The 7 Deadly (Economic) Sins Constraining a Recovery Before The Fiscal Abyss

Confounded Interest ^ | 12/13/2012 | Anthony B. Sanders

[whitedog57]

Over the past two days, the yield on the Treasury 10 year rose from 1.6451% to 1.7213%, about 7.6 basis points. Somehow, investors didn’t get The Fed’s memo about more monetary easing.

The recovery from the recession (which ended June 2009 according to the National Bureau of Economic Research) has been slower than molasses.

1. U6 Unemployment/Underemployment remains at daunting levels.

2. Salaries and Wages (divided by GDP) continue to fall.

3. The M1 Money Multiplier seems to have leveled out at a low altitude signifying that banks are not lending as much as previously.

4. The M2 Money Velocity is falling faster than the coyote in the roadrunner cartoons.

5. Outstanding mortgage debt continues to decline from its peak in June 2008.

6. Consumer confidence (Bloomberg) has not improved about -30 since the recession ended in June 2009.

7. The Federal debt has expanded by 48.2% since 2008, but real GDP has only risen by 5.2% since 2008.

But on the good news front, house prices have seemingly stabilized. At least until we fall into the fiscal abyss.

And effective rent on commercial real estate is recovering from its recent nadir in 2010 and begun climbing … again.

In summary, it is still a fragile recovery. Hence the wisdom of raising taxes on the rich (since there is so little there anyway) puzzles me. And don’t forget the 10+ Affordable Health Care taxes that kick in on January 1, not to mention whatever tax increases President Obama and House Speaker Boehner want to stick in our Christmas stockings (better known as lumps of coal).

I wish you a Merry Christmas and Happy Holiday season.

[whitedog57]

The seven deadly sins. Obama should have been one of them.

[Uncle Miltie]

Those aren’t sins. They are symptoms of the disease contracted after the sins were committed.

The sins are more like:

1) Excessive Government Spending.
2) Excessive Government Intervention in Markets (see 0bamaCare, bureaucracy generally).
3) Excessive money printing (Fire Bernanke!)
4) Rewarding people for failure (Welfare, 99 Weeks unemployment, 0bamaphones, Medicaid, it goes on and on)
5) Punishing people for success (tax increases for success)
6) Unfunded liabilities forever (Ponzi schemes like Soc Sec and Medicare)
7) A remarkably unskilled populace (Thanks, Teachers’ Unions!)

Don’t go look at symptoms. Go look at root causes.