Although the U.S. economy is showing some signs of stabilization you have to wonder is it real or just another temporary lull in the downward slide?
What have we done so far?
- Three-and-a-quarter percentage points worth of Federal Reserve interest rate cuts.
- A “Stimulus Package” that put some tax dollars in the hands of consumers.
- The Housing Rescue Initiative
- The recent bailout of Fannie Mae and Freddie Mac.
Certainly the government has been creative, but what options do we have left? I suspect not many. So what areas do we need to focus on immediately following the election? Here is my opinion…
No Rate Cuts: The Fed cannot continue to lower rates unless they truly feel the economy has stabilized. I think some (not all) of the current issues are a result of the Fed lowering rates too quickly in a short time frame. It is possible the Fed could lower rates again but it is also unlikely for two reasons. One, typically they will not just prior to an election and secondly, they are running out of room.
Real Estate Needs to Stabilize: I think we are just about at the bottom of the Real Estate slide (or at least I really hope we are). There was no way around it. Values went up to quickly and people purchased property based on speculation and greed. Consumers took outrageous loans with the expectation the value would increase. When the music stopped the last one holding the house lost. It appears, for the most part, values have settled back in at an acceptable level.
Real Tax Incentives: Tax incentives need to be long term, not lump sum. The results of a one-shot windfall, such as the tax checks people received this summer, are short lived. As I have said before I suspect the money disappeared quickly into flat screen televisions and gas tanks – but nothing lasting. Two months later you are in the same position you were before. Lowing taxes over the long haul will provide money each month (in the form of more take-home pay). These smaller amounts will bleed out into the economy and help stabilize the spending.
Stop the Bleeding: The U.S. Deficit must be addressed. We simply cannot allow our national debt to increase year after year. We need to create trade agreements that encourage the use of our products – not enter in to arrangements where we allow trade freely into our county but the reciprocating county overly taxes our goods.
I believe we are at a pivotal point – a crossroads if you will. In one direction a continued slide and increased dependence on foreign money. The other road leads to a recovering economy and self-sufficiency for the U.S.
We only get to pick one road – lets make some good choices.
Fine, I suppose this is where you look for some witty insights to my mind. A "bio" of sorts. Here is the deal... I ride motorcycles, smoke cigars, golf, kayak, fly, race my car through the mountains, write (a lot), and travel extensively. I am almost old enough not to care what other people think about me...almost. ~Godfadr
We are at a crossroads. For real change, vote for Obama.