Last week, with the passing of the healthcare bill, another crack in the foundation of the once sound US Economy occurred. Yet, almost no one noticed.
One or two cracks in a foundation won’t cause any immediate damage, but once there, these cracks typically are followed by others that are larger and appear more quickly than the first. After a period of time, the length of which depends on the external force being applied to the foundation, the foundation could begin to quickly deteriorate before finally collapsing from having ‘one crack too many’.
This past week, after the healthcare bill passed and was signed into law, evidence of another crack appeared. This from “Stock House” on March 29, 2010: Read more »
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I’ve written in past blog entries that I believe excess debt in the system to be deflationary. The fact is that in order for inflation to exist, folks have to be spending money, which they’re currently not from my perspective.
Consumers and businesses are opting instead to save and retire debt – only the US Government has remained in spending mode – ramping up the money that has been pumped into the economy over the past 18 – 20 months. And, despite all this spending, which is really just borrowing against future production, the economy continues to sputter, unemployment still dominates the headlines and consumers continue to hang onto their money.
I don’t expect that to change anytime soon. It takes time to ‘deleverage’, or pay down debt. As much as the Federal Reserve might try, the deflation monster is going to be tough to tame. This from Bloomberg last week (March 17, 2010) (emphasis mine): Read more »
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I wrote about this on January 28. Bottom line is that if the economy is recovering, tax revenues should be increasing, but that is not what’s happening. This from the March “Moving Markets” newsletter: (Note: For a free subscription to this monthly newsletter providing economic and market commentary, click on the free newsletter offer on the right hand side of this site)
Gary Shilling, in the March issue of his “Insight” newsletter discusses the difficulty that state and local governments are having with their budgets. With unemployment up, tax revenues are down but expenses haven’t followed. Shilling cites these facts: Read more »
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