The Real Economy

Is the economy really recovering? Most people would say yes, but slowly. We have positive GDP, but what does that mean to the average person? The words “double dip” have been used a lot, but what are the odds of a double dip? Extremely low statistically you would be told by most economists, but what if we never really got out of the recession, then it would not be a double dip. The bailouts have bought time, but not stopped the underlying problems with the economy. One of the big outstanding issues is that part of the bailouts were for the states. That was a one time bailout right? I doubt it. California, Massachusetts, New York and a number of other states are in deep. Local and state layoffs are happening and will continue to happen as their budgets get squeezed. We are not out of the recession, we just ran up our last credit card and there is no more room on any of the other cards. Will China and the rest of the world give us another one to use? Sooner or later we will have to pay or our kids will pay. Many people have finally woken up to the danger we are all in. The Debt is finally getting noticed and the consequences are starting to be realized. We are broke. Many parts of the Country are in for a rude awakening. While California, Florida, Nevada and Arizona have seen huge declines in property value, some areas like the North East have held up better. This will not last. The North East, Texas and Central States will see a decline in many areas of the economy for a long time. Perception is reality until reality becomes the perception. Many still have the delusion that their homes are worth much more and since so many think that way, it will work, but as the economy fails further… and it will, many will be caught off guard thinking they bought at the bottom only to find out that the bottom has fallen out. We fell off a cliff and caught a branch on the way down. There is no way we can climb back up and we can’t hold on forever. The real question is what will China do when we can’t pay up? If the Fed hyper inflates our way out of this, many will see their savings wiped out and chaos in the streets as people can’t afford to keep up with rising food and gas costs.  There is always hope. This is a confidence game. If a Ronald Reagan steps up, there may be a chance to get out of this, but more than likely we have YEARS of trouble ahead.