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May 07, 2015


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THE SMOKE AND MIRRORS ECONOMY continues to baffle the pros. I just heard the President say "While the economy is improving there are still a lot of people out there hurting!" Now that pretty much sums up 7 years of his economic leadership and his lack of understanding of the real economy. Today he will make his case at Nike for his trade agreement. Amazing isn't it that he sat on 3 or 4 trade agreements for 5 years and now all of a sudden he's in a hurry to get this one past---OMG--Harry Reid. Let's look at the facts:

1. Oil and gas industries that provided all the growth in his first 5 years has been decimated.

2. Unemployment is at 5.4% driven by part time and contract employment as well as people fleeing the labor force. Under employment has to be at an all time high. Wages are still depressed. His high paying middleclass jobs promised 7 years ago never came about.

3. The strong dollar and the fear of interest rate hikes are destroying American gains in exports.

4. Low interest rates for 7 years have failed to revive the American housing industry. Foreclosures and underwater mortgages still abound.

5. Retail centers and commercial buildings still remain empty.

6. Consumers loaded with debt and less income fail to go to the stores and spend their short term savings in gas prices.

7. Financial engineering and M&A continue to reduce the size of American big businesses. The number of shares of stock shrinks and forces prices higher without top line growth.

8. American small businesses who employ 70% of the work force continue to be denied loans and capital at banks throughout the land.

9. The hottest item in the real Estate industry is multifamily 350-500 SQ FT apartments in the inner city.

10. Seniors cannot find any yield on their investments and therefore do not spend any money.

In the end the hype we hear of the economy being the best in the world and recovering nicely is mostly hype. We are now a country of part timers or contract hired employees without benefits. The American dream of building companies is largely constrained to internet companies with fewer employees, fast food restaurants using easy to dump contract employees and part timers. I guess leveling the playing field is a strategy of making American more equal to their counterparts in China and feel lucky to be employed even if only part time. It has been a very successful political strategy of smoke and mirrors. Or has it? In the past 6 years the leadership of the Democratic party has gone from a landslide majority win of the White House and both houses of Congress to the loss of both houses of Congress and most of the Governorships in America. Perhaps Americans are not really as blinded by the Smoke as the White House hopes they are.

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