(barbara says: LeftyMN and I go back and forth sometimes about the whichness of what in this country. He is not optimistic about righting our economy, especially in the hands of the beverage drinkers whose names cannot be spoken. On the heels of an e-conversation about the economy mostly, he had this to say:)
I laughed when I saw Ron Paul was taking over that committee (the Financial Services subcommittee on domestic monetary policy and technology)….
Rep. Ron Paul (R-Texas), a longtime Fed critic who has called for auditing the central bank’s books, is in line to take over the Financial Services subcommittee on domestic monetary policy and technology, which has jurisdiction over the Fed.
“I will approach that committee like no one has ever approached it because we’re living in times like no one has ever seen,” Paul vowed in a recent interview with CNBC.
(barbara note: Gaaa! There's a savage shot across the bow that kind of sizzles the gizzard, eh?) Keep reading.
Also I have my new grim economic outlook being worked on… for the life of me, beyond taxes not going up in fed and state (good for people with money, bad overall for the deficits and programs that will seriously be needed), I don’t see any upside economically going forward.
Housing: Home prices on national average have fallen from their peak in 2006 by as much as they did in the Great Depression. Most housing industry economists expect it to fall another 5% at least for the greatest fall in over 125 years. The main reason is that foreclosures are increasing… and 35% of all homeowners with mortgages are underwater, with prices going further down by early 2012; the housing analysts say that number will be 50%. Inventory increases and more homeowners cannot move as they are prisoners in their equity-less homes.
Austerity in Europe: bad for growth and consumption, not to mention that it will exacerbate social tensions and political crises.
Debt crisis in Europe: see Ireland, Greece Portugal, Italy, Spain.…
Consumption: is 50% of most people’s expenses. With fear of unemployment and low home equity, people will not be spending much on unnecessary things.
Unemployment: unlikely to improve and could get worse but most likely stays between 9-10% (not sure I sent you the rate or employment data yesterday, but the fear is that more people in the 50+ age group will remain in the workforce, thereby making the creation of more jobs than currently required to keep employment rates up).
State/County/Local cuts in spending and employment: see unemployment and consumption above.
Politics: while some people think a divided government will cause some movement, with the exception of tax policy at the federal level, I see little hope for any legislation or policies that will actually help the economy grow. Cutting budgets is non-stimulative. Actual cutting will probably not be much as Repugs really have no intention to cut what is truly making the deficit high. And no need to tell you what that is. There will be no stimulus with this Congress. Any actual good policy will die due to lack of a united Repug caucus…the radicals will take over the place of the Dem Blue Dogs and block things. At the same time, most truly transformative legislation will die at the hands of Lord Filibuster in the Senate where all good legislation goes to die
Have I mentioned trade protectionism, the dollar, etc.? That is another topic, but for the USA the best thing that could happen and that Bernanke is pushing is weakening of the dollar. Unfortunately, as the recent G-20 summit shows, most of the rest of the world doesn’t think that is so good for them…particularly China and the emerging economies that are really keeping the world economy alive (India, Brazil, Russia, SE Asia)…
I just cannot see any silver lining at this time. But I think the first quarter of 2011 will be very interesting and crucial for the rest of 2011 economically.
My son is graduating in December. He has a job offer, and interviews with two major companies. We are very thankful that he looks to get a job…very thankful.