16 Aug
2010
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Just how bad are things?

A few short months ago, the story in the business press was one of the “recovery.”  2Q GDP growth was estimated at 2.4%.   Inventories were rising with industrial production.  While unemployment remained stubbornly high, worker productivity was rising, but also plateauing, suggesting that new hiring would soon begin chipping away at the 9.6% rate.

Now that all seems like a distant memory.  The government has revised its paltry 2.4% annual growth rate to a pitiful 1.3%.  In truth, 2.4% was always disappointing.  Recessions are usually followed by 6%, 7%, even 8% growth.  America roared out of the recessions of the early 80s with 8.1% annualized growth in Q4 of ’81.  As economist Ron Ross writes in The American Spectator,

At 33 months it is already more than three times longer than the average length of the other ten recessions we’ve had since WWII. There are no clear signs it will be ending anytime soon. Glimmers of a recovery appear from time to time, but most indicators remain depressed and many are worsening. On balance, the outlook is more negative than positive. Not since the Great Depression have we had two consecutive years of unemployment in excess of nine percent.

Among the ominous signs that things are indeed getting worse:

1) First time jobless claims are at a five month high.
2) Foreclosure rates are increasing dramatically, rather than decreasing.
3) States are being bailed out by the Feds.
4) The housing market is a MESS, with home prices falling once again, foreclosure and delinquency rates increasing rather than decreasing, and the home builder index at a 17 month low.
5) On August 17th, almost 2 full years after the crash of September ’08, Congress is finally getting around to dealing with the 2 largest bankrupt companies in the world – Fannie Mae and Freddie Mac.
6) The Fed is monetizing government debt.  Foreign governments are no longer willing to subsidize our profligate government as they once were.  Our lenders are aware of the precarious situation of our national finances and not so eager to invest in a failing state.  Our government has turned to printing money to pay its bills; to issuing debt upon debt with the incredulous belief that the pyramid will not collapse.
7) Our political class has so disgusted our border control agency that they recently voted no confidence in their leadership.  When your constituents get feisty and recalcitrant, starting Tea Parties and whatnot, just import some new constituents!
8) Gold is back near all time highs, as people flee traditional investments (which are stagnant) and cash (as currencies deteriorate) for the age-tested commodity.

In spite of this overwhelmingly negatives news, we can count on the cadre of socialists in Washington to make things worse.  Soon likely to come:

1) Tax Hikes, as the Bush era tax cuts expire
2) Cap-and-Tax, potentially passed in the lame duck Congress
3) Full implementation of gov’t run healthcare and its correlated tax increases
4) Need to repay $13 trillion (and counting) in debt
5) Higher interest rates from the Fed.  One Federal Reserve official is already calling the unprecedented low rates a “dangerous gamble.”
6) New revenue generating taxes/regulations due from the Debt Commission.  VAT tax?  Death tax?  Carbon tax?  Food tax?

The outlook is grim.  If we had a balanced budget and not $13 trillion of debt we’d be entering choppy waters.  But instead we’re like a bankrupt family, who instead of cutting their losses, implementing an austerity program, and buying only essentials, has decided to take out more and more loans.  But countries, unlike families, have no recourse to bankruptcy laws.  States that go bankrupt erupt in chaos as life savings are wiped out, entire industries collapse, and lawlessness prevails.  The economic collapse of the United States would almost certainly result in armies crossing borders.

Who knows how this will end?  What sort of sick legislators and leaders do this to their country?

Our best shot at avoiding calamity comes this November. We must clean house and elect leaders who will have the courage to reverse course, and dramatically.  We must deal without government charity until we can again afford it.  Unsustainable businesses must liquidate and begin to rebuild.  The wealth must again be allocated to those who use it responsibly, productively.  All this crap about taxing carbon must end before we chase away all industrial manufacturing.  Taxes must be cut; spending cut even more.  We should seriously begin to re-evaluate the wisdom of fiat money and monetary tinkering, and begin looking toward re-establishing a gold standard to force discipline on the political class.

In less dire times, political parties argue about relatively inconsequential matters – nitty-gritty specifics of environmental and financial regulation, so-called “class” incidence of tax burden, legalization same-sex unions, professed belief or non-belief in creationism/evolution, views on long-ended conflicts and court battles, support/non-support of the self-described feminist mindset.  These are minority interests by almost by definition.  Liberty, and the need to remain free of crippling debt and a collapsing national currency, could not have a larger audience.  It is imperative for everybody to temporarily put aside their parochial interests and to focus on the perilous situation at hand.

This is not a time to quibble.  Vote for candidates who recognize the severity of the debt/economic problem and who will vote to liberate, rather than strangle, the American people.

DISCLAIMER: This post and the contents thereof are the views of only the author identified immediately above and do not necessarily represent the views of the New York Young Republican Club (the "NYYRC"), its officers or its members. The NYYRC expressly disclaims responsibility for the contents thereof and by its charter documents may not, and does not, endorse any candidate for any office, except in a general election.

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