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Yes Virginia, the stock market has played Santa Claus, albeit a poor Santa Claus (bad economy you know), since the health care issue has been resolved. Love it or hate it, Wall Street hates the unknown/uncertain far more. Since this unknown is now moved into the arena for us to try to make sense of and react to it, the market can move forward.
For you and I the market really doesn’t matter. ADP (private) payroll base report has been disappointing. Jobs are very difficult to find and interest rates have begun to rise. Gasoline prices aren’t getting any cheaper either so for you and me life is tough and getting no better. In fact, on the subject of gasoline, it is surprising low in my neighborhood at $2.689. It should be about $2.799 based on the wholesale price. It seems like local merchants are holding back on increases, probably until after Easter. Unfortunately Congress is on Spring Break so no progress can be made on anything until they return.
As taxes begin to rise, and they surely will at all level of Government, the amount of money you have to spend on fun things like clothes and furniture, will continue to shrink. It is hard to imagine how this recession will be over anytime soon at this rate.
Primary elections are upon us and it is time for you to get involved. If you are happy with the ruling party in Washington, then vote for more of the same. If you’re unhappy with the direction Washington is taking us, vote to change things. Just vote in the primary to get the candidate that best represents your wishes and then be sure to support him/her in every way you can. Donate money to their campaign. They won’t send it back even if it is only $1.00 as long as it is a legal donation.
Remember, for a free country to survive and prosper, the electorate must be informed and involved. You don’t need to be in the military to support our way of life but you must be involved.
Wednesday, March 31, 2010
Tuesday, March 23, 2010
Health Care
Well Gang the aye's have it and we have a new monumental piece of legislation. The stock market yawned. Investors hate the uncertain. They are happier dealing with the certainty of this new program than with the uncertainty of will it or won't it. Now they have the opportunity to begin to figure out exactly what is in this bill and how it will affect our economy. They will invest accordingly.
The bill passed on Sunday and the market was up Monday and today (Tuesday). Certainty, atleast as the health care bill is concerned, has led investors to be a bit more confident or at least less fearful. As the details get processed the market could decide differently, but for now it appears happy that its over.
The economy is still in the dumpster. There are small signs of hope but there is no jobs turn around in sight. Housing prices are still declining nationally and sales, although better than 2009 are still anemic. There is little up lifting to be found in the various economic data that comes forth daily. On Thursday the impotant data will be the number of people filling for unemployment for the first time. The newly unemployed. The consensus opinion is that fewer claims were made last week than in previous weeks on average. Retail sales are showing some life with year over year gains of 3% or more. Of course 2009 is a low base for a benchmark but at least it is moving in the right direction.
Gasoline has been up lately, with the national average for regular at $2.82 per gal. Locally we have been paying $2.75 per gal. Locally that is about $.78 more than last year. This has to have a negative affect on other retail spending. It is an extra $20 a week or so for most of us. Maybe Congress should reinstate the tax deduction for federal gasoline tax like we had in the 1960's. At least then we could get a portion of it back instead of paying taxes with money leftover from income tax. But I dream.
Gasoline will likely continue to rise through July 4th and then begin to retrench, probably to $2.25 or so during the fall. Long term outlook, however, is that gasoline will continue to rise baring a huge oil field find. Remember the USA alone consumes 19 million barrels (798 million gallons) of oil per day, of which will pump only 40% domestically. A major import problem.
National debt is rising by the minute and sooner or later the interest rate will begin to climb. At the point that interest begins to rise we will see the country squeezed and taxes will have to be increased further. Raising taxes is contraindicated when trying to reboot the economy.
Housing prices are reported to have declined 3.3% year over year. This is the core problem and progress on this issue has been slow to come about. Until it is fixed, I remain convinced, the economy will progress at the pace of a loggerhead turtle on the beach.
The bill passed on Sunday and the market was up Monday and today (Tuesday). Certainty, atleast as the health care bill is concerned, has led investors to be a bit more confident or at least less fearful. As the details get processed the market could decide differently, but for now it appears happy that its over.
The economy is still in the dumpster. There are small signs of hope but there is no jobs turn around in sight. Housing prices are still declining nationally and sales, although better than 2009 are still anemic. There is little up lifting to be found in the various economic data that comes forth daily. On Thursday the impotant data will be the number of people filling for unemployment for the first time. The newly unemployed. The consensus opinion is that fewer claims were made last week than in previous weeks on average. Retail sales are showing some life with year over year gains of 3% or more. Of course 2009 is a low base for a benchmark but at least it is moving in the right direction.
Gasoline has been up lately, with the national average for regular at $2.82 per gal. Locally we have been paying $2.75 per gal. Locally that is about $.78 more than last year. This has to have a negative affect on other retail spending. It is an extra $20 a week or so for most of us. Maybe Congress should reinstate the tax deduction for federal gasoline tax like we had in the 1960's. At least then we could get a portion of it back instead of paying taxes with money leftover from income tax. But I dream.
Gasoline will likely continue to rise through July 4th and then begin to retrench, probably to $2.25 or so during the fall. Long term outlook, however, is that gasoline will continue to rise baring a huge oil field find. Remember the USA alone consumes 19 million barrels (798 million gallons) of oil per day, of which will pump only 40% domestically. A major import problem.
National debt is rising by the minute and sooner or later the interest rate will begin to climb. At the point that interest begins to rise we will see the country squeezed and taxes will have to be increased further. Raising taxes is contraindicated when trying to reboot the economy.
Housing prices are reported to have declined 3.3% year over year. This is the core problem and progress on this issue has been slow to come about. Until it is fixed, I remain convinced, the economy will progress at the pace of a loggerhead turtle on the beach.
Wednesday, March 17, 2010
Economic recovery
Happy St. Patrick’s Day to you,
The US economy is beginning to recover maybe even a little better than I thought. We still have major issues, too much government debt, partisanship, and too much of the private sector owned or heavily influenced by the government. That said, there are some positive signs of the recovery getting legs.
Producer Price Index shows a 4.6% increase over last year. This suggests that raw materials costs are rising, and that says that worldwide demand for those items is growing. Mostly the gains are in the area of Food and Energy, the former may be a result of the crazy weather that we have had limiting crops and the dominoes fall throughout the food chain. Energy is, however a better gauge of growth. Everything made uses energy to produce and transport. Even online services use energy. So rising energy costs are a sure sign that the world economy is in recovery.
The bad news is the US dollar is losing value by the bucket load against other currencies. Import prices are up 11.2% year over year. IF PPI is up 4.6% mostly due to energy and food (both of which are large imports) and import prices are up 11.2% we can infer that the dollar has lost considerable purchasing power on the world stage. The Euro has had its own problems of late but the dollar has dropped from $1.29 per Euro to $1.37 per Euro since this time last year. That is a 6.2% decline in relative value. That is a big decline in one year. Measured against the Swiss Franc the dollar has declined 12.8 % in the same time frame. As I said earlier the Euro has had its own issues. As for the dollar vs. gold, the comparison is even more stark, with gold rising 22.3% in the same time frame. People around the world are looking to gold as a store of value rather than any countries currency. The dollar is still regarded as the best currency overall, but its continued weakness is making investors seek alternatives.
The US will not likely lead the recovery since we have such strong headwinds. When you and I have a reduction in income we cut spending. We may even get draconian about it, cutting spending on everything except bare necessities. Governments don’t do that and a case can be made that they shouldn’t. Their spending actually increases in bad economic times. Unemployment costs skyrocket. Other social programs increase and money is spent to make work (Stimulus and jobs bills). These help to spur recovery. Unfortunately we add to this spending on Iraq and Afghanistan (the latter the longest War effort in 100 years, surpassing even Viet Nam at 8.5 years). We then add a long history of deficit spending all adding up to a massive debt of $12.6 Trillion, an unemployment level of 9.7% (official – some argue it is much higher) declining tax revenues resulting from the economic downturn and the outlook isn’t rosy.
What will it take to get the economy moving in the right direction? Time and fiscal restraint. Like you and me, the government will have to accept that it can’t do everything and certainly not all at once. We need to rein in spending where we can, slow the growth of spending virtually everywhere and bide our time. It is said that time heals all wounds and in this case it may be the very best salve. We can’t borrow our way to recovery. We can do this and have a bright future, but we need to start now. We can’t afford to wait because the problem is growing by the minute. Democrat and Republican, Independent and whatever, we must all stop doing what we are doing and take stock of ourselves and of our situation and decide if we care what kind of life we are leaving to our children. Or have we become so self centered that it is only about us and we don’t care about future generations. I sincerely hope that is not the case.
While it is convenient to blame the other political party for current ills, remember that this country has run a continuous deficit since the Revolutionary War. It has never been paid off, just refunded. Both Parties have had opportunity to add and detract from the deficit. Neither has ever accomplished a significant reduction in the overall debt and now it is so large that it will take generations to accomplish. Remember also that Congress has been there virtually the whole time. And while members of Congress come and go the Congress as an institution has failed to address this issue successfully. And those who have been there the longest bear the most blame.
The US economy is beginning to recover maybe even a little better than I thought. We still have major issues, too much government debt, partisanship, and too much of the private sector owned or heavily influenced by the government. That said, there are some positive signs of the recovery getting legs.
Producer Price Index shows a 4.6% increase over last year. This suggests that raw materials costs are rising, and that says that worldwide demand for those items is growing. Mostly the gains are in the area of Food and Energy, the former may be a result of the crazy weather that we have had limiting crops and the dominoes fall throughout the food chain. Energy is, however a better gauge of growth. Everything made uses energy to produce and transport. Even online services use energy. So rising energy costs are a sure sign that the world economy is in recovery.
The bad news is the US dollar is losing value by the bucket load against other currencies. Import prices are up 11.2% year over year. IF PPI is up 4.6% mostly due to energy and food (both of which are large imports) and import prices are up 11.2% we can infer that the dollar has lost considerable purchasing power on the world stage. The Euro has had its own problems of late but the dollar has dropped from $1.29 per Euro to $1.37 per Euro since this time last year. That is a 6.2% decline in relative value. That is a big decline in one year. Measured against the Swiss Franc the dollar has declined 12.8 % in the same time frame. As I said earlier the Euro has had its own issues. As for the dollar vs. gold, the comparison is even more stark, with gold rising 22.3% in the same time frame. People around the world are looking to gold as a store of value rather than any countries currency. The dollar is still regarded as the best currency overall, but its continued weakness is making investors seek alternatives.
The US will not likely lead the recovery since we have such strong headwinds. When you and I have a reduction in income we cut spending. We may even get draconian about it, cutting spending on everything except bare necessities. Governments don’t do that and a case can be made that they shouldn’t. Their spending actually increases in bad economic times. Unemployment costs skyrocket. Other social programs increase and money is spent to make work (Stimulus and jobs bills). These help to spur recovery. Unfortunately we add to this spending on Iraq and Afghanistan (the latter the longest War effort in 100 years, surpassing even Viet Nam at 8.5 years). We then add a long history of deficit spending all adding up to a massive debt of $12.6 Trillion, an unemployment level of 9.7% (official – some argue it is much higher) declining tax revenues resulting from the economic downturn and the outlook isn’t rosy.
What will it take to get the economy moving in the right direction? Time and fiscal restraint. Like you and me, the government will have to accept that it can’t do everything and certainly not all at once. We need to rein in spending where we can, slow the growth of spending virtually everywhere and bide our time. It is said that time heals all wounds and in this case it may be the very best salve. We can’t borrow our way to recovery. We can do this and have a bright future, but we need to start now. We can’t afford to wait because the problem is growing by the minute. Democrat and Republican, Independent and whatever, we must all stop doing what we are doing and take stock of ourselves and of our situation and decide if we care what kind of life we are leaving to our children. Or have we become so self centered that it is only about us and we don’t care about future generations. I sincerely hope that is not the case.
While it is convenient to blame the other political party for current ills, remember that this country has run a continuous deficit since the Revolutionary War. It has never been paid off, just refunded. Both Parties have had opportunity to add and detract from the deficit. Neither has ever accomplished a significant reduction in the overall debt and now it is so large that it will take generations to accomplish. Remember also that Congress has been there virtually the whole time. And while members of Congress come and go the Congress as an institution has failed to address this issue successfully. And those who have been there the longest bear the most blame.
Tuesday, March 2, 2010
Where is the economy headed?
March 1 2010
Hi All,
Today we are wondering, where is the economy going? It appears to be trending upward but almost as fitfully as the Wright brothers early attempts at flight. I have written before and I will continue to write that the secret to restarting the economy is to clean up the housing mess. When real estate prices become stable then the consumer will return to the market place and jobs will reappear.
One thing to consider, especially as we look forward to midterm elections, is that the longer instability remains in housing the more pent up demand grows for just about everything that we held off buying because we were uncertain. That pent up demand may be the next bubble.
What if the government waits for the market place to finally sort it all out, and it eventually will, and the pent up demand continues to expand for an extended period? When it is unleashed it will create a round of inflation not seen since the days of Jimmy Carter. Remember those days of 16% mortgages and double digit inflation? Remember how government responded to that with wage and price controls? Now I’m a free market guy, but we have not let the free market work on its own so we have prolonged the agony. We are letting the bubble build just as sure as we did when we encouraged lenders to find creative ways to raise capital to lend to high risk individuals who bought homes they couldn’t afford. Consumer demand is always there in the United States. We are a nation of spenders, not of savers like Japan. We can and we will spend our way out of this recession…as soon as we have confidence in our circumstances.
15 million plus workers are looking for jobs today. Many more have quit looking and filed for early Social Security. Many others have taken jobs well below their ability and training just to feed their family. If this situation continues for a long period of time, we may once again become a nation of savers like those who lived through the great depression. That would resolve the inflation worry but if you believe that you can’t shrink your way to greatness then where does that leave us? Worldwide economic expansion is the surest weapon we have against another World War. The have-nots have always risen up against the haves and the haves have always tried to dominate the have-nots. The Romans expanded by conquering weaker peoples who didn’t have the economic power to resist. Germany in WWII conquered peoples of weaker economic power, building an empire built on economic control. It was a strong economy that provided the funding to expand armies and weapons systems. The USA was able to assist in that great struggle because we were a large landmass filled with natural resources and manufacturing might and were such a large economic power that we could push back. If we fail to engineer this recovery properly and soon, our ability to push back will become suspect. And countries, like sharks, getting very aggressive when they smell blood.
Think about your representatives this midterm election. Is he /she representing your best interests and the best interests of this state/nation or are they protecting their own position and furthering the agenda of a single political party? Once you decide that for yourself, then you can cast your ballot intelligently. Ballots, cast by informed voters, are the one thing that has always made this country great.
Hi All,
Today we are wondering, where is the economy going? It appears to be trending upward but almost as fitfully as the Wright brothers early attempts at flight. I have written before and I will continue to write that the secret to restarting the economy is to clean up the housing mess. When real estate prices become stable then the consumer will return to the market place and jobs will reappear.
One thing to consider, especially as we look forward to midterm elections, is that the longer instability remains in housing the more pent up demand grows for just about everything that we held off buying because we were uncertain. That pent up demand may be the next bubble.
What if the government waits for the market place to finally sort it all out, and it eventually will, and the pent up demand continues to expand for an extended period? When it is unleashed it will create a round of inflation not seen since the days of Jimmy Carter. Remember those days of 16% mortgages and double digit inflation? Remember how government responded to that with wage and price controls? Now I’m a free market guy, but we have not let the free market work on its own so we have prolonged the agony. We are letting the bubble build just as sure as we did when we encouraged lenders to find creative ways to raise capital to lend to high risk individuals who bought homes they couldn’t afford. Consumer demand is always there in the United States. We are a nation of spenders, not of savers like Japan. We can and we will spend our way out of this recession…as soon as we have confidence in our circumstances.
15 million plus workers are looking for jobs today. Many more have quit looking and filed for early Social Security. Many others have taken jobs well below their ability and training just to feed their family. If this situation continues for a long period of time, we may once again become a nation of savers like those who lived through the great depression. That would resolve the inflation worry but if you believe that you can’t shrink your way to greatness then where does that leave us? Worldwide economic expansion is the surest weapon we have against another World War. The have-nots have always risen up against the haves and the haves have always tried to dominate the have-nots. The Romans expanded by conquering weaker peoples who didn’t have the economic power to resist. Germany in WWII conquered peoples of weaker economic power, building an empire built on economic control. It was a strong economy that provided the funding to expand armies and weapons systems. The USA was able to assist in that great struggle because we were a large landmass filled with natural resources and manufacturing might and were such a large economic power that we could push back. If we fail to engineer this recovery properly and soon, our ability to push back will become suspect. And countries, like sharks, getting very aggressive when they smell blood.
Think about your representatives this midterm election. Is he /she representing your best interests and the best interests of this state/nation or are they protecting their own position and furthering the agenda of a single political party? Once you decide that for yourself, then you can cast your ballot intelligently. Ballots, cast by informed voters, are the one thing that has always made this country great.
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