Hi All,

Well we just past mid-January and the markets have been so quiet people are getting nervous. After all the volatility last year it seems eerie to have stability. Is this the clear sky after the storm or the eye of the hurricane. No one seems sure if we are out of the woods or if there is an ACT 2 to come.

 Most of what I see on the economic side appears to suggest neither good news nor bad. We seem to be adjusting to a new normal.

I listened to a talk given by Woody Hall a PhD Economist from UNC-W today and he confirmed my idea that unemployment isn’t going to get better for several years.

On the political front, the President is building an enormous war chest for his re-election campaign. It is making the conservative talk show hosts uncomfortable.  On one hand it seems ridiculous to spend hundreds of millions of dollars on a campaign, even a Presidential one. On the other hand it is truly effective at putting money into the hands of staffers, hotels, restaurants, print shops and a myriad of other businesses around the country. In the meantime the various Republican candidates are busy crisscrossing the country trying to win their primary. Pumping some money into local economies everywhere they go and that spending will leap 100 fold when the eventual nominee hits the trail in earnest.

Who will win is anybody’s guess. Will it matter? Will either candidate, Democrat or Republican lead the country? Will they be a Harry Truman with the idea that the “buck stops here”. Or will they just be more of the same? I heard a local political candidate say “does anyone here think that politicians make too few promises they can’t keep?”  His point is well taken. It doesn’t matter what they promise, we need to elect someone who is more interested in doing the job well than making friends or getting re-elected.

Picking the right candidate is our job-1. We need to “hire” the right person who will lead from the front. Who will take the flack. Who will not waiver once committed to a course of direction.  

In the Great Depression we introduced Social Security and make work programs but we didn’t recover economically until we spooled up the military for WW II. That put everyone to work. We drafted able bodied men to the Army and stay at home mom’s went to the factory to build planes and ships and all the material needed. Everyone had work BUT we also added a lot to the national debt. The cost of resolving the economic crisis of the 1930’s was enormous not only in financial terms but in loss of life. We forget that while the loss of one life is regrettable, we lost more on one day at Normandy that we have lost in Iraq, Afghanistan and any other small actions around the world. We, you and me, have not done without anything during this recession and the two wars. We are building new cars everyday (no cars were made from 1941- 1946). Tires, gasoline and food stuffs were rationed during WW II. Have you had any problem getting what you need?

So far this recession has been, in large part, an inconvenience for most Americans and a real hardship for a relatively few. Now don’t get me wrong, it has been hard for some and we should all do what we can to assist them. At 9% unemployment, about 5 million more people are looking for a job than in 2007, before it all began.

Who is to blame? George Bush? Barrack Obama? Nancy Pelosi?  Harry Reid? Barney Frank? Chris Dodd?  The Bankers?  The heads of Fannie Mae or Freddie Mac? Probably dealers choice but I don’t really care who is to blame. I care about what we do next to fix it without leaving the bill to the grandkids. We, the people of the United States, elected each of those I named (and their appointees) and WE are responsible. We need to clean it up. We need to fix it.

We need to limit our borrowing, we need to live within our means. We need to move forward as one nation; black, white, yellow, brown and red. We need to assure that Grandma isn’t denied health care and that our grandkids aren’t denied opportunity. It is a tall order but it is our responsibility. We need to make it happen.

That is what Americans have always excelled at. We find a way to make it happen, to achieve the goal and to do it without complaint.  We have one year to send the word that this has gone on too long and that we expect it to be fixed by November 2012. In November we take charge by electing those we believe can and will make a difference. It is up to us; "We, the People".  

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.