It’s bubbling over again! The economy appears to be in good shape, with stock and home prices rising, retail sales increasing, and unemployment slowly falling. As people who enjoy looking behind the media veil we know that the economic foundation is weaker than it appears. The government spending money it doesn’t own is supporting a large portion of the economy (e.g. 90% of the housing market. It is not clear when reality will return and when the superficial recovery will end, but it is certain that it will. One author said, “Enjoy the party but dance very close at the door.”
Housing is seeing an increase in starts and permits, as well as home values. However, a large number of buyers are investors who are making all cash offers. People who are not regular Joes or Janes cannot afford to buy a house due to their lack of savings, low incomes, and excessive debt. The true unemployment rate is closer to 15-20% if you add in the long-term unemployed as well as part-timers who want to work full-time.
Many economists and other experts encourage the government to spend more right now, and then worry about future debt. Of course, “later” never materializes. These blogs have repeatedly stated that the United States (among other countries) must get its finances in order, even though it will cause short-term pain.
The U.S. central bankers and European central bankers have done nearly everything wrong in their attempts to support the economies and clean up after them. The central bankers in the U.S. and Europe can verify all the items below, even though common sense suggests that they shouldn’t have.
- set interest rates to near zero
- Encourage consumption at the expense savings
- Too much emphasis on getting stock markets to all time highs
- Don’t lend money to insolvent entities
- Banks should not be required to fix the problems they created
- Drive the currency down
The Fed in the United States keeps us happy and drunk by filling our punchbowls. You should be ready to leave once they have run out of cash injections. It’s a good idea to ensure that your portfolio contains plenty of precious metals such as gold, silver, or other precious metals.
Adam Mcbrian, a California commercial note buyer, is based in San Diego. His company is a commercial note buyer and can purchase notes on vacant lots, office buildings, restaurants, vacant lot with improvement, as well as other types of property.