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Monday, July 11, 2011

The pause in the "recovery"

The stock market predicts the future of the economy. Generally speaking, the more income generated by optimists in the stock market, the more successful America will be. The stock market average indices are thermometers of the future prosperity of America.

Its always important to follow the money -- the economy benefits everyone, as during an expansion, the money goes everywhere people want to work. If the economy benefits only a few, as during a contraction like we're in, it is important to see who is getting ahead. The politically connected Leftist 'ruling class' are getting ahead.

But political affiliation can blind some people and result in very odd economic analyses. The establishment-liberal Zacks Investment Research published this:

"Friday's dismal jobs report shocked investors. For the second month in a row, job creation wasn't even close to where it's supposed to be at this, or any, stage of the recovery cycle. It's almost hard to believe that it's been nearly 3 years since this crisis first began and jobs are still stuck in the neutral zone. Why isn't there more job creation?


"It all comes back to the very thing that started the financial crisis: housing. New home construction creates jobs. Right now, we're still near record lows for new construction starts. Until we get more new home construction, we won't see the big job growth we need to spark the economy."

-- Tracey Ryniec

This analysis shows how very turned around 'liberal' analysts can be. Housing did not start the current downturn. The US housing market was distorted by Leftist political manipulation into a bloated valuation. Think Barney Frank & Co. The dramatically increasing valuations of housing dragged along the value of everything else, resulting in a mass euphoria. Meanwhile everything became very pricey. When the political manipulation could not hold out the actual market anymore, mere anarchy was loosed. Housing values went into free fall.

Housing starts do not create wealth any more than Obama's "spreading wealth around" creates wealth. Housing is an indicator of how optimistic people are about the future, and how much cash they feel they have right now.

Sort of like the stock market, the housing market is a thermometer of the people's general expectations. The two markets should move more of less parallel each other. But one does not control the other. They both move in accord with expectation.

Things will recover some day, once we get a responsible government. Obama's method of punishing success in the market is not the way.

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Analysis and politics

Before the housing collapse, housing got very expensive. This fueled a despising of those who owned a house before valuations became ridiculous. Those who supplied housing, i.e., builders and banks, became political targets. Obama's "spreading the wealth around" sounded plausible to a majority of the electorate.

Clearly, the economy was out of hand - someone was to blame - Someone better take the fall! Too bad the public found solace with the same Leftists who corrupted the economy in the first place.

The country lurched left - and lives were ruined. Government was called upon to redistribute everything. Only the ruling class of politicians, crass manipulators, and the bureaucratic Left benefited. They Left has no idea how national prosperity is created, and that is not their interest anyway. The Leftist vision of "economic justice" is controlling who uses product and assigning blame. The Left fatten themselves on whatever they deem theirs.

The ongoing process of Leftist "deeming" means no government budget will guide government spending. Witness the 2 years of Democrat rule. There was no budget and government tossed billions of dollars after whatever they wanted. Mostly they gave money, our money, to their political allies.

Presently grabby Obama seeks more of the same. He and his cronies will crab about "Republican tax cuts for the rich" when those cuts will work to everyone's benefit. Obama and Co will complain about ruinous cuts in government spending, when those cuts are absolutely required for prosperity.

The Leftist Democrats had no idea how much they were spending; they had no budget to guide them. It bugs the ruinous Obama and the Left that control is slipping away.

The way out of the mess is the same as always. Take the control away form government and put it back in the personal hands of the people. The method was discovered centuries ago. It is the free market. Free markets have been involved in mass suffering, because the free market is the people, the free market is us.

Freedom has never caused any suffering. Its takes a self-absorbed politician to do that.

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