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Archive for the ‘Economy’ Category

So When Do The Jobs Start?

Posted by Billy On August - 3 - 2011

After thirty months in office, president Obama is saying that he is focused on creating jobs in America. The odd thing about that is the fact that he’s been saying that since he was on the campaign trail. So what’s different now than three years ago?

The whole idea (according to Obama) of getting the debt ceiling raised was to stop the country from defaulting on it’s loans as well as creating more jobs in this country. I find that hard to believe since one of the first things he did when he was sworn into office was to get an almost $1 trillion stimulus bill passed to do the same thing. Yes I know he tells us that the stimulus bill created or saved two million jobs. Analysts have looked into the facts of jobs created from the stimulus and it’s way lower than what the Obama administration has been reporting.

As you can see the stimulus and anything else that the administration is doing hasn’t created any jobs or even turn this economy around. It’s been reported that economic growth in America for the first half of the year (2011) is a staggering less than 1%. So how is giving the federal government any more money going to help?

The federal Reserve is now thinking of what they can do to stimulate the economy and get the country back on it’s feet. All I have to say about that is they are part of the reason why we’re in this mess. Manipulating the currency and controlling inflation artificially for the last hundred years hasn’t helped, so where should we think they’ll do anything now in the best interest of America. Chairman Ben Bernanke has touch base on starting a third round of bond purchases. The federal Reserve can also cut the interest rate for banks that hold excessive reserves as well as pledging to hold its assets at a record high and interest rates at record lows for a longer period, Bernanke stated.

As a nation, the only way we can create jobs and to get the economy moving again is to stop Washington from continuing has they have for many years. We need to cut back on government spending. When I say cut spending, I don’t mean cut Social Security or Medicare. Those programs are not the main problem. Yes they both have issues within the systems but reform is much different than cutting. Politicians are too concerned for their contributors as well as their own political careers. Doing the right thing in Washington would be political suicide. So if we want to save this country, we must remove each and every one of the politicians within the Beltway. Of course it will take years to do so since not all of them are up for re-election in 2012. If they’ve been in office for two terms, it’s time for them to move out of the way and let someone else try something else, or at least improve some of the current policies. Once we get Congress and the president to stop their excessive spending and let the markets correct themselves, we will continue to be in the same position.

Deal Has Been Made, But At What Cost?

Posted by Billy On August - 2 - 2011

A deal has been made in Washington in regards to the debt ceiling. As I expected, Congress has passed a bill in which it will allow raising the debt ceiling. Something I felt that shouldn’t have been done, but would be needed in this present economy. Now at what cost will it be for the American people?

Economist say that it will probably have little (if any) impact on the economy. The reason for that is, none of the cuts come until 2014. Many economists and the Federal Reserve Chairman Bernanke advised Congress that cutting too much too soon could hurt the weak economy. They also recommended that reduced spending over the long term would help the economy.

According to the deal, discretionary spending would be cut $21 billion next year and $42 billion in 2013. Social Security Medicare and Medicaid will not be touched, as the more “politically aware” knew would happen. It was a scare tactic all along. A political tool that the politicians, both Republicans and Democrats alike, use against the other. What kills me is the fact that these cuts will only add up to about 0.2% of the entire economy’s output for that time period.

The rest of the cuts will come over a period of 10 years (why always 10?). The first phase will reduce spending by $917 billion and the second phase will add another $1.5 trillion which will be decided by a congressional committee. So let’s create another committee to look into something else the government screwed up on.

The politicians we have in Washington are trying to “fix” the problem in which they caused in the first place. Let’s face it, we are going to face the pain one day for the actions of our past. We need to cut the spending now, not over a period of 10 years. Don’t get me wrong, I know it shouldn’t be immediately. No matter what they (politicians) tell us I know the economy is struggling and as for a recovery, the past two years, the federal government has been hindering it from really happening.

I (like many of you) haven’t read this bill/deal/sellout yet, but I’m sure there’s some scary stuff in it. One thing stated in the deal is that if lawmakers fail to reach a deal on the second round of cuts, The Pentagon’s budget will automatically be cut by $500 billion.

All I can say is that this deal made it possible for all of the politicians to pass this issue off once again until after another election. OK, they avoided default, but let’s be for real, the credit agencies can still go ahead and down grade the United States.

Which in turn will cause interest rates to go up for everyone.

That is what the cost will be for the American people. Higher rates in a time when the economy is in the toilet (and will remain for some time), unemployment is at 9.2% (until the July report comes out on Friday) and the financial future of this country is still unknown.

The Ticking Debt Ceiling Time Bomb

Posted by Billy On July - 26 - 2011

With only a week to go before the August 2nd debt ceiling deadline, nether the Democrats or the Republicans can come to some sort of an agreement as to what to do to save the country from defaulting on it’s debt. Both side are more concerned with next year’s election than actually doing what is necessary to cut the deficit.

There are billions of dollars being spent on programs that do nothing to increase jobs in America or to raise GDP. Instead of talking about those items, both parties are using scare tactics about Social Security and Medicare. Two things that will get the American voter engaged in doing something next year at the booth.

At the same time, the Democrats are feeling the pressure from the labor unions telling the Dems to stand firm on Social Security and Medicare. While I strongly believe in keeping the benefits of the two programs in place, there are other areas of the programs that can be cut. Such as administration costs of the program. We all know that government offices have to many employees in each of the different offices. They can not tell us that there is no way to cut at least 15-20% of staff within each of the programs. Most of the system is automated and to have so many employees in the system is taxing on the program itself.

The federal government has known about this issue for months now and have touched on the subject, but they wait until now to really get involved in it. Why is it that they wait until the last minute to do something? It’s because with the pressure of time, they can push the bill through quickly and claim later on that they didn’t realize what was in the bill since they didn’t get adequate amount of time to go through it. Of course the American people have short-term memory and forget that they waited and that’s what the politicians hope for, so they can do it again.

So as we see the politicians are trying to draft anything to get a majority of the politicians to vote yes on extending the debt. The Republicans in the House of Representatives have unveiled a two-tier plan that will cut $1.2 trillion over a ten year period and will only raise the debt ceiling for a few months. Obama has already expressed that he will not sign it because it’s a temporary fix.

Meanwhile the Democrats have presented their own plan to cut @2.7 trillion over the next ten years, but with a debt limit hike that will carry it through the 2012 elections. An election where Obama and many lawmakers will be up for re-election.

As we see over the last decade that the situation is getting worse as in the politicians doing what is necessary to get the fiscal condition of this country back in order. It’s always a temporary fix and not a permanent one. Each time the debt ceiling has come into play, politicians never cut the spending that is needed, instead they draft plans that cut spending in the future, not in the present. What happens is the cuts never come, but the spending and the raising of taxes always do.

We are coming to the end of the fuse and if we, the American people don’t do something to change the mindset of Washington, we will be finished sooner than later. This has gone on for way to long and it will come to an end one way or another.

The Economy Is Still In Danger

Posted by Billy On July - 22 - 2011

Just a little over two years ago, president Obama made the announcement that we are in the recovery stage of the economy. The unemployment rate in June 2009, was 9.5%. Two years later, we are still at 9.2% with no end in sight. As this goes on, many American families are struggling to make ends meet. Well, just like our present federal government, they are turning to their credit cards.

According to First Data Corp.’s (the largest credit card processor) SpendTrend report, which was released this month, shows an ever increasing amount of credit card uses by consumers paying for basic necessities since salary increases are not keeping up with raising food and gasoline prices. Senior vice president at First Data, Silvio Tavares expressed that it may represent the increasing cost of fuel.

Tavares is quoted “Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food.” He continued, “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”

The cost of food and gasoline are rising and leaving American less money to spend on discretionary items. Tavares said, Household spending accounts for about 70 percent of the world’s largest economy.
While he commented about this is slowing the pace of the economy, I say that we aren’t in the recovery stage yet. How can you slow something down that doesn’t exist?

In the report it shows the increase across the board in regards to credit card usage. Gasoline purchases, up 39% year-over-year ending June 2011 and food shopping increase 5%.

Figures from the Commerce Department show an After-tax income adjusted for inflation fell 0.1%. According the the Labor Department, energy prices climbed 8.2% and food 2% during the same time. That is a major swing in difference for low to middle income families.

We are not out of the woods yet, so for those of you that are feeling the pinch already, work on your budget since I feel that Congress won’t work on their budget, we will continue to struggle a little more. Those who think this increase usage is a sign of consumer confidence coming back, you might want to think again.