Tuesday, September 1, 2009

Economic Recovery - Seeing Is Believing

The Obama Administration is claiming credit for the "Economic Recovery" that is non-existent. President Obama told us that if the Congress passed the SwindleUS Package, that they did not read, that unemployment would cap out at 8%. Well, Mr. President you were wrong. Unemployment is now approaching 10% and if all were counted that have stopped looking for work, national unemployment would be well above 15%. In some states like California, Nevada and Michigan unemployment is already at 11%, 12.5% and 15% respectively. Only about 10% of the SwindleUS Package, full of pork barrel projects, has actually been spent so it has had no impact on economic recovery and in fact, it has probably made matters worse because of the trillions of dollars in deficit spending which depresses the value of the dollar. Other than stabilizing the banking system which began during the Bush Administration, all the other bail outs including billions to the auto companies have done little to impact economic recovery.

Further the commercial real estate shoe is falling as more and more commercial buildings that have fallen in value and cannot be refinanced are going into foreclosure. This has caused 84 banks year to date to fail which will shortly require the FDIC to seek more federal funding and deficit spending to guarantee deposits in those banks. And, don't be fooled by a rising stock market. The stock market has gone up which is good for 401k's because companies have laid off millions of workers to cut expenses not because corporate revenues have gone up. And, I can say first hand because of my business, which is down an unprecedented 50%, like nothing I have ever seen in my 30 years in business, that corporate America is just not hiring new employees. What we are seeing is a "New Normal" as companies permanently downsize and/or use this fiscal crisis to move even more jobs overseas.

Trust me, we are on the front line and what I describe is happening in anticipation of Obama's higher taxes, Healthscare, Cap and Tax and other proposed regulations that will be stifling on business. During the last five years, the number of US companies that were in the global 2,000 largest companies in the world has shrunk from about 770 to 558 because US companies are being acquired as a result of the weak dollar or they are simply relocating their headquarters out of the US to avoid US corporate income taxes; among the highest in the world. Companies that understand Economics 101 are voting with their feet. This trend will surely accelerate as a result of President Obama's socialist agenda which will cause the collapse of the dollar, higher unemployment, slower growth and higher inflation and interest rates. These things are inevitable if Obama succeeds in passing the laws and programs he has proposed that will result in Trillions of dollars of deficit spending. As a result, companies have slowed investments that could have resulted in job growth.

And, then President Obama and crew told us that deficit spending was projected to be $7 Trillion over the next ten years which was a staggering number. Well, Mr. President you were wrong again. Your administration had to come back and tell us it would really be $9 Trillion which no doubt will be much higher if all of Obama's socialist plans for America are enacted. Let's not forget that Medicare, which is bankrupt, actually cost 10 times the original amount that was projected in 1965 when the law was enacted.

Now the Obama administration is talking about a "jobless recovery" where the the economy begins to grow, but we continue to have very high unemployment. This is a contradiction in terms. I see absolutely no indicators that would tell me that the economy is improving in any meaningful way. Obviously, for those people out of work, it is a Depression not a Recession. And, as long as we have high unemployment, which will be a side effect of Obama's socialist policies, it is impossible to have a true economic recovery. Government spending alone cannot spur growth. Remember government does not pay income taxes. We need growth in the private sector to have a real economic recovery and that will not happen with higher taxes and more government regulation. Again, Mr. President you are wrong. Until you recognize and understand the principles of Economics 101, we will never have a solid economic recovery in the United States.

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