Yesterday’s entry turned out to be quite a long dissertation on signs in the economy indicating things aren’t nearly as stable or encouraging as many in the Dem party, and the administration, would like us to believe. The writing turned out to be much longer than I expected, but was necessary, I think, to make my point.
And now today, although I’ve been avoiding mentioning the “sequester” because I think it’s a farce, a couple of articles on the subject serve to underline my ongoing thoughts that when it comes to the economy this particular batch of Dem’s haven’t the slightest clue as to what they’re doing.
My first input comes from Politicker’s, Colin Campbell, via Drudge in a story headlined, “Mayor Bloomberg: Don’t Panic About the Sequester.”
On his weekly WOR radio show with John Gambling, the mayor said about the sequester's fiscal threat, “It depends on how long. If it lasts a few weeks, no. If it does, yeah. We get 10 or 12 percent of our budget from the federal government, not all of that is going to be cut back, but there would be effects–not good effects. But in the context of, ‘Is anything going to change tomorrow? Are we going to run out of money tomorrow?’ I’m sure I’ll get that question at the [next] press conference. No.”
But his next commentary is where I believe he made the most powerful point: “We are spending money we don’t have. It’s not like your household. In your household, people are saying, ‘Oh, you can’t spend money you don’t have.’ That is true for your household because nobody is going to lend you an infinite amount of money. When it comes to the United States federal government, people do seem willing to lend us an infinite amount of money. … Our debt is so big and so many people own it that it’s preposterous to think that they would stop selling us more. It’s the old story: If you owe the bank $50,000, you got a problem. If you owe the bank $50 million, they got a problem. And that’s a problem for the lenders. They can’t stop lending us more money.”
However, although I certainly concur that our lenders are stuck and its highly unlikely, if not impossible, that they’d force a default, there still comes a time when overwhelming debt and demands of repayment break the borrower’s financial back. And I suspect it’s that expectation that caused Buffet, Paulson and Soros to begin backing away from U.S. investments. Because they know the entire economy will sink unless the debt's addressed and corrected.
Then, following on to this dismal projection, another piece, this one by Michelle Jamrisko, of Bloomberg.com via Drudge regards the same topic, but from a different direction.
“Consumer spending in the U.S. rose in January even as incomes dropped by the most in 20 years, showing households were weathering the payroll-tax increase by socking away less money in the bank.
The slump in incomes in January was the biggest since January 1993 and followed a 2.6 percent jump in December.
The expiration of the payroll tax cut in January, coupled with climbing gasoline prices, are trimming discretionary income and may damp household purchases in the first quarter.”
And here’s what I think is most relevant about this one. “Congress and President Barack Obama allowed the payroll tax to return to its 2010 level of 6.2 percent from 4.2 percent at the start of the year, which means an American who earns $50,000 is taking home about $83 less a month.
The average price of a gallon of regular gasoline at the pump rose to $3.78 on Feb. 27, little changed from the previous day’s rate that was the highest in more than four months, according to AAA, the biggest U.S. motoring group.”
So now, if you put the three preceding items together, looming fiscal strangulation due to debt, lower take-home pay reducing consumer spending, the economy's backbone, along with suspicions of the nation’s financial weakness devaluing securities of major corporations in the eyes of extremely savvy investors, you don’t get a very promising picture.
However, as I’ve been mentioning for quite some time now, none of the preceding is at all surprising. Because it’s exactly what should be expected when the nation’s not being led in any way shape or form, and the guy at the top is totally clueless about anything other than making meaningless speeches about fiscal issues he doesn't understand whatsoever.
That’s it for today folks.
Adios
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