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bAss ackwards - Historic

Can trading markets expand in a decaying or weak economy? The short answer, yes.  We're seeing this exact event happening today.  Frankly, it's disturbing.  The people in the "know" keep pushing the mantra "things are improving" and government stimulus is helping the economy recover. 

Last years 900 Billion dollar stimulus package helped to save 2 million jobs - this according to Obama and crew.  Let's face it, the money spent last year helped government employees hang onto their jobs for a time period, but that time period has elapsed and with no more Fed money, jobs are on the decline as school districts around the country lay off teachers and workers.  State governments are also finding a declining payroll is necessary as money is not available to keep people on staff.  State revenues across the country is continuing to decline and we're finding an interesting conundrum as governments look to generate revenue by taxing producers and non-producers alike.  Governments, outside of the Federal Government are also reducing spending in the face of reality.  A saving glitch that will keep unemployment numbers lower than where they should be is hiring for the Consensus.  With 1.2 million temporary jobs created, you can bet the Obama crew will cite the creation of 1.2 million jobs as a result of the stimulus package.

Following this years State of the Union speech and  Obama's declaration that job creation will have priority, we can now point to exactly no real progress on this all important issue.  Rather, Congress and the President seem laser focused on historic proportions to push through an "Insurance Reform" bill that will add to the cost of business and national debt while historically reducing job creation and stimulating failure.  Pelosi keeps citing the passage of the bill will be historic.  True, it will be an historic blunder that will cost this nation trillions of dollars, never mind the preliminary CBO data, and drive the economy to failure at an accelerated pace.  Today, CAT cited the bill will increase costs for them over 100 million dollars.  Consider the fact that Pelosi has cited the Democrats gave us Social Security and Medicare.  Ok, given that fact, where are this programs today? Are they solvent?  Imagine the current bill saving us money in the long run...wow, what a nightmare.

Obama referred to the CBO's preliminary report that suggests the current "Insurance Reform" bill will cut deficits.  Hogwash and shame on him for being disingenuous with us.  The bill will require that WE pay into it for years before we benefit from it, only in this way is it deficit reducing.  Imagine buying a new car and paying for it for 4 years before we can use it. 

Where are the Jobs, Mr. President?  Where is your promise to focus on job creation and helping small business?  Obama will refer to the "Insurance Reform" bill as helping small business and a recently passed "Hire" bill that does nothing to create jobs.  Amazingly enough Congress will put a title on a Bill expecting that title to resolve the problems its suppose to address and that tout it as a fix.  This "hire" bill will give tax credits, only after certain criteria are met, for businesses hiring unemployed persons.  Warren Buffett put it best when he said, I'd like to hire but not if they're just sitting around doing nothing (my paraphrase of his comments in a CNBC interview).

Deficit spending and a revision of economic fundamentals is the direction this current Congress and President are taking us.  "Government is the solution" and deficit spending will give us "sound economic footing", so says the President.  He can't create jobs and incentivize job creation, simply because he and his crew have no clue how.  All we can expect is "historic" legislation, "historic" events that will be the historic economic blunder of these US of America. 

Summary:  So, can the markets expand and the economy fail simultaneously?  Yes, we're seeing that happen as we speak (write).  Let's hope that we're wrong, but as the States go, so does the Union.



Disclosure: no positions