2 + 2 = ?

A friend of mine cornered me in the kichen this week. He knows I follow thngs financial but I suspect he does not read my blog, though he knows I do it. So he asks me, where do I think the market is going. I tell him I have no idea, and that is the truth.

Now if he bothers to read this, he will get a bit more insight. I said no idea, but that was my thought in the short term, which is what I think he was fishing for. Beyond that, however, and I have a belief.

Let me start by saying 67-70% (I have seen this range cited) of the GDP has been consumer spending in the U.S. over the past few years. Before I go on, think a minute about how any economy can support itself off of its citizens buying stuff. Stop --- give yourself time to digest this and--- let me repeat: 67-70% of our GDP over the past several years has been us buying stuff for ourselves. PLEASE STOP AND THINK ABOUT THIS A MINUTE OR TWO!!!! Most of our economy is us buying stuff. And mostly we are buying from China and other coutries. So who exactly is paying us to buy this stuff from other coutries NOW? No one, I suspect!!

And now you know the problem. We are all in big debt. We are paying it down but it is still near record levels. So we have little to spend, especially with unemployment at high levels and housing near a bottom.

But let us look at the solution. Ideally, it would be something that creates more jobs domesticaly so that we could make money to buy all this crap we have been buying to prop up 70% of the GDP. Ideally it would provide long term benefits and wages to support the economy. Well, ideal is apparently not in the cards.

Nope, we are shooting for much less than ideal. We are spending tens of billions to prop up the A-Holes who got us here. We are spending very little so far to build new jobs or support companies that will do so.

Obama was the worst vote of my lifetime. I w0uld give up my card carrying Democrat status but for my repulsion for the other side. I truly hope he wakes up soon. He needs to listen to Volcker soon!!



















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Disclosures: None