Friday, June 25, 2010

Double Dip ?

Why oh why are people talking about a "double dip" for the economy ? To have a "second" dip presumes a recovery is underway. Where is there any evidence for that ? Every week, week after week, over 450,000 NEW unemployment claims are filed, That's hard data - no major adjustments. real people go to the unemployment office and file claims for benefits - they lost their jobs. That pain is real. That whole family is directly impacted. And loss of that job has a major, major word of mouth secondary effect on neighbors, friends, relatives who hear about it.

Recovery ? Nonsense, at least nationally. [New England seems to be recovering well, anecdotally.]

The correct question is whether there will be a second leg down.

The US economy is still in the swamp, slogging along with huge drag. Correct metaphor is whether is, "Will it step into quicksand and drop more ?"

The stimulus was squandered. A proper stimulus would now be seeing major spending on internal improvements (bridges, ports, rail, high speed Internet, conservation, water projects, historic rehabilitation, etc.) Little was done and little is happening.

Homes values are stagnant or are still dropping in the hard hit areas. The only thing that prevents them from falling faster in those areas is the very slow rate of forced sales by banks as they ration supply to the market to prevent more declines. The big talk in DC of loan modifications is and was boob bait - nothing is or was being done that had a major impact. People are stuck in underwater homes - and when / if something bad happens to their income, a foreclosure or bankruptcy occurs. More pain.

Major taxes rises are scheduled for 2011. That will hurt the economy a lot. Obama is doing nothing to change that and he's even piling more on.

Savers aren't making any money as interest rates are very low. Retiree incomes are down and will likely stay down.

State and local governments have still not restructured their huge pension obligations nor significantly cut the future accrual of benefits.

Three things are fighting a second leg down: The Fed, the natural tendency of those Americans with jobs to spend, and the entrepreneurial nature of free Americans. If they can't find a job, they often scrap and scrimp and create one by starting a business of some kind.

We can only hope that Obama won't shoot off one of the three legs on that shaky stool. He has no leadership ability nor ideas. The "book" on Obama before the election was that he's simply a "speech". That is now proven true before our eyes. The public was fooled by his media sycophants and shills.

Have they learned their lesson ?

Word of the Day

"Duoliteral" - adjective [$100]
Duoliteral means consisting of two letters only.
Sentence: What's a duoliteral description of Obama's Presidential performance ? BS.


maverick said...

Solid post today Bman...very good

Bunkerman said...

thanks, I've been steaming about this subject for a few weeks.

Frosty said...

spoken like a true permabear