The F&C Editorial – July 23rd Edition
So I hear the economy is getting better but there are fears of a double-dip recession to which I say we never got out of the first recession.
Here are seven points:
1. The consumer is being crushed by debt, 1/4 with a mortgage are underwater, near 20% are under or unemployed, and few have any faith in Obozonomics.
2. Current housing inventory is misleading as the banks are sitting on a vast mountain of inventories and stalling on an even vaster mountain of foreclosures. Housing ultimately depends on jobs and income growth and positive future-earnings demographics. None of these supports housing, all of them work against it.
3. Business spending was seemingly strong. However, the emphasis should be put on “was” and “seemingly.”
4. The latest production numbers show a steady deterioration. If you look further back to when the stimulus was having an mild affect on the economy, only then do they look good.
5. Some experts say, “Employment does not look threatening.” Are they serious? Nearly 20% are under or unemployed and little to no job growth. Only Shakespeare will do here: “Scorn, defiance, slight regard, contempt . . . .”
6. The financial markets look as good as they do because: the banksters are getting endless amounts of free money to play with in their favorite casinos; the ECB is buying sovereign debt, thus improving credit spreads. That spreads are much better than they were when we were poised to fall into the bottomless abyss means little as to where economy is going.
7. China’s slowing may or may not be more or less than expected. However, that China can so quickly replace the American consumer in a manner that prevents a double dip recession in the United States is, to put it kindly, quixotic.
Technically, by econometrics, the United States may indeed avoid a double dip recession because we never came out of the first. But it will be a distinction without a difference, much as the recovery has been.
Financial Reform
From a F&C Contributor
Financial "reform" is bogus. It just rearranges the deck-chairs of the Titanic. It adds additional layers of bureaucracy, while leaving the same regulatory bodies in charge that were supposed to stop the last crisis.
Every time there's a financial crisis, the politicians come out afterwards and say "Look what the greedy fat-cats in the markets did!! We (the politicians) will stop it by passing the ABC Act and the 123 Act to prevent this from happening again"
And the people applaud like sheep
It happened after the 1929 crash, happened during the 1970s, happened during the S&L crisis of 1990, after the dot-com bubble of the 1990s, etc. etc.
And all of those new fees in the new regulations? You think the banks will pay all of them without recourse? Of course not. It's being passed right onto us. So next time you see your credit card fees or your mortgage fees go up, you can thank the Democrats "historic" financial reform...
Notes:
- New jobless claims jumped by 37,000 in the U.S. last week by the most since February, reversing a sharp fall two weeks ago.
- President Obama signed the extension of unemployment benefits blasting the Republicans and saying the measure will "restore desperately needed assistance to two-and-a-half million Americans who lost their jobs in the recession." Now earlier this week I called for the Republican to pick their battles wisely and I stand by that statement. But what I failed to mention was I do agree with the Republicans on was to pay for this with the unused stimulus but that of cause is not going to happen.
- The Federal Reserve Chairman Ben Bernanke, repeating his testimony from a earlier this week, told House members that the fragile U.S. economy still needs government stimulus spending to strengthen the recovery and help reduce unemployment. Yep, that is just what we need, so Big Ben wants to add more debt on to our fragile economy and thinks that will help? Did the first or second stimulus help? Interpretation: keep spending cause ain't nothing working.