Economic Charts

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Tuesday, August 10, 2010

House prices, double-dip recession and jobs

A popular theme now seems to be that we are not emerging from the recession, that the market is disconnected from the fundamentals.  In prior blog posts I talk about why the housing market will continue to decline (stimulus not working, priming the pump is out of steam) and how jobs are actually falling off worse than what is being reported.  The market fundamentals are going sideways at best.  I was reading another article today about how small business optimism has declined ( article here ).  An earlier post today goes over the decline in imports from China, which will weigh heavy on business.  This does not bode well for business going forward.  Fannie Mae and Freddie Mac need another bailout to fund their losses in backstopping mortgages and putting out more programs to get more people into houses with near zero down.  This is all not healthy economic activity.

It seems we are bent on continuing to bail out states, nationalized banks and banks as well.  We may not be bailing out the banks with money currently, but we are backstopping there loans so they go risk free with there lending and can lend to as many mortgagors as needed as the risk is not carried on their balance sheets, its on yours (the tax payer).  We need to get back to honest and sound financial practices, with real government enforcement of regulations (as the bills being passed really miss the mark) and if we are going to spend money on bailing the economy out, why don't we do it productively.  Lets get America back to manufacturing, farming or just over all producing again.  Lets infuse money into our energy grids, improving transportation, re-educating the US workforce.  This is a productive use of money, by improving our infrastructure and creating jobs to do it, we create real jobs.  When people feel confident in their jobs, they will spend again, bringing demand.  This time around though I suggest we save as much if not more than we spend and only spend when you don't have to go into debt to do it.

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