The 64 Million Dollar Question.

Everyone is searching for the answer to the sixty-four thousand million billion trillion dollar question: Are we there yet? The bottom that is? It seems as though we have been riding this roller coaster down for a long, long time, but we are noting some indicators that show a slight improvement, as though we have finally hit bottom and are starting the climb up and out of the abyss. Extreme care is required, especially from the #%@!!*&??!s (you supply the word) in Washington NOT to stall the engine and send us back down even deeper, Heaven forbid.

On the good news side, from February to April, non public payrolls rose more than 466,000, or at an annual rate fo almost 1 3/4%- the best in three years. Private payrolls are the best indicator of the type of employment that counts. We all know that Governmental payrolls are growing- they’ve hardly slowed down since the start of the recession. No, private payrolls are the ones to watch. They’re the ones paid by services providers, manufacturers, wholesalers and retailers; you and me. Of course we pay the governmental workers too, but that’s done with confiscated funds, if you know what I mean. Those private payrolls reached some eight million by the first of May, still considerably below their peak at the end of 2007, and they need to increase faster, ‘cause at the present rate we won’t reach 2007’s mark for another for or five years, but at least the direction is good. If the economy can continue to create private jobs, we should see a reduction in the unemployment rate. That will get the media excited, and their spreading something besides doom and gloom should push things along even faster.

Housing inventory is still a heavy drag on the economy. Even though building permits are up considerably from last year, over 16%; last year’s were so low, that contractors and the building trades are still looking up from a pretty deep hole. If the banks would start actually lending some money the commercial construction business could take off. Apartments are in demand in many locales, but the funds to build them are hard to come by. Home sales are dropping again, ostensibly because the Government has withdrawn the eight grand bonus for buying a house. We sincerely think the longer the government stays in the game trying to help, the longer it will take to put the whole sordid mess behind us. The continuation of the government to pressuring lenders and the GSEs to approve unqualified purchasers into home ownership can only extend and exacerbate the problem. The unsold inventory needs to be reduces, but without artificial means.

The Fed, by keeping the discount rates next to nil, is keeping the resurgence going. The FOMC is careful not to say all is well, because it isn’t. They also have to be careful not to say too much that is derogatory, because it wouldn’t take much to start the trend downward again. They will keep the rates low, and not withdraw their monetary stimulus. It is much, much easier to deal with some inflation, than it is to try to restart another failed economy.

There are some wild cards out there most of which we have little or no control over. The European Union is saddled with a number of it’s constituent States/Countries- namely Greece, Ireland, Italy, Portugal, and Spain- who, like the good old U.S. have been trying to borrow themselves into prosperity. One or more of these E.U. States could go BK, most likely Greece. Interesting that we all the while we have been hearing how upside down Greece is, few people know that California is far worse, some four times farther in the hole than Greece. And, there are a whole bunch of U.S. States who could go BK at any time. If the FED and the GOV tries to buy everyone out of trouble, in 2050 we’ll be using wheel borrows to carry enough cash to buy a loaf of bread.

The world, the country, the people need to regain their fiscal sanity. Incomes and costs don’t have to keep escalating. You can’t borrow your way to prosperity. The Beanstalk does not grow to the moon! All those clichés have meaning, and that meaning is this; don’t wait for the government to fix the problem, they are the problem. We all should know what the right thing to do is. If you don’t, read “The 5,000 year leap”, by W. Cleon Skousen. We had it right once. If we put our collective minds to the problem, we can get it right again.