Double Dipping just in time for summer
Are we heading back into recession or did we just never come out?
Today’s sobering news about existing home sales comes on the heels of more and more data that indicates the perfect storm may have been hatched. The dramatic and record decline in home sales is being attributed by all the bobble head economists and market pundits as due to the lack of a tax credit. Wow!! These guys are good! Next thing you know they will point out that large increases in car sales last summer may have been a direct result of the “cash for clunkers” program or that waterfront homes on the Gulf of Mexico may experience a decline in value over the next couple years. The question I have though is how come a few months ago when the home sales numbers being released by our government showed dramatic gains they all chimed in that the recession was over and that real estate had bottomed? It never occurred to anyone that the numbers were a bit inflated due to the aid once again of Uncle Sams check book?
I am not a Harvard MBA, I never studied economics at Wharton and I have no Idea why people follow a graph and describe it as cup and handle or candle stick. I’m a clueless small business owner who can only judge things from my eyes and ears on the street. Instead of quoting Greenspan and Bernanke , I’d rather quote Bluto from Animal House after they accidently killed the horse in the Dean’s Office…I believe the words of shock Bluto uttered over an over again were: “ H-O-L-Y S-H-I-#!..H-O-L-Y S-H-I-#“!!
No single quote can so easily sum up the perfect storm that has happened here in America. The recession that began in 2007 is heading back into a double dip situation because we failed to accept responsibility and failed to take reasonable and needed actions. We had a choice at the start of 2008 and that was to either let the recession and housing crisis run its course or we could open up check books and hope that we could buy our way out of the crisis. That mentality has never made sense to me yet our government has been doing this for the last decade. Imagine telling your wife that things are really tight and we might lose the home in the next few weeks and she responds by saying she is going to go shopping at the mall and spend as much money as possible in an effort to save the house? Isn’t that essentially what our Government has done since January 2008?
TARP wasn’t enough for the Government’s appetite. Each party decided that since we were already in debt we might as well just keep spending as much as possible, kind of like the drunk husband on a Friday night who knows he’s in trouble when he gets home so he stays out until 2 in the morning. The election of 2008 allowed social agendas to be put in place even though they had no chance of actually helping the economy. Indeed, President Obama’s first order of business was to spend almost a trillion more dollars that we didn’t have to ‘stimulate the economy”. Here we are over a year later and unemployment is at 10% and millions have given up looking for work. The stimulus has been a colossal failure yet here we are today and the President wants additional stimulus money that this time he is calling the “Jobs Bill”. The latest employment numbers show that over 600,000 Americans fell off the labor market in May. The drop in unemployment from 9.7% to 9.5% was a result of hundreds of thousands of American’s giving up. Am I the only one who is scared?
The entire year of 2009 was spent trying to push through a health care bill that will cost another trillion dollars that we don’t have. All the while unemployment was escalating higher and higher and despite stimulus, health care reform, tax breaks for buying homes and cars there is a universal truth that can never be challenged: Unemployed people do not buy new homes or Health Insurance. The cheapest health care plan in the world means nothing to a man without a job and three mouths to feed and now that every single possible government incentive has run out we are seeing the sad truth. The trillions that could have spent giving meaningful incentives to small business owners to hire people no longer exist and we are now having a hard time raising both tax revenue and selling our debt to our good buddies in China (yes that is sarcasm). In a sense, our government went to two ends of the spectrum in 2008 ( Bush) and 2009 (Obama). Bush and the TARP catered to the top ½ of 1 percent of the country. They took the money, paid for bonuses and laughed all the way to the bank. Obama instead went 180 degrees in the opposite direction and catered to the lowest common denominator and used trillions on people that quite frankly cannot create meaningful jobs. So here we are in mid 2010 with home sales declining again, unemployment high and debt soaring and more importantly, no bullets left in the chamber. We are heading quickly into a double dip recession and have no way or means to stop it now. Holy Shi#!
