Red Esprit

Putting Job Losses in Perspective

Great article and the Gross interview gives insight. Not so sure about his assessments of averting a depression or depression styled economy but his opinion carries significant weight so what can he really say. There are simply too many chips stacked against us at this point. I remember when Clinton espoused the glorious future of the U.S. as a service economy and what a fool I thought he was. A service economy works fine for the Caymen Islands. We, on the other hand, are now enjoying the fruits of those that believed the wholesale decimation of manufacturing was acceptable. This, of course, includes the union socialists. But you cannot dwell on the past. You must look towards the brightness of the future. The stimulus program will surely begin to create more jobs...well, maybe not. With massive taxpayer investment, banks will obviosly begin to ease the current trend of consumer credit contraction...well, maybe not. Surely, states like Califronia (the world's 8th largest economy) will reign in their entitlements, deport the illegals, curtail their socialists retirement benefits programs for state employee unions, and balance their budget....well, maybe not. No worry. The world will continue to support our Keynesian styled deficits by purchasing treasurys at 2% rates forever...well, maybe not.
So the truth is that this recession, just maybe, is not your typical recession. Inquiring minds would ask...if jobs will lead us out of the recession, just where will they come from? Clearly not from the manufacturing sector. Its gone to a hammer and sickle. Clearly not from technology. What technology can possibly be brought immediately to bear? Maybe form Clinton's service sector. Maybe we simply all buy maid franchises, clean each other's homes and pull ourselves from the brink of depression with the help of some janitorial "circle jerk".
The reality is that a depression can no longer be ruled out. Discounting it is totally for the foolish. The fundamentals of our economy are no longer sound. We derive 97% of our tax pool from 50% of the populace. The upper 1% pay an astounding percentage. That 50% is earning 30-35% less taxable income due to the economy and job loss. Taxing the "rich" is simply getting harder to do. You are no longer facing the "Great Unwind"...you are experiencing it. How you stop it, is anybody's guess. We simply have no credible fiscal leadership....anywhere... any level. Pelosi, Reid, Frank, Dodd, et al. There has never been a time in American history where the leadership of the US has been in the hands of greater incompetance, ineptness and corruption. Obama is set to pattern himself after FDR. He will likely succeed, unknowing that FDR and his policies fueled one of history's great economic failures. Our "skin in the game", "green shoots", great orator, is one with no credible solutions. Sound familiar? Unfortunately, the die seems to be cast and we are all along for an incredible ride. Those that compare this to the Great Depression, just may be wrong. In the end, we may want to re-define the 29 version, as simply a major economic downturn in light of what we currently face. Now....back to re-potting the daffodils. Its a beuatiful day in Florida.

No Bailout for the Governator: California's 'Fiscal Emergency'

Concept Wizard has been drinking the Concept Koolaid. Why doesn't Kalifornia simply hitch a ride over to the People's Republic and talk to the Bank of China for a loan like our treasury does. If you are operating the state on a deficit basis, borrowing will only exacerbate the problem. You are assuming you have a temporary problem. You do not. You are assuming that the recession is abating. It is not. The Keynsian fools are now in control of both yours and the national ship of state. You are in for a very, very long slog.

California: The Haves and Have-Nots

California is in a death spiral and it needs to happen. It is being crushed by unionism and its policies toward illegals have now come home to roost. As said by Thatcher, the problem with socialism is that you eventully run out of other peoples' money. California has run out. Its time to fix the system and take the unions head on. Show the illegals the southern door and rebuild your state. The fact is, you really have no choice. You are imploding.

Better to Rent than Buy a Home

In today's economic environment, you simply cannot put a high enough value on flexibility. I have only owned real estate twice in my life (while I was married) because it gave my spouse (the nest builder) what she wanted. As a single man, I always rent a nice condo to live in. Currently over 2,000 sq. ft for $1,000. Homes are investments. Investing in depreciating, illiquid assets that won't cash flow in an emergency simply makes no sense. Prices need to come down another 30% or more (and they will) before thye buy vs. rent equation is in balance.

Futures Show Home Prices Continuing To Plummet

What everyone findsd hard to believe is that residential real estate can decline as it has. Keep in mind that a home is nothing more than the sum of its commodities (concrete, glass, wood, etc.) and a bit of labor. There is no basis for appreciation other than modest inflation. We are clearly now in a deflationary environment which will be made worse by the credit crisis, growing unemployment, and a leadership vacuum. Where it ends is anybody's guess. Recovery, however, is out of the question for a long, long, time.