CHESSNOID

We are definitely in a severe recession and each day seems to focus how bad it is and how worse it can become.  Daily news items now are increasing defaults in mortgages, auto loans, and credit cards, increasing unemployment, and continuing budget deficits. If we are to get out of this mess, then we must be honest about how we got here.

We talk about how bad it is now, but it has only been like this for the past 18 months or so.  Prior to that, anyone who talked about a housing bubble was laughed at.  Everyone was jumping on the real estate train to riches for the previous 5-6 years before the beginning of the recession.

That spending frenzy was brought about by mass consumer debt spending and artificially low rates.  Americans used home equity loans and credit cards to run up the prices of houses and unsupportable economic growth for over 5 years.  The recession is not a punishment for the irresponsible spending;  it is a part of the business cycle that corrects markets back into a balance.  In time this recession will reverse course and we will again experience growth or economic expansion.

I read the plans put out by Obama and his new administration and am afraid they will actually delay that day by making this economy worse with his plans.

ABC News:

Obama has made clear he is hoping to have Congress approve by mid-February a gigantic spending plan his advisers have indicated might cost between $675 billion and $775 billion. Others insist it may cost more.

Obama and his economic team have described it as a mix of tax breaks for businesses and the middle class, and robust spending for public works, energy, health care and education, which he estimates will save or create 3 million jobs over the next few years.

The most pointed criticism of the plan came from Democrats who objected to Obama’s plans to cut taxes for businesses and for middle class families.

They were especially critical of a proposed $3,000 tax credit for companies that hire or retrain workers, according to the Associated Press.

“If I’m a business person, it’s unlikely if you give me a several-thousand-dollar credit that I’m going to hire people if I can’t sell the products they’re producing,” said Sen. Kent Conrad, D-N.D., a member of the Senate Finance Committee after a briefing on the Obama proposal. “That to me is just misdirected.”

One of the major source of these bad economic times is that the government is spending money we don’t have. We are creating deficits that will be impossible to pay back. The solution for the Bush administration was to spend as much as we could and print out the necessary money to back that up. Unfortunately, the house of cards has brutally collapsed in the last 12 months.

I don’t understand why everyone thinks they can spend their way out of debt. It is no different for the federal deficit and if we don’t pay it down, the economy will continue to get worse. A great movie called I.O.U.S.A explains in detail in a non-partisan way that makes it understandable where our country is headed. Here is the link and video you can watch.

I was against the war in Iraq because I knew there were no WMDs. I was against the Bailouts (all $2 trillion worth of them) because I knew they were a moral hazard and it would not help the situation long term. In reality, Paulson begged for money for a specific reason and wound up funneling the funds elsewhere like the biggest bait and switch scam! There is Republican Congressman Ron Paul who happens to share my past and current views. He was against the war in Iraq and the Wall Street bailouts and voted against them.

He almost sounds like a broken record because he repeats the same thing consistently. Now that many of the things he predicted have come true, more people seem to be giving him media attention. This is Ron Paul’s latest video in regards to the trillion dollar deficit and possible dollar crisis.