Friday, February 26, 2010

Economic Realities

I make the assumption that people who read this blog and others like it, have a genuine concern for where our country is heading, including economically.  We see friends and neighbors losing their jobs and homes, while the government tells us about, "green shoots".

We know something bad is happening.  We may not know exactly why it's happening or what we can do about it, but we certainly don't believe the Happy Talk coming from Washington and our state capitals.

Basically, we're not drinking their brand of Kool Aid.

Amazingly, there are people that don't see it.  More accurately, perhaps, they're people choosing not to see it.

We all know people like this.  If you've still got it in you, and you want to give them a detailed (albeit pretty darned long) piece on this subject, send them to this article ("The Great Recession of 2011-2012") in The American Spectator.  It is excellent.

Some snippets to whet your appetite -
The coming crisis should be no surprise, for we all have had plenty of advance warning. If it is a surprise, blame those chat-show economists who have become so politicized that they ignore the truths of their own science in order to acquire celebrity. Nor should we forget those politicians who deliberately suborn national interest for the security of zero-sum pork-barrel politicking. Combine it all with a news media largely made up of self-referential ignoramuses and it is small wonder that most of the world has been diverted as Dorothy was in Oz by the lightning bolts, explosions, and billowing smoke screen being generated by the men behind the curtain.
Right to the point, huh?

The author uses plenty of hard statistics coupled with common sense analysis. The article is more of a conversation than it is an economic dissertation. It is factual and plainly spoken.
After hearing an entire day’s worth of philosophizing by the party’s greatest minds, Reagan closed the meeting with a decision to make tax cuts a policy point for his upcoming run for the White House.

“Nancy and I always believed that if you didn’t want the kids to overspend their allowances, you didn’t give them the money in the first place.” And so it was tax cuts, which did indeed provide the investment capital needed to work the nation’s way out of economic gridlock. If he was wrong in presuming that federal deficits would be reduced, it was because neither he nor any president since has been able to restrain the 535 members of the U.S. Congress from overspending.
And he is no Republican water-carrier, either. There is absolutely no love lost for politicians of either major party.
It would have been a comfort, of course, if there were a viable opposition force in Washington (or elsewhere) to the pervasive government-fix-all philosophy that exists. But a coherent Republican Party led by folks of stature who offer meaningful solutions has vanished from our scene as abruptly as did the Whigs in the 1850s. What’s left is a hologram of a political party, dominated by second-raters who obsess over moral doctrine in an appeal to some hypothetical “base” that will keep them in the few offices they still cling to.
So, how long will this mess last? I'll let you read the article yourself to find out his beliefs. Let's just say that whatever green shoots we have right now, will be big, strong trees...

In case you think this might be a bit of hyper-ventilation on the part of some "doomer," consider this speech given yesterday - straight from lips of the president of the Cleveland Federal Reserve Bank -
Let me begin, then, with the national economy. You know we have been through one of the most severe and longest recessions in our nation’s history. The recovery from the recession may also end up being one of the longest in our history. In fact, it may take years just to get back to the level of output we enjoyed in 2007, just before the economic crisis began.

Some of you may think I am being too pessimistic. After all, we saw a strong GDP growth estimate for the fourth quarter of last year--nearly 6 percent at an annual rate. But I think that figure overstates the underlying strength of our economy right now.
Accept The Challenge

You know the drill:  Get your "financial house" in order.  This is going to be a long, hard slog through the mud.

One thing to remember, though, is that in every economic down-turn, opportunities WILL present themselves.  Homes and other real estate are going to continue to drop in price.  Businesses will continue to close, and assets will be auctioned.

It sucks, but it's reality.  You need to be ready to take advantage of these opportunities.

Look around you and be on the alert for opportunities.  Finding a niche and making a go of it is how YOU are able to make your own personal economy more stable.

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