Wealth in America was in our homes

We won't be well till we get it back

     Whose Got A Centrifuge?
   The “Fair Weather-All Is Well” prognosticators are spin, spin, spinning away like a mama orb spider in a new location. In fact, if they get much more bad news to spin into good, they may need a centrifuge. The 2nd Quarter advance GDP report came out this morning only 0.10% lower than projected. However, the revised data for earlier periods presents some real cause for alarm. 1st Quarter GDP numbers were adjusted upward a full 1%. That made the 1st Quarter look pretty good. But boy, that switched the 2nd Quarter numbers from OK to bad, if not dismal. To add to the turmoil, the 2009 GDP was dropped from a -2.4% to a 2.6% loss, the 2008 was lowered from +0.4% to unchanged, and the 2007 was dropped 0.2%. All worse than we were told.

What this means is the economy has not been growing as fast (I use that term with trepidation) as claimed, and we are not in nearly as good shape as the Administration pundits claim. I question whether even this poor news will be enough to wake up the markets, and make the “rah, Rah, RAHers” understand that until the housing market quits bouncing along on the bottom (if it is even at the bottom) and the consumers leave the sidelines and start to spend, the economy is going nowhere. We need businesses to start creating jobs, but no businessperson in there right mind would go on a hiring binge, or even think about it with a future so clouded by tax increases, healthcare uncertainties, and banks that won’t lend. Why wont the banks lend? Because they don’t know what sucker punch the administration will throw at them next.

     The Gains Are Not Sustainable
   The gains the equity markets have been enjoying have been fueled by positive corporate earnings. Problem is those earnings have been predicated on massive cost cutting by companies. They’re reducing costs and slicing R & D budgets, preparing for the draconian increase in regulatory costs that will start hitting next year. 2010 hasn’t been fun, but 2011 just may be horrendous. Even Bernanke is pushing full recovery off till 2015 or 2016

     How Long Till Recovery?
   The last two years have seen America’s wealth peeled away like the skin of an onion. The constant flow of double-talk and even lies from inside the Beltway has both businesses and the consumer confused. Wealth in America was in our homes. This fact seems to have come as a surprise to the Beltway insiders and even the geniuses on Wall Street. It is going to take several years to recover from the excesses of the past few, and the government is doing everything in it’s power to push the date of full recovery farther down the time line.

That's My Take.
Dave Skibowski