Read What I See

     Yesterday I had a conversation with a friend and ex-coworker.  The main subject of the discussion was the state of the economy, and what the new administration will do to keep it from going into a depression.  We did not agree on everything as he was more inclined to believe that perhaps we could pull a recovery without going into a full fledge depression.

Follow up:

     News from my home State of Florida indicate that we are technically in a depression, although most are not feeling the brunt yet.  More unemployment = more welfare, unemployment benefits, less revenue, bigger deficit = more unemployment = and on, and on...  Real Estate and tourism has taken a toll and all indications are that it will get worse.  With forty four of the States running budget deficits, it is hard to deny that our economy is very troubled.

     The economy appears to be in an irreversible trend that will take years to change.  Take a good look at the debt of our Federal Government, it is bankrupt and does not possess the means to fix our economy without making very painful decisions.  Current economy stimulus plans are not a fix but only a delay of the final outcome.  Opponents of bailouts criticize acquiring more debt to pass on to future generations without realizing that the buck stops here.  We are going to pay for it now.  When we default on our debt, we all will pay.  Our precious dollar is still alive because other countries are keeping it from collapsing knowing what the consequences will be for them if it does.  At the moment, they are holding the fate of our economy and the value of the dollar.  They will not do this indefinitely.

     The Obama's Administration plan will not be able to create new jobs faster than they will be lost and the trend will continue.  Pensions, 401ks and even Social Security payments are in danger of being if not totally lost at the least become a fraction of what they once were.  Listen to those who believe that we cannot spend our way out of it by printing more worthless paper.  It has been tried before and those economies and their currencies collapsed.  Eventually the rest of the world will shut down our dollar printing press when they decide to stop their losses and quit trading it.

     One of the recent solutions that the Fed has put into place was the temporary bailout of the Auto Industry.  They have virtually taken over GMAC which is the lending branch of General Motors.  This will allow them to continue issuing sub-prime loans in order to sale cars.  Didn’t we do this to the housing industry already?  Aren’t sub-prime loans the main reasons why we are in this financial mess?  This is equivalent as to using a hammer to get rid of a headache.  We have seen recently in the news the outrage of our Congress during the Madoff inquiries as if they share no guilt.  Have they already forgotten what they did to us with Fannie Mae, Freddie Mac and the sub-prime loans?  Are these the people who are going to save us from a depression?  This link is the simplest explanation that I have found on the mortgage crisis and the accelerated downturn of our economy.

     There is always a bright side to the down side of events.  Current events in our economy may not entirely be a bad thing but just a needed correction of the way we had materialized our lives and build an economy largely based on waste and over consumption.  One morning in the near future, we may wake up and be more concerned about how we are going to find food for the next meal or how much gasoline we are allowed to buy.  We are likely to see a change by the news media while reporting more  calamity and distress instead of trivia. The headlines will not be about Lesbian - Gay parades, legalizing drugs, the ACLU, or tainted toys from China.  We may just wake up in the real world.  It was good while it lasted but we will have come down to earth from this artificial, wasteful, selfish, and over materialistic life that we had invented.  We may then still be the greatest nation and the best one in the world to live in, but undoubtedly it will have changed.