A Recession Fallout (Nuclear Winter?)

Credit Card Fallout?

If you really want to think about how scary this recession will be, consider this: Everything individuals and families were doing with their credit cards and homes, businesses were doing on a much larger level. Cheap credit pervaded every facet of the economy. From Construction to the Federal Government, expansion was fuelled by credit. Credit through low interest bonds, finance companies, and government debt selling. So how much of this credit-fuelled bubble is going to be around after this is all over? After this heavy recession and possible depression, how many companies will be left?

Cost of War

“War is the reciprocal and violent application of force between hostile political entities aimed at bringing about a desired political end-state via armed conflict.” – Wikipedia

What is it about America that sets this country apart? We’ve never warmed to metric systems or soccer. There is a real sense of American Exceptionalism. We are different, we like different things than everyone else. So what it is it? Why are we so different from the rest of the world?

Perhaps it is because we have not had a major national conflict occur in the continental United States since 1865. We have not suffered the destruction of war as Europe and Asia has.

Please don’t stimulate my economy…

Country Politician - George Bingham

In my other recent blog, In Defense of Capitalism, I argued that increased government activity would exacerbate this crisis. I argued that, in the long-run, investment will fix itself. As I read the news, I hear good and bad things. I cringe when I hear that the government is going to spend $850 billion for a stimulus package. But, I am encouraged when Barack Obama wants to cut taxes to stimulate the economy. I fear that government spending, on this scale, is bound to be inefficient and may makes things worse. But, I also know that tax cuts tend to stimulate economies in the long run. When people can spend their own money, they tend to benefit an economy. Money is invested wisely, looking for returns. The government is a bureaucratic mechanism that is extremely slow to work. When it does finally work, it tends to lend and trade favors not always for the social economic good. Governments tend to overspend on shotty merchandise. You need only look at the J. Edgar Hoover building to see how poorly the American government spends its citizens’ money. What makes you think they will use $850 Billion any wiser?

Money Supply Blues

Up up and away!

As I hear more and more about this economic crisis, the pundits and politicians’ voice begin to merge and it becomes a sort of white noise. There isn’t much sense to be made out of most the reports, so as a statistician I prefer to look at data and see what the real story is. Data sometimes lies, but to be frank it lies a lot less than politicians and businessmen scrambling to keep their jobs. I went to the Bureau of Labor Statistics (BLS) website for some graphic interpretations of various economic data. As I had said back in March, the United States is in a recession, perhaps the worst in a very long time. But what does the data say about this? Inflation is currently at 3.7%, not much different from last year. The unemployment rate (6.7%) increases every month, but we’re still nowhere near where we were in 1982 when the rate was around 10 percent. What really worries me is not the labor indicators, it’s the monetary indicators. Check out the latest data and you will see what worries me.