Brushfire of Freedom
The Conservative Cowboy
I read an article today on MSN.com that actually made sense; I know I was baffled as well. It was an article on the housing market and how it is not growing. This is very interesting fact for me because the stock market is going back up, the Dow is back over 10,000 doesn’t that mean that the economy is growing? Well unfortunately no it does not mean the economy is growing and let me explain why. The stock market is inflated, there is nothing backing the Dow or the S&P or any other stock market for that matter. I know we are all bombarded with commercials telling us it is great time to re-invest, it is going back up and it will continue that way right? Wrong, and how do I know this, simple the answer lies within the housing market. The American economies best indicator for anything is not GDP or the consumer confidence index it is the housing market.
You see even when the economy starts to rebound there will be a lag in the housing market because there are simply too many vacant houses out there. When this country is not building new houses it affects every single asset of the economy. There is obviously the direct affects it has on labor and material used to build the houses but there are also many indirect affects that come from housing builds. Building new houses mean that there is a demand for those houses. Prior to all of the crappy loans that lenders put together and the American public was stupid enough to accept, new housing builds typically mean that people can afford those houses. There is also of course all of the utilities that come with houses meaning the electric companies gas companies and water companies need to put pipe in the ground as well as sell the water, gas and power that runs through the pipe.
As you can see from the items above everything in the American economy hinges on consumer debt and the majority of any regular American’s debt is in their mortgage. So I will not buy any of this recover crap until the housing market starts to turn. This will be a long recession for the simple fact that there were too many unsustainable pieces to our economy that need to be fixed before the recovery process can be totally complete. The biggest thing that is hindering our recovery is the increased regulation by the government. All that Obama’s increased aid is doing is increasing the “Government” portion of the GDP equation, not increasing the “Consumer” or the “Business Investment” sections which are what would actually constitute growth.
I have seen some light at the end of the tunnel with the election in Massachusetts and the stall on health care reform and hopefully a complete gridlock on any legislation until the elections in November.
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