Sunday, May 22, 2011

Why The U.S. Economy Is Not Recovering (Additional Comments)

Investors are counting on consumers leading a rebound of the U.S. economy, but it’s not happening. On Wall Street Friday, retailers such as the Gap, J.C. Penney and Ralph Lauren had their stocks sell-off because with the rising price of cotton, new clothes are becoming too expensive for many people living on tight budgets.

More importantly, Walmart, by far the biggest global retailer is telling investors and stock analysts that their U.S. customers are being hurt by the rising costs of food and gas and other essentials and are highly selective and tightly limited in what they buy. Most Walmart customers, like most of America lives paycheck to paycheck and they have maxed out their credit. Many of them have lost their jobs or are fearful they will lose their jobs. Some of them have lost their homes.

Most of what Walmart and other U.S. retailers sell is made overseas, so we as nation are dependent on China and other foreign makers to loan us money to buy the products they produce for American companies. While OPEC also sells us oil produced overseas for U.S. global giants such as Exxon and Chevron. As we manufacture relatively little other than weapons, our balance of trade is in the toilet and circling the drain as our dollar grows weaker.

Meanwhile, Democrats and Republicans are arguing over raising the debt ceiling, which THEY WILL DO after pontificating in front of the cameras like peacocks preening their feathers because otherwise the government can’t pay its bills. But reality is that even with a higher debt ceiling, the government must still borrow and print to pay its bills, as it is rapidly sinking into the quicksand of overwhelming debt. As interest rates rise, and they will, that debt will become a staggering burden to the American people.

This is the harsh reality our government is not sharing, in the hope consumer spending, which is 70% of our economy, will postpone a financial Armageddon, an Armageddon which is preventable if only we will change our course and do it now.


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