“Fed Signals Optimism over US Economy” blared the headline on the Financial Times’ front page this past week. Really? So, why are they also signaling that rates will be held down for the foreseeable future? The two statements just don’t jive. Unless of course you’re intent on creating another bubble, something the Fed IS really good at doing.
Low rates equals more cheap money. Will the American consumer fall for it again? You betcha. Sales of big screen TVs are up, as are sales for PCs. Even Ford is selling more cars. Despite February’s inclement weather, retail sales were also up. Even the Dow and S&P were up, building on the gains from the second half of 2009. So, all is rosy. Let’s just shut down the criticism and analysis and start spending!
But, what about employment and housing, the two most important indicators? Unemployment is still hovering around 10%, maybe close to double that if underemployment and those who have just resigned themselves to the Federal dole are counted. And, housing prices are still falling, maybe even plummeting. It’s a good time to be a buyer, especially if you’re Canadian.
Last week I received an e-mail from a friend from the Great White North. He asked me incredulously – “are these prices real”? He was referring to an attachment to the e-mail, a brochure, touting Florida homes for sale. A three-bedroom, two bath home near the beach in Port Canaveral for $179,000 – over 2,400 square feet. I replied that not only was it true, the price was too high!!
I pulled up a list of foreclosed properties that just sold within a 30 miles radius of a major city, Orlando, and the prices ranged from $50 a square foot to $200 per square foot depending on location and whether it was a condo or not. Yes, my friends, for $50,000 or less, you can buy a piece of the American dream within a few miles of Disney World. Sure, housing’s recovering!
For someone from Toronto, shivering in March, this is a dream come true. I pulled up prices in Toronto where $400 a square foot on many properties was considered a bargain. If you want to sell your home, start advertising North of the Border because that’s where the buyers are. The Canadian dollar is almost at parity to the US Dollar today and they smell bargains down south. Too bad that the State of California is more populous than the entire country of Canada…we could use some more loonies flowing this way.
The Jobless Recovery
Another oxymoron put forth by the folks in Washington and the general media. I guess as long as the word recovery is in there somewhere, it softens the blow. I mean, if I was unemployed it would surely make me feel better that even though I didn’t have a job, the economy was recovering.
There is hiring going on. That’s a fact. I was in Washington DC last week and it took me 40 minutes to get from Bethesda to the center of DC, about 12 miles. I went to a Thai restaurant, MaiThai, in Georgetown for dinner. It was 8:30 pm and there was not an empty table in sight. People are spending like it’s going out of style in the District. And, why not? There are jobs aplenty here and money is flowing like it was being printed on a press. Oh wait…it is.
A little further to the south, in the state of Florida, unemployment just hit a 35-year high, almost at 12%. As I mentioned last week, one out of eight people were using food stamps. This is the real situation with jobs. They just aren’t being created unless the government is creating them.
Time and again its been proven that the private sector is where the productive jobs come from. With certain exceptions, very few I might add, the public sector is not where ideas are created. If the government truly understood the nature of job creation, they would do everything in their power to reduce red tape, offer tax incentives, and allow businesses to operate on a level playing field with competitors from abroad. What we are seeing today is Government trying it’s hardest to take over private commerce, like health care and finance, for the “good of the people”. The result is waste, higher taxes, and pandering to the Nth degree. We are facing the worst of all worlds. Politicians who have done their best to screw up the public sector are now focused on “fixing” the private sector too.
One might argue that it is government’s role to step in and be the last bastion of hope and stimulus when all else fails. After-all, even the most cynical pundit doesn’t really want to see the system collapse even if it means dipping into the country’s future to pay for the sins of the past. But, these aren’t the types of jobs that will move the country forward. They are one step above the make work programs that the Soviets and the Chinese used to employ in the 60s and 70s just to keep the population somewhat subdued. Of course there are certain programs that are really worth fighting for…
The last words….
Recently US Senator Bill Nelson, Democrat from Florida announced, “We’re going to Mars”. At a cost of several billion dollars (more than $6 billion a year for the moon and mars programs), the Senator is pushing hard for a manned space program that will save 7,000 jobs. The money will go to create new technologies that will advance science in general. An admirable goal to be sure. But, shouldn’t we be saving the money and paying down the huge Federal debt instead of finding ways to add to it for the sake of political gain? Yes, go to the moon and go to Mars if you CAN afford it.
Actually, maybe this isn’t such a bad idea…I can think of 535 people, Bill Nelson included, whom I would vote to send to Mars indefinitely. Spending $6 billion a year to send both Houses of Congress to mars to save us a hundred times that in pork barrel spending is not such a bad thing when you come to think of it.
