differences – do not use your beliefs as instruments of conflict. This interview with retired U.S. Colonel Douglas MacGregor of “Our Country, Our Choice” by Glenn Diesen of Norway is excellent. It sums up the current global geopolitical situation excellently: https://www.youtube.com/watch?v=IWGhXB1uszI.
What the European Union has done to nullify free elections in Romania and very recently in France (in effect to “legally” ban their parliamentary opposition) is nothing less than tyranny. Europe and the so-called liberal west have no chance whatsoever to overcome the BRICS and Shanghai Cooperation Organisation countries who represent from 79 to 91 of the human race on planet earth. If the USA joins forces with the latter the west will merely be “defeated” that much sooner rather than later. If the USA changes its politics once again in January 2029 it looks to go very hard left (i.e., the far left wing of the Democratic Party championed by the likes of Bernie Sanders and AOC). This will merely send the USA into bankrupt oblivion harder and sooner than softer and later. This phenomenon is unfortunately part of the human condition which I will refer to as “affluenza.” It happens to countries, states, provinces, corporations, smaller businesses and families. It is much like the spoiled rich children squandering their inheritance.
