Friday, August 12, 2011

Administering the Coup de Grace


Consumer spending is up by the most in four months, sales of customer goods in general are up and there is exceptional strength in new car sales. This increase in the new car market is happening not so much because the economy is getting better but because there is a shortage of used cars and prices are up sharply. A few years ago there was a huge glut of used cars generated by lease returns since people don’t keep leased cars until they wear out. 

Leasing was one of those “genius” ideas of the financial services industry that made them a lot of money as people “rented” rather than owed. When the crash came this glut was strangling car sales with used cars falling in price and new car sales in the tank. Cash for Clunkers was intended to take a bite out the surplus of used cars but even with that, used cars were falling in price until this January but are now soaring. 

You see by “forcing” people who can afford it to buy new cars instead of depending on getting a deal on returned lease car, you stimulate the economy. People will complain that the poor must pay more for cars, but this is temporary as new cars beget trade-ins, and there are more jobs too. Obama is right about one thing, you don’t dig your way out of a hole this deep overnight. 

The consumer confidence survey is at a three decade low but this is a survey and not real numbers. Wages have actually started to tick up with new jobs being created and this is boosting consumer spending. There is pent up demand if we could avoid still more damage to the economy. Gasoline is expected to drop 50 cents a gallon or more over the next two weeks which could help the “back to school“ shopping season considered critical to the retail sector.

The problem with this is that the terrorists come back from vacation in September and will set about destroying America again. Grover Norquist of the “never tax the rich pledge” that all Republicans must sign, has three economy killing salvos ready to fire into the guts of the nation. The deal to extend the FAA budget expires in September putting 150,000 airport construction workers out of a job again. The gas tax will expire in six weeks, which if not renewed will put hundreds of thousands in highway construction out of work, and cripple state and local government as well. 

The fiscal year ends September 30th and if the tea bag terrorists can shut down government while they hold the budget hostage, then that is almost a million workers to add to the unemployed numbers plus contractors, suppliers and on and on. This is potentially millions that could be out of work by mid-October, just in time for the Christmas season. 

If Grover Norquist and the Tea Baggers find that the economy is not completely dead but still thrashing around, then the coup de grace would be to force the expiration of the Unemployment Extension at the end of the year. The millions that they have put out of work will have nothing to live on and the economy will expire. 

Since the Billionaires control the media they will make this all seem like something that Obama did and not the deliberate steps they took to destroy America. Of course if Obama keeps these things from happening he will have saved the Republic, at least for the moment. He still hasn't embraced any plan to actually rid us of the terrorists. www.prairie2.com

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