Transition (August 17, 2004).
Last night the in-laws and some of their children were over at our place for dinner. At the conclusion, my spouse made the request that we declare where we each are at present, in our lives. When it was my turn to speak, I withheld. I said that it had always been my goal to live a life of vitality; that is, to be vital. I also said that I had designed my life to permit me to live that way. I then went on to describe some of the things I want to do: learn Spanish fluently, and take up welding, perhaps to build motorcycles. However, I also said I am not willing to do what everybody else is doing (presently, motorcycle building families is a topic on several cable TV channels).
But I didn’t say the core things. Why? Well, I’m in the process of re-evaluating my life. I do that from time to time. I have worked myself into a kind of “lull” in my business and I am in a kind of “maintenance” mode; I have no pressing outside commitments; my youngest child is just about complete with college (he would have been complete but for a breakdown which caused him to postpone graduation) and I have some assets, have a program and I and am on track.
So what are the core things I didn't reveal at the conclusion of dinner? Well, the big question is, what am I to do with the next 20 years of my life? I have a “good” 20 years or so remaining, God willing and I am beginning to look at “phasing myself out of business”. I am planning on working full time for another four years and then moving into a “part time” mode for another four years. That will get me to the pleasant age of 66. However, that brings up the question of “For what future endeavor am I phasing myself out? “or to put it succinctly, “what am I going to do with the rest of my life?”
I have begun to move in my stated direction; however, what then remains is the question “what exactly am I to do to remain vital?”
I have been fortunate to have been born at the end of the Industrial Age and with a skill set that made me useful. I also was fortunate to have had an education, both formal and informal, which provided me with insights and tools to pursue a reasonable life.
Well, here I am having celebrated my 58th birthday. The world is changing, and as I like to say, “The only constant is change”. Now don’t get me wrong, I have never really liked being a part of change. I am inherently lazy. I don’t like to take risks, I don’t like to work hard and I don’t like unknowns.
My customer base is changing (shrinking??) at what appears to be an increasing rate. That's sort of aligned with my intentions. I have achieved a modest success at this point in my life. The children have completed or nearly completed college. The youngest will probably complete his BS degree in December 2004.
This affords me an opportunity to look at what is next. That’s somewhat unsettling. I never did like this kind of introspection and reflection. Why? Well, I’ll probably get some insights into what makes me tick and will be compelled to make some declaration or other about the direction my life is to take. And then off I will go!
Monday, November 17, 2008
Going Back to June 2004
Back in June 2004 I wrote this:
"I am certain that, given enough time, our brilliant political leaders will screw this up, just as they have all the other social engineering initiatives. (For example, Dick Daley was backpedaling the "Service Economy" at the National Design Engineering and Manufacturing Show, and gave a keynote rally about manufacturing in the USA. Unfortunately, all the exhibitors at the predominant "Southeast Asia", "China", and "Mexico" pavilions, could have cared less!).
"I will be given a permanent "vacation". I just hope I am able to salt enough away to live on while on my furlough and pay for my insurance and all the benefits I will not be entitled to while working during my golden years at Wal-mart. Who knows, the best is yet to come! An alternative from the "If you can’t lick them, join them" Department: become a politician. Just one term in Congress and I get retirement benefits for life, which can't be raided, as can the Social Security "tax" fund".
"I am certain that, given enough time, our brilliant political leaders will screw this up, just as they have all the other social engineering initiatives. (For example, Dick Daley was backpedaling the "Service Economy" at the National Design Engineering and Manufacturing Show, and gave a keynote rally about manufacturing in the USA. Unfortunately, all the exhibitors at the predominant "Southeast Asia", "China", and "Mexico" pavilions, could have cared less!).
"I will be given a permanent "vacation". I just hope I am able to salt enough away to live on while on my furlough and pay for my insurance and all the benefits I will not be entitled to while working during my golden years at Wal-mart. Who knows, the best is yet to come! An alternative from the "If you can’t lick them, join them" Department: become a politician. Just one term in Congress and I get retirement benefits for life, which can't be raided, as can the Social Security "tax" fund".
Tuesday, November 11, 2008
Some Recent Data on the Economy and Housing Market
Note: Updates to the information presented here, are at the end of this post.
As a small business owner, I ongoingly do numerous assessments, for my own use, of projected business and related factors. This includes the status of the economy. The ultimate goal is to project and predict the rise or fall in business orders. This is not simply an exercise. It is vitally important to the well being of my business. I have decided share some of the data pertaining to the economy at large, my thought processes and general conclusions on this blog.
Economic statistics have been released as of September 30, the end of the 3rd quarter of calendar year 2008. Additional data is being released by various agencies and businesses related to the current banking and mortgage "crisis" which is morphing into a debt crisis, and pertaining to the U.S. economy. The popular media also issues articles in a more or less continuous stream. These are not always reliable, and as this was a presidential election year, I concluded that I must be more cautious than usual in my use of any data gleaned from the popular press.
See the end of this blog for comments added November 13 and later.
Summary
Based on the data available, it is my current opinion that on our present course, the economic "decline" could possibly reach its bottom as early as late 2009 or early in 2010. This is because of the continued deterioration of housing prices and resetting mortgages accompanied by rising foreclosures and the consequences of the stock market panic which as of October 30, 2008 had eliminated about $3 trillion in wealth. Retail, usually a buffer for jobs as in recent recessions, is also rapidly deteriorating. The International Monetary Fund today (Nov. 6, 2008) forecasts "only" a -0.7% contraction in the U.S. economic output in 2009. I consider a -1.0% contraction a possibility.
Positives
Positive factors include the conclusion of a torturous presidential election process, additional government stimulus, government intervention in failing mortgages, and falling energy prices, most notably oil. Retirees and others drawing social security benefits will receive a 5.8% increase in those benefits for 2009.
Other energy costs are also falling. Coal accounts for 92% of the electrical energy generated from combustible fuel in the U.S. Coal had risen 11% in the first 6 months of 2008, as compared to prices for all of 2007, but has recently moderated in price. Heating oil, which according to the EIA is used by 7% of U.S. households, was projected to rise in price by 23% this winter, but is now also expected to moderate and in New York state is currently about 1% above the price of one year ago.
With the IMF projection of possible simultaneous recessions in the U.S., Europe and Japan and also slowing growth in China, oil prices might stay at a low level longer than expected, perhaps until the middle of 2009. However, it is difficult to rely on that without additional consumptive data, specifics on OPEC production cuts, and details on the slowing Chinese economy . Recently, oil accounted for about two-thirds of the trade deficit. Falling oil prices and reduced U.S. demand should reduce the trade deficit. We'll know in November when data is released.
On a personal note, I use natural gas heating and I am on a "budget" plan with the local utility. Recently, my budget payment per month was cut in half! This was because in 2008 I achieved a sufficiently positive balance and the utility is projecting stable or falling prices. If that is indicative of what many others are experiencing, this provides a non-trivial injection into the pocket books of many consumers.
Negatives
Negative factors include overall negativity, falling confidence and pessimism. Foremost tangible factor is the astonishing deterioration in housing. Mortgages were projected to continue to reset for another five years.. However, the triggers built into these mortgages have accelerated the reset process, contributing to the current housing default rate. This should also accelerate the cleansing of these mortgages. The CMRI, an index of foreclosure risk, is predicted to continue to increase until December 2009 or January 2010. The consumer savings rate, while a positive, is also a negative as it removes government stimulus from the economy. Oil is currently falling in price, but will probably stabilize and could begin rising in Q2 of 2009. The losses sustained by owners of stocks of US corporations in 2008 are, I understand, greater than $5 trillion! If the stock market does not bottom out and stabilize, further panic selling may occur. This opens the door for further purchase of U.S. assets by foreign sovereign wealth funds. Consistently positive stock market data will contribute to improved optimism.
The government programs applied to date to address the credit and banking "crisis" have not been applied consistently. Congress would prefer to debate than to act. The Federal Reserve and Treasury departments are in a "rapid fire" reactionary state. Until the pace of the problems decelerates, this will probably continue and with it, more significant bad news will surface.
Consumer spending will continue to fall if for no other reason than the fact that with tightening credit, consumers will be forced to save first, and then spend. Even K-Mart is dusting off layaway programs for Christmas!
Unknowns
Factors which cannot be easily gauged include the full impact of current and future, unknown government stimulus packages. Stimulus to date has been "oblique", by which I mean it has been applied in a manner which does not always permit it to reach the economy at large. Nor can I gauge the status of the "unwinding" of debt, the full consequences of the restriction of credit to the consumer, and the savings rate by the consumer and consequences thereof. The negative savings rate became a positive one last quarter. At an annual rate, the BEA indicated that the consumer was saving about $297 billion. Link: Good News About Consumer Saving Also unknown, the current condition of the consumer as related to their optimism or pessimism. Pessimism that results in the saving of stimulus checks will further impede economic progress and short circuit the process. At present, we are as a society very pessimistic. I cannot gauge where the consumer will be in 6 months.
"Deleveraging" or the unwinding of debt, continues. This buzzword refers to homeowners, banks, companies and hedge funds, etc. selling assets so as to reduce outstanding debt. In some cases, this also meant selling currency as well as other assets to raise local cash. Apparently, many borrowings were in U.S. dollars or Japanese yen, due to low interest rates. The reversal of this borrowing has been used to explain why these two currencies soared. Unfortunately, this process is still going on, and it is said that hedge funds, as of October 10, were perhaps about 66% through their liquidation process.
The consumer has been, according to data, the driver in the U.S. economy. As the consumer withdraws, the economy contracts. So today we have a recession. How far will the consumer withdraw, and for how long?
If retail has a Christmas season as is currently predicted, and continues to cut its workforce, how long will it take for such businesses to begin the rehiring process?
It was predicted and there are statistics that support the notion that more people eligible for social security benefits would prefer to remain employed in the face of the uncertainty in the economy. This would provide some relief to government deficits. However, layoffs in sectors such as retail may force some of these into retirement. What will be the effect of increasing social securities recipients?
General Information
According to many "experts", the economy will not stabilize until housing has stabilized. If this is true, then the contraction could continue for another 18 months. That would yield a bottoming sometime after March 2010, rather than mid- 2009 as many "experts" are predicting. [Cautionary note: these same "experts" for the most part either missed or understated the depth and breadth of the current problem.]
The U.S. consumer who had been the driving force of the modest economic expansion since 2002, is now completely hobbled. The mild expansion of the last 6 years was fueled almost entirely by artificially inexpensive credit, which is no longer available to the consumer, coupled to a negative savings rate. Retirees, who if prudent, draw down their savings by 4% per year or less, are in a belt tightening situation as confidence and portfolios have been eroded, and yields on CDs are again falling. The losses in the stock and bond markets have reduced the value of these assets, and the amounts that retirees can safely withdraw by nearly 40% or in some cases, by more. The large increase in Social Security benefits (5.8%) will help, but will not restore lost savings or confidence.
I do have decreasing confidence in all predictions and anticipations which extend beyond six months into the future. That is because it is so difficult to determine exactly where the U.S. economy will be at that time. I don't think anyone can predict the effectiveness of U.S. policy and the bailout and "TARP" programs, the ultimate results of resetting loans on consumers and the economy at large. I do think that most economists and experts have understated the enormity of the current problems and as a consequence, have also overstated the rapidity by which the economy will recover. However, this is an incredible and resilient economy with fantastic companies and individuals. If we can prevent the politicians from doing what they do best, which is not very good, we have tremendous opportunities ahead. This is an opportunity to remake or at least, reconfigure the U.S. economy and break the various gridlocks in it. However, the U.S. Congress will continue to be a serious impediment to this.
I'll re-evaluate the economy on a quarterly basis. More frequent analysis is, I think, unwarranted, as the economy and the credit and housing fueled "crisis" go through their throes and gradually unwind. In truth, with the change to the Obama Presidency and so on, it may be two quarters, or spring 2009 before we can again gauge the depth and breadth of the economic quagmire, and also gauge the results of the various stimulus packages.
Other questions and issues
Other things to consider: Deficits for 2008 and 2009 may reach $1.5 trillion this year and $2.0 trillion next year. Depending upon how this money is spent, it may prevent a deep recession. If spent on infrastructure, it can make a lasting contribution. If not, it will simply be another of many debts passed to our children.
As a final note, it is my understanding that a lower trade deficit also means fewer dollars to buy U.S. debt. That debt as I have already stated, is mushrooming. So who will buy the debt? There are a few choices: the Federal Reserve can monetize it or can raise interest rates to attract capital from overseas. Or if U.S. citizens have sufficient savings, we can purchase it. What effect will possibly lower trade deficits (short term) and higher U.S. debt have on the economy?
Specific Information used in the above
1. Some efforts to reel in mortgage fraud are succeeding:
Efforts to eliminate mortgage fraud are having a beneficial affect. From "First American CoreLogic": On October 27, 2008, the company "announced that its Multi-Closing Alert Program has prevented more than $175 million in losses in its first 20 months for participating equity lenders who represent more than half of the equity lending market in the United States.
The Multi-Closing Alert Program helps lenders identify and stop multi-lien fraud, also known as “shotgun” fraud. Multi-lien fraud targets residential equity lending through fraudulent borrower schemes to apply for and close multiple loans on a single residential property within a short time period. The Multi-Closing Alert Program monitors all participating institution loan applications and pending closing activity and electronically notifies them of multiple activities occurring on a single residential property. According to data from First American CoreLogic, this type of fraud continues to be prevalent in several regions of the U.S., including California, New York, New Jersey and Florida". Link: Multi-Closing Alert Program Averts Fraud
2. Mortgage foreclosure risk is increasing:
From "First American CoreLogic": Core Mortgage Risk Monitor, Q3 2008 (July):
The International Monetary Fund Economic Update was released Nov. 6, 2008. It is subtitled "Rapidly Weakening Prospects Call for New Policy Stimulus". Regarding prospects as it pertains to the U.S. "In advanced economies, output is forecast to contract on a full-year basis in 2009, the first such fall in the post-war period....However, these forecasts are based on current policies. Global action to support financial markets and provide further fiscal stimulus and monetary easing can help limit the decline in world growth". The IMF further states that ""The U.S. economy will suffer, as households respond to depreciating real and financial assets and tightening financial conditions". Link: IMF World Economic Update
4. Housing in the U.S. continue to fall and more homeowners now have "Negative Equity":
In a Nov. 11 article, the New York Times, using data from First American CoreLogic and other sources, made the following statements: "7.6 million properties in the country were underwater as of Sept. 30, while another 2.1 million were in striking distance. That is nearly a quarter of all homes with mortgages". In the article, it stated that First American CoreLogic "evaluated 42 million residential properties with mortgages." This did not include certain states, for which limited data is available. These included "Maine, Mississippi, North Dakota, South Dakota, Vermont, West Virginia and Wyoming". The company then used computer models to calculate the current housing values using comparable sales. The article also stated that "More than 10 million homes do not have mortgages". Link: A Town Drowns in Debt as Home Values Plunge
Comments Added November 13 and Later
November 13:
The OECD issued a revised economic forecast for the U.S. "Economic activity is expected to fall by 0.9 percent in the US next year, by 0.5 percent in the Euro area and by 0.1 percent in Japan as OECD countries enter a protracted slowdown, according to latest projections. Watch the news conference to present GDP, inflation and unemployment forecasts for the three economies ahead of the G20 summit on the financial crisis on 15 November 2008". Link: OECD Economic Projections November 13, 2008
November 18:
Labor Department figures indicated a decrease in consumer prices by 1% in October. This is the largest one-month decrease ever recorded. Labor Department records began in 1947.
The Labor Department reported a large decrease in motor fuel (gasoline) prices as well as in other energy. Price declines were also reported in many other areas and "core consumer prices", which are prices excluding food and energy, also fell in October. The amount was 0.1%, which was the first decrease in core prices in about 26 years!
U.S. wholesale prices, which include gasoline, fell a record 2.8% in October. Wholesale gasoline prices decreased 24.9%.
The price of "finished energy goods" fell 12.8% in October, the largest decrease since 1986. Food prices fell 0.2%. The October 2008 inflation rate was 3.66%, a very sharp decline from September's 4.94%.
As reported at Bloomberg: "Food prices, which account for about a fifth of the CPI, increased 0.3 percent after a 0.6 percent increase in September....[however] Wal-Mart, the world's largest retailer, said yesterday it planned to reduce U.S. prices on Thanksgiving food and Christmas merchandise to lure customers during the holidays......Target, the second-largest U.S. discounter, said this week it plans to add grocery items and offer ``sharper'' discounts to draw shoppers who are shunning jewelry, clothing and home goods, which account for more than 40 percent of its revenue".
Link: Consumer Prices in U.S. Decline 1%, Most on Record
As a small business owner, I ongoingly do numerous assessments, for my own use, of projected business and related factors. This includes the status of the economy. The ultimate goal is to project and predict the rise or fall in business orders. This is not simply an exercise. It is vitally important to the well being of my business. I have decided share some of the data pertaining to the economy at large, my thought processes and general conclusions on this blog.
Economic statistics have been released as of September 30, the end of the 3rd quarter of calendar year 2008. Additional data is being released by various agencies and businesses related to the current banking and mortgage "crisis" which is morphing into a debt crisis, and pertaining to the U.S. economy. The popular media also issues articles in a more or less continuous stream. These are not always reliable, and as this was a presidential election year, I concluded that I must be more cautious than usual in my use of any data gleaned from the popular press.
See the end of this blog for comments added November 13 and later.
Summary
Based on the data available, it is my current opinion that on our present course, the economic "decline" could possibly reach its bottom as early as late 2009 or early in 2010. This is because of the continued deterioration of housing prices and resetting mortgages accompanied by rising foreclosures and the consequences of the stock market panic which as of October 30, 2008 had eliminated about $3 trillion in wealth. Retail, usually a buffer for jobs as in recent recessions, is also rapidly deteriorating. The International Monetary Fund today (Nov. 6, 2008) forecasts "only" a -0.7% contraction in the U.S. economic output in 2009. I consider a -1.0% contraction a possibility.
Positives
Positive factors include the conclusion of a torturous presidential election process, additional government stimulus, government intervention in failing mortgages, and falling energy prices, most notably oil. Retirees and others drawing social security benefits will receive a 5.8% increase in those benefits for 2009.
Other energy costs are also falling. Coal accounts for 92% of the electrical energy generated from combustible fuel in the U.S. Coal had risen 11% in the first 6 months of 2008, as compared to prices for all of 2007, but has recently moderated in price. Heating oil, which according to the EIA is used by 7% of U.S. households, was projected to rise in price by 23% this winter, but is now also expected to moderate and in New York state is currently about 1% above the price of one year ago.
With the IMF projection of possible simultaneous recessions in the U.S., Europe and Japan and also slowing growth in China, oil prices might stay at a low level longer than expected, perhaps until the middle of 2009. However, it is difficult to rely on that without additional consumptive data, specifics on OPEC production cuts, and details on the slowing Chinese economy . Recently, oil accounted for about two-thirds of the trade deficit. Falling oil prices and reduced U.S. demand should reduce the trade deficit. We'll know in November when data is released.
On a personal note, I use natural gas heating and I am on a "budget" plan with the local utility. Recently, my budget payment per month was cut in half! This was because in 2008 I achieved a sufficiently positive balance and the utility is projecting stable or falling prices. If that is indicative of what many others are experiencing, this provides a non-trivial injection into the pocket books of many consumers.
Negatives
Negative factors include overall negativity, falling confidence and pessimism. Foremost tangible factor is the astonishing deterioration in housing. Mortgages were projected to continue to reset for another five years.. However, the triggers built into these mortgages have accelerated the reset process, contributing to the current housing default rate. This should also accelerate the cleansing of these mortgages. The CMRI, an index of foreclosure risk, is predicted to continue to increase until December 2009 or January 2010. The consumer savings rate, while a positive, is also a negative as it removes government stimulus from the economy. Oil is currently falling in price, but will probably stabilize and could begin rising in Q2 of 2009. The losses sustained by owners of stocks of US corporations in 2008 are, I understand, greater than $5 trillion! If the stock market does not bottom out and stabilize, further panic selling may occur. This opens the door for further purchase of U.S. assets by foreign sovereign wealth funds. Consistently positive stock market data will contribute to improved optimism.
The government programs applied to date to address the credit and banking "crisis" have not been applied consistently. Congress would prefer to debate than to act. The Federal Reserve and Treasury departments are in a "rapid fire" reactionary state. Until the pace of the problems decelerates, this will probably continue and with it, more significant bad news will surface.
Consumer spending will continue to fall if for no other reason than the fact that with tightening credit, consumers will be forced to save first, and then spend. Even K-Mart is dusting off layaway programs for Christmas!
Unknowns
Factors which cannot be easily gauged include the full impact of current and future, unknown government stimulus packages. Stimulus to date has been "oblique", by which I mean it has been applied in a manner which does not always permit it to reach the economy at large. Nor can I gauge the status of the "unwinding" of debt, the full consequences of the restriction of credit to the consumer, and the savings rate by the consumer and consequences thereof. The negative savings rate became a positive one last quarter. At an annual rate, the BEA indicated that the consumer was saving about $297 billion. Link: Good News About Consumer Saving Also unknown, the current condition of the consumer as related to their optimism or pessimism. Pessimism that results in the saving of stimulus checks will further impede economic progress and short circuit the process. At present, we are as a society very pessimistic. I cannot gauge where the consumer will be in 6 months.
"Deleveraging" or the unwinding of debt, continues. This buzzword refers to homeowners, banks, companies and hedge funds, etc. selling assets so as to reduce outstanding debt. In some cases, this also meant selling currency as well as other assets to raise local cash. Apparently, many borrowings were in U.S. dollars or Japanese yen, due to low interest rates. The reversal of this borrowing has been used to explain why these two currencies soared. Unfortunately, this process is still going on, and it is said that hedge funds, as of October 10, were perhaps about 66% through their liquidation process.
The consumer has been, according to data, the driver in the U.S. economy. As the consumer withdraws, the economy contracts. So today we have a recession. How far will the consumer withdraw, and for how long?
If retail has a Christmas season as is currently predicted, and continues to cut its workforce, how long will it take for such businesses to begin the rehiring process?
It was predicted and there are statistics that support the notion that more people eligible for social security benefits would prefer to remain employed in the face of the uncertainty in the economy. This would provide some relief to government deficits. However, layoffs in sectors such as retail may force some of these into retirement. What will be the effect of increasing social securities recipients?
General Information
According to many "experts", the economy will not stabilize until housing has stabilized. If this is true, then the contraction could continue for another 18 months. That would yield a bottoming sometime after March 2010, rather than mid- 2009 as many "experts" are predicting. [Cautionary note: these same "experts" for the most part either missed or understated the depth and breadth of the current problem.]
The U.S. consumer who had been the driving force of the modest economic expansion since 2002, is now completely hobbled. The mild expansion of the last 6 years was fueled almost entirely by artificially inexpensive credit, which is no longer available to the consumer, coupled to a negative savings rate. Retirees, who if prudent, draw down their savings by 4% per year or less, are in a belt tightening situation as confidence and portfolios have been eroded, and yields on CDs are again falling. The losses in the stock and bond markets have reduced the value of these assets, and the amounts that retirees can safely withdraw by nearly 40% or in some cases, by more. The large increase in Social Security benefits (5.8%) will help, but will not restore lost savings or confidence.
I do have decreasing confidence in all predictions and anticipations which extend beyond six months into the future. That is because it is so difficult to determine exactly where the U.S. economy will be at that time. I don't think anyone can predict the effectiveness of U.S. policy and the bailout and "TARP" programs, the ultimate results of resetting loans on consumers and the economy at large. I do think that most economists and experts have understated the enormity of the current problems and as a consequence, have also overstated the rapidity by which the economy will recover. However, this is an incredible and resilient economy with fantastic companies and individuals. If we can prevent the politicians from doing what they do best, which is not very good, we have tremendous opportunities ahead. This is an opportunity to remake or at least, reconfigure the U.S. economy and break the various gridlocks in it. However, the U.S. Congress will continue to be a serious impediment to this.
I'll re-evaluate the economy on a quarterly basis. More frequent analysis is, I think, unwarranted, as the economy and the credit and housing fueled "crisis" go through their throes and gradually unwind. In truth, with the change to the Obama Presidency and so on, it may be two quarters, or spring 2009 before we can again gauge the depth and breadth of the economic quagmire, and also gauge the results of the various stimulus packages.
Other questions and issues
Other things to consider: Deficits for 2008 and 2009 may reach $1.5 trillion this year and $2.0 trillion next year. Depending upon how this money is spent, it may prevent a deep recession. If spent on infrastructure, it can make a lasting contribution. If not, it will simply be another of many debts passed to our children.
As a final note, it is my understanding that a lower trade deficit also means fewer dollars to buy U.S. debt. That debt as I have already stated, is mushrooming. So who will buy the debt? There are a few choices: the Federal Reserve can monetize it or can raise interest rates to attract capital from overseas. Or if U.S. citizens have sufficient savings, we can purchase it. What effect will possibly lower trade deficits (short term) and higher U.S. debt have on the economy?
Specific Information used in the above
1. Some efforts to reel in mortgage fraud are succeeding:
Efforts to eliminate mortgage fraud are having a beneficial affect. From "First American CoreLogic": On October 27, 2008, the company "announced that its Multi-Closing Alert Program has prevented more than $175 million in losses in its first 20 months for participating equity lenders who represent more than half of the equity lending market in the United States.
The Multi-Closing Alert Program helps lenders identify and stop multi-lien fraud, also known as “shotgun” fraud. Multi-lien fraud targets residential equity lending through fraudulent borrower schemes to apply for and close multiple loans on a single residential property within a short time period. The Multi-Closing Alert Program monitors all participating institution loan applications and pending closing activity and electronically notifies them of multiple activities occurring on a single residential property. According to data from First American CoreLogic, this type of fraud continues to be prevalent in several regions of the U.S., including California, New York, New Jersey and Florida". Link: Multi-Closing Alert Program Averts Fraud
2. Mortgage foreclosure risk is increasing:
From "First American CoreLogic": Core Mortgage Risk Monitor, Q3 2008 (July):
This map shows geographic areas, and does not represent the numbers involved. However, it has been estimated that 24% of all "underwater" or negative equity mortgages in the U.S. are in California.
You will note that large areas in California, Florida, Arizona, Nevada, and in the Northeast, most notably New Jersey, Massachusetts, Connecticut, Rhode Island, Virginia and lower New York state are classified as "High" or "Moderately High" foreclosure risk areas.
Of particular interest to me, as a resident near Chicago, Illinois, are the counties of Cook, DeKalb, DuPage, Grundy, Kane, Kendall, McHenry and Will, which are all "Moderately High" risk.
Risk is characterized by "home price declines, higher than average fraud and collateral risk, and a struggling local economy". The Core Mortgage Risk Index (CMRI) has risen "12% above a year ago and increased for eleven of the last twelve quarters. The CMRI -- which forecasts delinquency risk -- is currently 55% above the base period of Q1 2002, a period near the end of the last U.S. economic recession. Although significantly higher now than during the base period [Q1 2002], the CMRI is likely to continue rising nationally over the next 18 months". Link: Core Mortgage Risk Monitor Q3 2008
3. The global economy of developed countries, including the U.S., is contracting:The International Monetary Fund Economic Update was released Nov. 6, 2008. It is subtitled "Rapidly Weakening Prospects Call for New Policy Stimulus". Regarding prospects as it pertains to the U.S. "In advanced economies, output is forecast to contract on a full-year basis in 2009, the first such fall in the post-war period....However, these forecasts are based on current policies. Global action to support financial markets and provide further fiscal stimulus and monetary easing can help limit the decline in world growth". The IMF further states that ""The U.S. economy will suffer, as households respond to depreciating real and financial assets and tightening financial conditions". Link: IMF World Economic Update
4. Housing in the U.S. continue to fall and more homeowners now have "Negative Equity":
In a Nov. 11 article, the New York Times, using data from First American CoreLogic and other sources, made the following statements: "7.6 million properties in the country were underwater as of Sept. 30, while another 2.1 million were in striking distance. That is nearly a quarter of all homes with mortgages". In the article, it stated that First American CoreLogic "evaluated 42 million residential properties with mortgages." This did not include certain states, for which limited data is available. These included "Maine, Mississippi, North Dakota, South Dakota, Vermont, West Virginia and Wyoming". The company then used computer models to calculate the current housing values using comparable sales. The article also stated that "More than 10 million homes do not have mortgages". Link: A Town Drowns in Debt as Home Values Plunge
Comments Added November 13 and Later
November 13:
The OECD issued a revised economic forecast for the U.S. "Economic activity is expected to fall by 0.9 percent in the US next year, by 0.5 percent in the Euro area and by 0.1 percent in Japan as OECD countries enter a protracted slowdown, according to latest projections. Watch the news conference to present GDP, inflation and unemployment forecasts for the three economies ahead of the G20 summit on the financial crisis on 15 November 2008". Link: OECD Economic Projections November 13, 2008
November 18:
Labor Department figures indicated a decrease in consumer prices by 1% in October. This is the largest one-month decrease ever recorded. Labor Department records began in 1947.
The Labor Department reported a large decrease in motor fuel (gasoline) prices as well as in other energy. Price declines were also reported in many other areas and "core consumer prices", which are prices excluding food and energy, also fell in October. The amount was 0.1%, which was the first decrease in core prices in about 26 years!
U.S. wholesale prices, which include gasoline, fell a record 2.8% in October. Wholesale gasoline prices decreased 24.9%.
The price of "finished energy goods" fell 12.8% in October, the largest decrease since 1986. Food prices fell 0.2%. The October 2008 inflation rate was 3.66%, a very sharp decline from September's 4.94%.
As reported at Bloomberg: "Food prices, which account for about a fifth of the CPI, increased 0.3 percent after a 0.6 percent increase in September....[however] Wal-Mart, the world's largest retailer, said yesterday it planned to reduce U.S. prices on Thanksgiving food and Christmas merchandise to lure customers during the holidays......Target, the second-largest U.S. discounter, said this week it plans to add grocery items and offer ``sharper'' discounts to draw shoppers who are shunning jewelry, clothing and home goods, which account for more than 40 percent of its revenue".
Link: Consumer Prices in U.S. Decline 1%, Most on Record
Sunday, November 9, 2008
China Does it Right
China announced a $586 Billion stimulus package, this will be spent on infrastructure by 2010. According to the New York Times, the money will include "constructing new railways, subways, airports and rebuilding communities".
Meanwhile, here in the US, we have a nearly trillion dollar "bailout package" for Wall Street and the Banks!
So the Chinese will be getting buildings, roads, public transportation and cities. All of that good stuff that creates jobs and produces something. What will we get? We'll get bankers buying other bankers, bonuses and dividends to stockholders. No infrastructure, no jobs.
So who is in action? That's a rhetorical question. Over the same period, our politicians are talking about a few hundred billion in stimulus checks, perhaps $30 billion or so to energy infrastructure. According to the "Obama-Biden Energy Plan", they will be "strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future". It is important to note that this plan permits the new administration and congress to earmark energy monies for bailing out the automotive manufacturers. This will be done to reward the UAW and other unions who strongly supported the Obama-Biden campaign. However, unless the transportation system in the US is transformed, this money will be wasted. Unfortunately, insufficient funds have been allocated by the Obamam-Biden team to do such a thing.
Do you think we have a problem here?
The article: China Unveils Sweeping Plan for Economy
The Obama-Biden Energy Plan: http://my.barackobama.com/page/content/newenergy
Meanwhile, here in the US, we have a nearly trillion dollar "bailout package" for Wall Street and the Banks!
So the Chinese will be getting buildings, roads, public transportation and cities. All of that good stuff that creates jobs and produces something. What will we get? We'll get bankers buying other bankers, bonuses and dividends to stockholders. No infrastructure, no jobs.
So who is in action? That's a rhetorical question. Over the same period, our politicians are talking about a few hundred billion in stimulus checks, perhaps $30 billion or so to energy infrastructure. According to the "Obama-Biden Energy Plan", they will be "strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future". It is important to note that this plan permits the new administration and congress to earmark energy monies for bailing out the automotive manufacturers. This will be done to reward the UAW and other unions who strongly supported the Obama-Biden campaign. However, unless the transportation system in the US is transformed, this money will be wasted. Unfortunately, insufficient funds have been allocated by the Obamam-Biden team to do such a thing.
Do you think we have a problem here?
The article: China Unveils Sweeping Plan for Economy
The Obama-Biden Energy Plan: http://my.barackobama.com/page/content/newenergy
Saturday, November 8, 2008
So you think you have difficulties?
The above is from IMF data. It is a bit old (goes back to 2007). However, for all you people out there in good 'ole America who think your lives suck, think about the fact that you spend much less on fuel, food and "drink" (excluding booze and lattes), than many of those on the planet. On the other hand, that excess cash allowed you to buy real estate and commodities futures. Or you are spending big bucks servicing your debt. But what you do with your spare change is your decision and YOUR problem. Next time you have cash burning a hole in your pocket, consider CDs (no, not Maria Carey, T-Pain or whoever; I'm talking about "Certificates of Deposit". Check with your local banker if you don't know what that is!)
Friday, November 7, 2008
Post Election Blues
Well, the presidential election and the primaries are finally over. The Democrats even let Joe Biden out from under his rock, after a time out for bad behavior. I'm sure he's glad to be back.
Note the catchy title. I chose it to honor the color of the party of the winning candidate. Clever, yes?
So now the economists are predicting a deeper than usual recession. Aren't those the same guys and gals who didn't even see most of this coming? So I should listen to them? I think not. I'll continue my own research, and I'll post my conclusions from time to time.
As for the Obama button toter's, I saw this statement by a fan in a WSJ Forum:
"I believe the market will begin to turnaround in the upcoming weeks. President - Elect Obama will lift the spirits of people worldwide, and American Iconic companies such as Coke, Johnson and Johnson, Wal - Mart, etc. will lead the way. The market needed to contract, and shake out the casino/stock analyst. Wall street will regain its stride, as the market starts to respond the worldwide support for American goods. What we have learned is that the American Presidency is more than just a title, it is the measure of the Free - Market. When people believe that the American president is a good person, they respond by buying up American goods".
OK, pass the guy some more cool-aid.
The Onion had a piece on the emptiness facing these people, now that the party is over. What will they do? Maybe go to an orgy in the dorm, or plan an overthrow of some democracy. Is South Korea on the list? Of course, after proposition 8 in California, there is always the Mormon Church to attack. With the power of the web, the opportunities are endless! Onion Video.
To be serious for a moment, I am concerned by the naivete of some of these people. I'm glad they feel good, but feeling good and having confidence is not the same thing. Nothing has really happened yet. We don't even have President elect Obama's design for tackling the problems or a team to do it. In fact, the only thing we do have is most of the same congresswomen and men who got us into this mess in the first place. Wake up America!
The economy will turn around when people again have confidence in the economy. It will turn around when they reach the point that they are certain that a depression is not just around the corner, or if one has arrived, that we have survived it; and when they reach the point that they can trust their money in the stock market, and in the banks. Finally, it will turn around when the herd reaches the point at which they feel secure. We have a long way to go before the guy or gal in the street feels that way. At present, millions have seen a large chunk of their savings vaporize (or someone else's in the case of many home "owners"). However, it is very important to remember that the stock market will turn around before the economy does. So if you see the stock market turning up and staying there, that's a good sign. As for the economy, it will be a year or more before it actually bottoms. That's my guess, sometime late 2009 or early 2010. Sorry to all of you "instant gratification" people out there. Remember, the crazy people, the speculators, have been out of the asylum and running the financial system for a few years. It's going to take a while to clean up the mess they created. If you were flipping houses, or bought one in 2006-7 and expected a huge increase in value, you should be aware I am talking about people just like you!
I'll know the worst is over when the retirees climb out of their homes and into the light of day and again begin purchasing dinner at the diner down the street. At present, many of these people have apparently, like the proverbial turtle, pulled their head in and dug down. One local restaurant which these types frequent, told me their business was off 70%! Who knows when they will return? Perhaps they'll climb up into the sunlight with the return of spring, or when they begin feeling flush with the 5.8% SS benefit increase. Those retirees and other beneficiaries have a big impact on the economy. As of September, 2008 they numbered over 50 million! See Social Security Beneficiaries Snapshot. To put this number in perspective, in 2006, according to the US Census bureau, there were 144 million employed civilian workers in the US. See US Census Employed Civilians. So when the social security beneficiaries pull back, about 26% of the population with income pulls it's chips off the table. As some of these people work and collect benefits, there is possibly a larger effect on the economy.
For many of us, who have never experienced a true, deep recession, this is a new phenomenon. Unlike the "worst recession since the great depression" campaign rhetoric that Sen. Kerry used in his bid for the presidency, this is the real deal. Kerry was spouting bull. I do remember the Arab oil embargo, the recessions of 1973-74, 1980-82, and the stock market crash of 1987. I have been in the work force since 1963 (worked a real job in high school) so this is not a shock to me. However, it isn't pleasant, either. Now we have to deal with those around us who did not prepare, who refused to prepare, or who speculated and gambled, and deal with the fact that "People Will Be Strange."
Now everyone is impatient to get beyond this crisis. Heck, the unemployment numbers have just begun to really rise. It will take time for this to be resolved, and until then, we can only watch and deal with our personal realities. It took years to get into this mess. It will take years to get out of it. As I said earlier in this blog, we could bottom out in late 2009. But that means that at that point we are just beginning to claw our way out of the pit. If you don't believe me then do your own research, but do avoid MSNBC and the other minute miracle entertainers out there. And don't believe anything an economist or politician tells you.
Nor do we know what will be at the end of the tunnel when we do emerge. Given the typical Americans penchant for instant gratification, I have no idea on how these addicts will deal with the new reality. I do know that some and perhaps many of us will eventually come to the conclusion that the worst is over, and like the passing of a tornado, we will conclude it is safe to again emerge from our shelters. At that point we will breath a sigh of relief and allow our lives to resume. When enough of us have done this, the stock market will begin a reversal, people will begin spending some of the cash they hoarded during the "crisis" and the economy will rebound. Will we return to the "good old days" of the Internet boom, cheap credit and so on? No. We blew that wad of cash and sent much of it overseas. Nor will oil return to $25 a barrel; more likely it will return to $150 a barrel and continue upwards, perhaps reaching the predicted $200 a barrel in 2030.
Until then, I suggest we simply watch something besides the talking heads, the economists and that drivelling weatherman Tom Skilling on WGN-TV. Unless you enjoy the equivalent to listening to our economists. You know, 15 minutes of noise about the weather, and then the next morning no matter what Skilling said, you look out the window, go online to Weather.com and decide how to deal with the current events. As for TS's Proselytizing, as we know, the weather will do what it will do, and frequently, it has little to do with the "predictions".
On a positive note about the election, Pres. elect Obama may be the perfect guy for the job. Let him deal with his team-mates Nancy Pelosi, Harry Reid, Charles Rangel, John Dingell, Barney Frank and the rest of them. Have fun fella! This will be more entertaining to watch than the weather or the economists. Of that, I am absolutely certain. The trick will be to separate the wheat from the chaff.
Today, the New York Times decided to put a positive spin on the economy in the article:
Stocks Are Higher After Jobs Report. Here are a couple of choice quotes:
"Investors were not letting a barrage of grim economic news get them down.......After two days of heavy losses, shares on Wall Street bounced back on Friday................In late afternoon trading, the Dow industrials were up about 165 points............but they were still poised to close lower for the week after a two-day sell-off that sent the Dow plunging by nearly 1,000 points".
Ok, so this cool-aid would have me celebrating that the Dow is only down 835 points, or about 9% over the past three days. Wow, I am thrilled. If I had put $10,000 into the market at the close on Wednesday, I would have lost "only" about $710 by the close on Friday; it was actually a larger loss at the time the NYT issued their "news". That's what they call "bouncing back" in New York ? I'm sure my broker would be thrilled, as he made a commission on the sale. Oh, that's right, Wall Street is in New York City, isn't it? So my stock purchase was good for the big, rotten apple. Should I send some more $$$ to the poor people in Times Square? I think not! OK, to put a positive spin on all of this, as they say "long term" the stock market indexes always go up! However, brokers make no money selling Vanguard indexes, so it is some company's stock I would have purchased. In 5 years or so, my stock may be worth more than I paid for it, or then again, the company could have imploded, like Enron!
Note the catchy title. I chose it to honor the color of the party of the winning candidate. Clever, yes?
So now the economists are predicting a deeper than usual recession. Aren't those the same guys and gals who didn't even see most of this coming? So I should listen to them? I think not. I'll continue my own research, and I'll post my conclusions from time to time.
As for the Obama button toter's, I saw this statement by a fan in a WSJ Forum:
"I believe the market will begin to turnaround in the upcoming weeks. President - Elect Obama will lift the spirits of people worldwide, and American Iconic companies such as Coke, Johnson and Johnson, Wal - Mart, etc. will lead the way. The market needed to contract, and shake out the casino/stock analyst. Wall street will regain its stride, as the market starts to respond the worldwide support for American goods. What we have learned is that the American Presidency is more than just a title, it is the measure of the Free - Market. When people believe that the American president is a good person, they respond by buying up American goods".
OK, pass the guy some more cool-aid.
The Onion had a piece on the emptiness facing these people, now that the party is over. What will they do? Maybe go to an orgy in the dorm, or plan an overthrow of some democracy. Is South Korea on the list? Of course, after proposition 8 in California, there is always the Mormon Church to attack. With the power of the web, the opportunities are endless! Onion Video.
To be serious for a moment, I am concerned by the naivete of some of these people. I'm glad they feel good, but feeling good and having confidence is not the same thing. Nothing has really happened yet. We don't even have President elect Obama's design for tackling the problems or a team to do it. In fact, the only thing we do have is most of the same congresswomen and men who got us into this mess in the first place. Wake up America!
The economy will turn around when people again have confidence in the economy. It will turn around when they reach the point that they are certain that a depression is not just around the corner, or if one has arrived, that we have survived it; and when they reach the point that they can trust their money in the stock market, and in the banks. Finally, it will turn around when the herd reaches the point at which they feel secure. We have a long way to go before the guy or gal in the street feels that way. At present, millions have seen a large chunk of their savings vaporize (or someone else's in the case of many home "owners"). However, it is very important to remember that the stock market will turn around before the economy does. So if you see the stock market turning up and staying there, that's a good sign. As for the economy, it will be a year or more before it actually bottoms. That's my guess, sometime late 2009 or early 2010. Sorry to all of you "instant gratification" people out there. Remember, the crazy people, the speculators, have been out of the asylum and running the financial system for a few years. It's going to take a while to clean up the mess they created. If you were flipping houses, or bought one in 2006-7 and expected a huge increase in value, you should be aware I am talking about people just like you!
I'll know the worst is over when the retirees climb out of their homes and into the light of day and again begin purchasing dinner at the diner down the street. At present, many of these people have apparently, like the proverbial turtle, pulled their head in and dug down. One local restaurant which these types frequent, told me their business was off 70%! Who knows when they will return? Perhaps they'll climb up into the sunlight with the return of spring, or when they begin feeling flush with the 5.8% SS benefit increase. Those retirees and other beneficiaries have a big impact on the economy. As of September, 2008 they numbered over 50 million! See Social Security Beneficiaries Snapshot. To put this number in perspective, in 2006, according to the US Census bureau, there were 144 million employed civilian workers in the US. See US Census Employed Civilians. So when the social security beneficiaries pull back, about 26% of the population with income pulls it's chips off the table. As some of these people work and collect benefits, there is possibly a larger effect on the economy.
For many of us, who have never experienced a true, deep recession, this is a new phenomenon. Unlike the "worst recession since the great depression" campaign rhetoric that Sen. Kerry used in his bid for the presidency, this is the real deal. Kerry was spouting bull. I do remember the Arab oil embargo, the recessions of 1973-74, 1980-82, and the stock market crash of 1987. I have been in the work force since 1963 (worked a real job in high school) so this is not a shock to me. However, it isn't pleasant, either. Now we have to deal with those around us who did not prepare, who refused to prepare, or who speculated and gambled, and deal with the fact that "People Will Be Strange."
Now everyone is impatient to get beyond this crisis. Heck, the unemployment numbers have just begun to really rise. It will take time for this to be resolved, and until then, we can only watch and deal with our personal realities. It took years to get into this mess. It will take years to get out of it. As I said earlier in this blog, we could bottom out in late 2009. But that means that at that point we are just beginning to claw our way out of the pit. If you don't believe me then do your own research, but do avoid MSNBC and the other minute miracle entertainers out there. And don't believe anything an economist or politician tells you.
Nor do we know what will be at the end of the tunnel when we do emerge. Given the typical Americans penchant for instant gratification, I have no idea on how these addicts will deal with the new reality. I do know that some and perhaps many of us will eventually come to the conclusion that the worst is over, and like the passing of a tornado, we will conclude it is safe to again emerge from our shelters. At that point we will breath a sigh of relief and allow our lives to resume. When enough of us have done this, the stock market will begin a reversal, people will begin spending some of the cash they hoarded during the "crisis" and the economy will rebound. Will we return to the "good old days" of the Internet boom, cheap credit and so on? No. We blew that wad of cash and sent much of it overseas. Nor will oil return to $25 a barrel; more likely it will return to $150 a barrel and continue upwards, perhaps reaching the predicted $200 a barrel in 2030.
Until then, I suggest we simply watch something besides the talking heads, the economists and that drivelling weatherman Tom Skilling on WGN-TV. Unless you enjoy the equivalent to listening to our economists. You know, 15 minutes of noise about the weather, and then the next morning no matter what Skilling said, you look out the window, go online to Weather.com and decide how to deal with the current events. As for TS's Proselytizing, as we know, the weather will do what it will do, and frequently, it has little to do with the "predictions".
On a positive note about the election, Pres. elect Obama may be the perfect guy for the job. Let him deal with his team-mates Nancy Pelosi, Harry Reid, Charles Rangel, John Dingell, Barney Frank and the rest of them. Have fun fella! This will be more entertaining to watch than the weather or the economists. Of that, I am absolutely certain. The trick will be to separate the wheat from the chaff.
Today, the New York Times decided to put a positive spin on the economy in the article:
Stocks Are Higher After Jobs Report. Here are a couple of choice quotes:
"Investors were not letting a barrage of grim economic news get them down.......After two days of heavy losses, shares on Wall Street bounced back on Friday................In late afternoon trading, the Dow industrials were up about 165 points............but they were still poised to close lower for the week after a two-day sell-off that sent the Dow plunging by nearly 1,000 points".
Ok, so this cool-aid would have me celebrating that the Dow is only down 835 points, or about 9% over the past three days. Wow, I am thrilled. If I had put $10,000 into the market at the close on Wednesday, I would have lost "only" about $710 by the close on Friday; it was actually a larger loss at the time the NYT issued their "news". That's what they call "bouncing back" in New York ? I'm sure my broker would be thrilled, as he made a commission on the sale. Oh, that's right, Wall Street is in New York City, isn't it? So my stock purchase was good for the big, rotten apple. Should I send some more $$$ to the poor people in Times Square? I think not! OK, to put a positive spin on all of this, as they say "long term" the stock market indexes always go up! However, brokers make no money selling Vanguard indexes, so it is some company's stock I would have purchased. In 5 years or so, my stock may be worth more than I paid for it, or then again, the company could have imploded, like Enron!
Tuesday, November 4, 2008
What will Saturday Night Live Do Now?
A friend gave me a link to a YouTube video in which V.P. candidate Palin received a bogus telephone call from some comedians impersonating French President Sarkozy.
The video is supposedly funny; however, it underscored my opinion that what Americans really want is entertainment, not solutions.
This prompted the realization that if Sen. Obama does win the presidency as the polls currently predict, that the comedians on SNL will have a significant problem. Fey and Poehler will have to go back to work. I understand the SNL ratings have been up about 35% since their parody of Palin and Clinton.
At least someone is profiting besides the politicians, the pollsters and the political entourage.
However, the 100's of millions spent on the election this year will be suspended and lots of ad men, writers and so on will have to find something else to do. Perhaps get a job in the manufacturing industry? Oh, that's right, I forgot, we don't do that anymore. Our economy is based on the service industries, such as political service, postal service, fast food, banking, finance, criminal activities, entertainment, etc.
On a very positive note, the congress will also have to get back to work. No more campaigning, as Obama has done for the last 21 months. I thought we, the citizens of Illinois elected him as one of our representatives in government. Seems I just don't get it. Our purpose as citizenry is to elect these people so they have a springboard to a political future with lifetime paid insurance, benefits, political connections, etc., forever.
As for the congress, they'll get back to work, all right, and probably pass a lot of resolutions, just as they have done for the past two years. Oh, that's right, they aren't there to represent us, the citizenry, they are there to further the party, feather their political nests and represent the fringes of society; the rich, the too poor to work, the stupid and so on.
The video is supposedly funny; however, it underscored my opinion that what Americans really want is entertainment, not solutions.
This prompted the realization that if Sen. Obama does win the presidency as the polls currently predict, that the comedians on SNL will have a significant problem. Fey and Poehler will have to go back to work. I understand the SNL ratings have been up about 35% since their parody of Palin and Clinton.
At least someone is profiting besides the politicians, the pollsters and the political entourage.
However, the 100's of millions spent on the election this year will be suspended and lots of ad men, writers and so on will have to find something else to do. Perhaps get a job in the manufacturing industry? Oh, that's right, I forgot, we don't do that anymore. Our economy is based on the service industries, such as political service, postal service, fast food, banking, finance, criminal activities, entertainment, etc.
On a very positive note, the congress will also have to get back to work. No more campaigning, as Obama has done for the last 21 months. I thought we, the citizens of Illinois elected him as one of our representatives in government. Seems I just don't get it. Our purpose as citizenry is to elect these people so they have a springboard to a political future with lifetime paid insurance, benefits, political connections, etc., forever.
As for the congress, they'll get back to work, all right, and probably pass a lot of resolutions, just as they have done for the past two years. Oh, that's right, they aren't there to represent us, the citizenry, they are there to further the party, feather their political nests and represent the fringes of society; the rich, the too poor to work, the stupid and so on.
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