Recovery???

June 30, 2009

6 months into the year and a little over 5 months in to the new administration and the economy is still floundering. We can point to the Bush administration as the cause but the current administration hasn’t made major in-roads into its solution despite committing billions upon billions of your future taxes. Today the troops moved out of major cities in Iraq turning the security for those areas over to the Iraqi government. Pray for the people of Iraq as the next weeks and months could be really tough. Hopefully we can start saving some of the money we were spending there. We can use it for the overhaul of health care.

Afghanistan continues to consume enormous amounts of money and material not to mention American lives. When do we follow suit and leave the Afghani people to protect themselves.

The economy continues to disappoint. Unemployment continues to rise. People are losing their retirement savings and politicians seem to have no idea how to cut a budget. It is time to admit we can’t do everything we want to do for everyone who needs help. We are no longer the richest country in the world (actually #10 in GDP per Capita according to the CIA World Book). We are deeply in debt and we must tighten our collective and individual belts. Of course that hurts votes and might risk political jobs. Can’t help the people if I’m not in office to do it, they argue. Won’t help the people if I want to stay in office is how that translates. We need political leaders who are willing to make the right call whether we like it or not. Washington, Lincoln and other greats did. They deserve our support when they do the right thing even when it doesn’t fell so good personally. They deserve informed and educated voters who can see past their personal self interest and put the best interest of the country first.

Gasoline will top out below the $3.00 number this month and begin to decline back toward $2.40 maybe even $2.25 per gallon by fall. Watch for it to skyrocket at the first real sign of economic recovery.

Energy will be a huge tax problem if cap and tax carbon tax program is passed. Everything you and I buy is made with energy and carbon based fuels. This will drive up the cost of…everything. While you and I may not get a tax bill directly like we do on April 15th, it will be included in everything you and I purchase, including food which is planted and harvested, processed and transported using carbon based fuels.

We just put Billions into two failed car makers and I was passed on the highway (I-140) here in Wilmington North Carolina by a Tesla Roadster. For you who don’t follow the car scene, Tesla Motors (California) produces a high performance ALL ELECTRIC sports car capable of Corvette and Ferrari performance completely electrically and gets lots of miles (220 according to the web site)between recharging. So where is Ford, GM and Chrysler? Where did those Billions go? Why aren’t we supporting Tesla and others engaged in creating the next generation automobile instead of trying to save the old generation? That would be like trying to save an old computer company who still produced main frame technology instead of I-Pods and I-phones. Why support one G technology when we could be support 4 G and 5 G technologies? Hmmm... Does campaign contributions come to mind?

Mr. Obama promised change but has yet to fix any of the real problems. He is just attacking symptoms. Rising health care costs could be contained if we limited Doctors liability (Tort Reform). Gitmo is still open (and should remain so), Unemployment is still growing, Mortgage rates are starting to climb and even the first time buyer credit is only minimally effective. The Speaker of the House, Nancy Pelosi – 3rd in line to the Presidency – represents California where the biggest problem has been and continues to be their inability to balance their budget under Governor's from both parties. They are more than 20 billion away from the constitutionally mandated balanced budget because they won’t raise taxes and won’t be fiscally responsible. So they will have to cut costs with a fire axe to bridge the enormous gap between revenue and spending. Police, Fire and other essential services are going to get cut. Some say decimated. I wonder if there will soon be billions more spent helping out state and local governments who won’t help themselves.

On the plus side, I am beginning to sense that the economy is finally nearing a bottom, maybe even slightly, I repeat, slightly past the bottom headed upward. The decline was severe and sharp. The recovery will be very, very slow and strong growth isn’t likely until 2012 and maybe even later than that. Unemployment will remain high until the economy is well into recovery, so I’m thinking maybe 2011 before we see any real signs of improvement on that important front.

This recovery is frail and even the slightest problem, Iran, Iraq, etc. and the whole thing could come apart.