How Better Off Are We Now Really?

US economyI apologize for my lack of consistency in posts as I have been very busy in multiple different projects. I love discussing with the community and will be doing updates much more frequently from now on.

We are now closing in almost two and a half years since the major downturn in our economy began to take place. It feels like a distant memory as of now. I still remember waking up on mornings wondering, "who will be the big bank to fall today?" Businesses were dropping into bankruptcy left and right and not just small businesses, business that have been around for decades (Circuit City, Mervyns, Levitz and more).

Today, you would never even assume that existed only two years ago. Malls are full again, consumers are happily paying over $4.00 a gallon for gas and companies like Apple are having record breaking sales numbers. I have seen a lot of magicians in my day, but this is by far the most impressive illusion I have ever seen.

I have endured multiple recessions and I believe our most recent had the quickest change of sentiment out of all of them. What makes this remarkable is what fundamental changes were made during that time. National big banks entered bankruptcy, home foreclosure levels at record numbers, unemployment reaching mid teens in some states, and the stock market dipping the lowest we've seen in years. It is all a distant memory, at least that's what it feels like.

So what has caused such a miraculous turn around? I can't complain, my business is seeing huge turn arounds. What makes me nervous, is the artificial nature it has been built on. Why is it artificial? Here are a couple reasons:

The government has essentially partnered with big banks and is allowing them to rake in record profits off essentially government printed money. The US has issued profit/loss share agreements that are extremely favorable to banks and institutional investors that make doing business a no brainer, while delegating the downside to the government. Now you and I as taxpayers will carry the burden of loose underwriting and bad business practices that brought down many of the banks in the first place.

People are hailing that the housing market has reached bottom. Really? The FDIC reports that 1/6 homes are in foreclosure. Do you see these homes on the market? That is because the government is rewarding banks for holding on to these homes. Shadow inventory (homes that are not foreclosed but are in default) is even worse. Most of these agreements have 5 year lifespans, which makes me wonder what happens in 2o13 when a lot of these agreements are up? Slap another band aide on it I suppose.

Unemployment is still devastating. By far the most influential fundamental tracker still shows a depressing result. Am I suppose to be excited about a 9% national unemployment rate? And this number is not going down anytime soon, even the government admits that.

What we have learned the past two years is that we are not accountable for foul play and bad business practices. People have been bailed out left and right for, in some cases, very criminal decisions. This is why millions of consumers have found that they can stop paying their mortgage and spend their extra income on big screen tvs and new cars with no consequence. Sure, the US Treasury printing press can pick up the bill for now, but that result will come full circle eventually. In my mind, it is a time bomb waiting to explode, and when it does, not even our government will have the time or resources to defuse it. I am staying on my toes.


  1. Anonymous Says:

    the key to this is this is all based on a false belief that people are are to be trusted or that they are trustworthy. once the big idiot at the top realizes how flawed and stupid this assumption was, he will find himself so deep in hell it will immediately shake the heavens and earth and you will see the final of what was nothing but idiots leading idiots to hell. no amount of wisdom is potent enough to wake them up they are doomed to perish and be consumed by everlasting fire and pain. Cya

  2. james moylan Says:

    I have a web site where I give advise on penny stocks and stocks under five dollars. I would like to comment about are times really that good. I do not think that we will see real improvement in the economy until we see sustainable job growth. Recently the number of jobs created has been running around two hundred thousand a month.The GDP report that just came out recently was only 2% this is not nearly high enough to sustain employment growth of two hundred thousand jobs a month Another factor holding things back is stagnation of wages and benifits. This is good for business owners but terrible for workers.

  3. Anonymous Says:

    would taking my money out of the bank help me in the long run? and what are some tips that you may have for the families of America, that they can protect themselves before things go under?

  4. Anonymous Says:

    It seems the easiest solution is not allow banks to grow over X amount, and not allow them to give insurance to each other, like AIG and Bear.

    If they are forced to be held accountable they will be less likely to invest in super risky investments.

    I'm worried, that the author is correct, we are just setting ourselves up for a bigger fall.

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  6. Penny Stock Investing Says:

    I believe that the reason that we are having many of the problems that we have today is simply because everyone decided years ago that the united states could have an economy based on financial services professionals like financial planners insurance agents CPA'S just take a look around the corner of the town you live in and you will find the insurance agents office the financial services company or a financial services company renting space inside a bank selling mutual funds and annuities. The only problem with this picture is its reversed saving creates financial services businesses What we have is an industry that makes its money off of money by charging money to manage money. Instead of creating real jobs that create real wealth we have quite the reverse. And what does most everyone see their children doing once they graduate from a college. Someone sitting at a desk in some bank in front of a computer all day.

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