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When will we wake up? Two Class System

When will we wake up? State of the Economy 12-30-2009
I was talking to a friend the other day a local CPA, and we got talking about the markets and he stated “The economy has turned the corner. We will be back to the pre crash stock market levels pretty soon since we have corrected the bank failures”. I almost chocked! However, I think this is what the average American thinks. This made me wonder when America will wake up.
In order to sustain our pre crash levels we have to be spending more than we can afford. America was on an eating binge prior to the crash. It was buy whatever you can as fast as you can on credit. The American Middle Class was in a State of Euphoria. However, with all bingers there comes the time to throw it all up. It doesn’t matter how low interest rates go America was Maxed Out! We can’t buy anymore. 
Second, the main reason the Stock Market has rebounded the last 8 months is Doing What America Does Best “CUTTING Costs”! Corporate America is great at laying people off and tightening their belts. It is the Great American Innovation of the 21st Century! However, this causes unemployment which causes even less spending. Even optimistic estimates state that it will take us 3-5 years to get back to pre-crash unemployment levels.
For companies to start hiring people they have to believe profits will increase. Where are the new profits going to come from? If they don’t come from American Households they have only one other place to come from The Government! They are the only American entity not Maxed out! They just put the money presses to work full time. However, the great Question is how long can this go on?
Many feel Bernanke is the Man of the Year, and he will help us spend our way out of this. However, he isn’t spending money he borrowed or earned. Only a small share of the National Debt is borrowed - we just create more money. 
Creating more money will eventually lead to inflation and Asset Bubbles which is how we got here in the first place.
Also where does this money go? So far it has gone to entitlements to the poor, and the Supper Rich! The government bailouts have only helped one class of Citizens the Supper Wealthy. When Congress looks to lower their seven digit salaries – suddenly they can pay back their stimulus bailouts. We are moving to a two class system the Super Wealthy and the Lower Middle Class! Pretty soon it will not matter if you work or collect welfare you will have the same healthcare, same government loan, same retirement (Social Security), same education, and the same lifestyle.
Wake up America before it is too late!


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