The problem I have in forecasting the economy goes to government intervention for decades that is now catching up with us.
By Daniel at 29 August, 2009, 5:18 pm
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We have international companies that could just roar if the global economy is recovering ( is it?)
What makes this so hard to forecast in the short term, is the dollar, our debt, deficits and the knowledge of foreign governments that we can’t tax or grow out of the debt and other obligations we have. We need total reform and yet, reform would cause more problems at first, before they started to help and during a recession (or depression), government doesn’t want to be viewed as making things worse, so they “delay.”
Whether the DOW crashes to 4,000 due to deflation or soars to 20,000 due to inflation, we are still in the same fiscal policy mess we were in when this started. Even the GOA has warned for four years in a row before this crisis even started, that we face the loss of our standard of living .
Now, we are borrowing to fund shortfalls in Medicare/Medicaid, FDIC, other government programs and only thanks to low interest rates, can even afford to pay the interest on debt out of declining tax revenues.
Corporate tax receipts have fallen 57% and individual, 22%. Payroll taxes, likewise, are falling and throwing even the most pessimistic projections for S.S. and Medicare, out the window.
The FED has reportedly said, “no net new jobs for five years,” in a recent FED meeting. So, recovery or not, we still can’t get out of this crisis. We passed the point of no return. Now, debt will rise no matter what we do and the interest on debt will quadruple in the next few years if there is a recovery here and we have to let interest rates rise to curb inflation.
JanPaul
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