Happy New Year folks,

Wow, it is 2012. By some accounts the world as we knew it was supposed to end when the clock stroke midnight December 31/January 1 2000. All the computers were going to stop working. Cars weren’t going to start elevators would stop etc. etc. etc., Well, a dozen years later and were all still here. Sept. 11, 2001 not withstanding, the world didn’t end. We’ve fought to major wars, spent a great deal of money that we borrowed (see below  from Wikipedia).

The last time debt was this high ( as a percentage of GDP) was right after WW II when the government was paying for GI education, hospital care for the wounded and generally trying to get the peacetime economy moving again. Remember that auto factories were shuttered to divert steel and other materials to the war effort. We actually reduced the debt (as a percentage of GDP) during Viet Nam. It wasn’t until the Jimmy Carter presidency that debt began to climb and has continued to climb ever since. Yes, there was a hiatus in the late 1990’s but it was minor and short lived. From 2000 forward (the Bush 43 and Obama 44 years) it has been allowed to climb at ever increasing rates. Both parties were in control during those years so it doesn’t seem to belong to one party or the other. It belongs to the current members of both houses of Congress. Hold them accountable in the next election.

In February of 2011 I wrote in this blog about the coming issues in Europe. They are still unwinding a year later. They will continue to be a drag on our economic recovery for the next year or two.

Despite all the talk about recovery, I’m not seeing it happening anytime soon. For the economy to recover someone has to ship something from someplace. The IXTR (transportation index) is 15% below where it was a year ago, suggesting that there has been no marked pick up in bookings for trucks, planes, trains etc.. Even the Dow Jones US Marine Transportation Index is only up maybe 1% for the year. Not hardly stellar growth.

Housing remains in a funk, with continued high foreclosure rates despite the lowest interest rates in my lifetime, and that is a very long time. In fact the last time Mortgage rates were in the 3% range was in the 1940’s. Homes are selling for a fraction of their cost just three years ago and a fraction of what it would cost to replace them today. This is a huge loss of capital for the American public, all of whom were encouraged to buy homes by the government. Great investment advice don’t you think? We can blame it on the banks but two guys who are to blame are former Senator Dodd of CT and soon to be former Congressman Barney Frank of MA.  Staunch defenders of Freddie Mac and Fannie Mae until they went belly up. These two knew or, as they say in legal circles, should have known what was going on. If they didn’t we should charge them with gross negligence and if they did… then they are in the same class as Ken Lay of Enron.

Ask yourself this. Why is it that where you live is still struggling while high end apartment buildings are under construction all over Washington DC and housing prices there didn’t take anywhere near the hit they did in your neighborhood?

So what does 2012 hold? Too soon to tell I suppose, but there is an old stock market saw that says as goes the first 5 trading days of January, so goes the year. This is true more often than not and 2especially in presidential election years, of which this is one. Three trading days in and I see a light. Just don’t know if it is the end of the tunnel or a damn train.

If you love where the country is headed or if you hate it, get out and vote in November. It is the only thing you can do to make yourself heard clearly.

Your one vote can make a difference. Getting your neighbors out on election day can compound that difference. The United States is a Republic not a democracy. We don’t vote on much, we vote for representatives who vote on a lot. If we do a poor job selecting our representatives or if we chose to not participate, then we get the government we deserve.