June 23, 2009

OK Gang, here we go again. This past week started off to be a downer. The stock market crumbled, its rally collapsed. Slowly but surely the world is beginning to recognize the American consumer as the most narcissistic bores in the world. We over indulge at every turn. We have more stuff than anyone in the world, we eat more, we are fatter, we conspicuously consume.

Our economy was 70% consumer products. When the consumer gets hurt, the economy tanks. Simple. Yet the government is doing everything it canto make it worse. Don’t think so? Consumers need more money to keep up their conspicuous consumption. I’m placing no moral value on this mind you but our economy is built on it. Every time government at some level raises taxes, you take money out of the consumer’s pocket and you depress the economy. As Mr. Clinton said in his first campaign, “It’s the Economy, stupid”. Raleigh, Washington and elsewhere these guys still don’t get it. Clinton was right. Ooh, it is hard to believe that I said that. I didn’t often agree with Mr. Clinton, but he was right then and he’d be right today.

Not only should we not add new taxes, we should continue to cut taxes. Not forever, I’m a prudent person. We need schools, better ones than we have. We need to pursue a reasonable and responsible health care system that is accessible to all LEGAL residents of the USA. We need a path by which currently illegal residents who have a clean police record here AND at home can become legalized residents. Yeah, I know. They are illegals and we should just kick them out. But that just isn’t going to happen so let’s resolve this issue and move on. We need to spend wisely and as we can afford too. If we do that, we end up with more for everyone and sooner rather than later.

That said, Mr. Obama has said that the economy is showing signs of turning around, yet in the same speech he said that the unemployment rate will continue to climb exceeding 10%. There are 8 million more people unemployed this May 2009 than there were in May of 2007 and 6 Million more unemployed in May 2009 than in May of 2008. It doesn’t seem like whatever we are doing is working, now does it? I know, shut up and drink my cool aid.

Gasoline, here in Leland NC, has eclipsed $2.60 per gallon working its way up as we move closer to the traditional price peak in July. I still think we might see $3.00.

The number of mortgage applications are still at record lows nationally, running 28% below last year for the Month of May. Housing Starts and Permits are evenly matched, suggesting that no one in the building industry is optimistic, pulling permits ahead of time for spec homes.

Consumer credit remains tight and rates are rising. Both of these constrain consumer spending which in turn slows recovery.

Mr. Obama see’s the economy as turning the corner. With rising taxes, continued unemployment growth and tight credit I fail to see how the economy will recover. The “porkulus bill” has yet to be actually spent in any meaningful way. According to the New York Times, only 6% has been spent to date. That is $46 billion of $800 billion. A very small amount considering it was to stimulate an $11 Trillion economy… NOW! Tax cuts would have been more effective in getting money into the hands of consumers right now, perhaps saving people from foreclosure. Instead we are preparing to build or refurbish bridges in the hinterlands and other projects that were not critical to recovery, just to someone’s re-election.

England see’s its unemployment picture starting to brighten. China’s economy has continued to grow (albeit from a smaller base and at a reduced rate from prior years). Where, Oh Where has our stimulus gone? I may be showing my age here, but perhaps it is "Blowing in the Wind".

Remember to keep our little corner of the world from being decimated we need to keep the fine people in Raleigh from killing the movie industry in Wilmington. It is a great little industry, one of our few. And it is clean and ecologically pretty friendly. Hard to find these days so lets keep the ones we have.

The future isn’t all bleak but it isn’t bright and beautiful either. We will be dealing with this economic problem well after Mr. Obama’s first term is over. Whether he will make things better or worse, history will judge. It will judge without any color bias. It may have a Latina woman’s experience bias or certainly a socio-cultural bias. Remember that history of battle is always written by the victor. It will just be interesting to read that judgment when it comes.