May 26, 2011

Where is Bounce in Economy?

In order for a ball to bounce it needs some resilience. The same is true of an economy. The participants in the economy need to be willing to spend and in order for this to happen they need to feel good about the future, have confidence in their personal financial situation and have some cushion in case of the unexpected happening.

The American consumer is not ready to go back to the days of yesterday when they not only spent everything they earned, but borrowed against the future.

Well, the future is now. Their homes have dropped in value by 40%, as has commercial real estate. This converts into a substantial drop in their net worth.

Our citizens are doing the right thing; getting their financial house in order. This is the same for the government. Both entities, us citizens and our government, must do less consuming and more investing or savings. Now is not the time for consumption for the sake of consumption. The government needs to invest in high speed Internet, infrastructure, high speed rail where it makes sense, alternative energies and improving exports.

We also have to get our markets in order, We have fewer and fewer free markets. They are being taken over by oligopolies and democracy is slowly converting to an oligarchy where large corporations are taking over our government by the use of "campaign contributions". Some of us refer to them as bribes.

I have confidence we will wake up before it is too late, Do you?

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