Search This Blog

Monday, February 4, 2013

Things Are Getting Better? Really?


 One has to wonder what makes the media think things are getting better.  The Congress is still not doing its job and is offering no solutions that might make things better down the road.  If anything they have taken the Ostrich approach and stuck their collective head in the sand.  They are hoping things will magically fix themselves because they sure have no clue how to do it.

  One argument is that the housing market is getting better.  It may have that appearance if all you are basing it on is the number of foreclosures being down and market prices being up.  That might be true if another downturn in the market was not just around the corner.  If Congress does nothing the budget cuts agreed to by Congress in its last debt limit fiasco will take effect.  The first effect will be the loss of hundreds of thousands of jobs.  That means more people on unemployment which means a return of rising foreclosures. 

Unless Congress is going to make unemployment a permanent entitlement, it or the lack of it will start the next downturn.  Making it a permanent entitlement will destroy the economy by pushing the debt level skyward.  If not as more and more people fall off of unemployment they will lose the cushion that kept them in their homes.

One of the biggest potential drains on the economy has not been fully realized.  It will soon start to take its toll.  Hundreds of thousands of college graduates and students can’t find meaningful employment.  That means all the debt they owe will soon become a burden on the banks and the government.  Budgets based on the repayment of that money will be thrown into chaos.  Also many of those students will move back in with their parents who are struggling themselves.

 Some will argue that the market is doing better.  That is a delusion.  The problems that happened because of the last economic collapse have not been fixed. The only thing pushing the market up is the institutional investments.  Money poured into the markets because it has nowhere else to go.  Putting money in savings accounts or bonds will give absolutely no return on one’s investment.

In a year and a half to two years my wife’s retirement lost almost 50% of its value during the last market collapse.  Nothing has been done to prevent that from happening again.  The money lost the last time has not magically reappeared.  Some argue that the stocks have recuperated.  That is fine, but where is all the lost money and income.  It is still gone and will not be given back

Many investors are forced to invest in the market through their employer’s retirement programs.  The employers have not fixed the problem.  They can’t as long as the system remains broken.  Sooner or later the market will tank again and people’s retirement accounts will tank along with it.  Congress is not taking any action to fix the problems.  They would rather point fingers than do anything constructive to fix the problems.

Congress has taken no action to rein in the debt or at a minimum freeze spending to stop the runaway deficit increase.  They argue that as the economy gets better the debt will go down.  The only problem with that theory is there has to be a stimulus to make the economy grow.  That will require the creation of jobs.

While Congress contends they can’t create jobs without increasing spending.  They can encourage business investment by creating a more secure investment environment.  They can close loopholes in the system and create a better and fairer tax system that does not favor one group over another.

One of the biggest and most important things Congress can or could do is realize who the money they are spending belongs to.  They need to wake up to whose futures they are destroying with their incompetence.  The money they are spending belongs to the American taxpayers and their children. It does not belong to the Federal government even though they spend it like it does.  They need to look at every dollar they spend as belonging to someone else, because it does.  They need to make sure each dollar they spend benefits every American equally.  If it does not benefit every American it is pork.

Building roads can benefit every American regardless of where they live. It can help reduce the cost of traveling which can reduce the cost of goods they consume that come from other parts of the country.  Money spent to support the countries like Pakistan who hates us is wasteful and not in the interests of the American people.  Every dollar needs to be looked at. 

Fixing the budget will require some tough spending cuts.  Some people will be hurt by them.  Yet if done properly and if what America does spend is spent wisely America can get back on its feet.  Spending American money on money borrowed from foreign countries is not a good investment of American money.  Regardless of how low the interest rate is.  That money could be spent in America to build infrastructure and create jobs.  The problem is that Congress on its own will not make these changes.  It will take Americans getting involved and forcing their representatives in government to do the right thing.

If Americans fail to do so they will pay a price that I am sure they do not want to pay.  When the whole house of cards collapses it will force them to force the government to change.  That will be done because they will have no income to pay taxes and support the system we now have.  Sooner or later, it will collapse.  It is not a matter of if. It is a matter of when.  If we keep on the path we are headed down it will not be long coming.

No comments:

Post a Comment