AMEERICA: US STILL LIVING ON BORROWED TIME

US Still Living on Borrowed Time

By tothetick on October 21, 2013 in Bonds, Commodities, Economic News Analysis, Featured, Stocks with

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Dreams usually come to an end when we get to the good part. The juiciest part of the American dream has ended too; except the country will be waking up in the middle of the cold dark night and see itself breaking out into a cold sweat. Isn’t it amazing how the US federal workers get back to work and the politicians and the mainstream media believe that things are all hunky dory in the good old Land of Dreams? Dream on! The problem has only been temporarily solved and it won’t go away as it has nothing to do with brinkmanship or gamesmanship as it always has done in the past. It’s the whole system that needs an overhaul. The swamp needs dragging so that we can get rid of the swamp flies that have been feeding off the country.

How many times have I heard people (including US citizens and not just the politicians) harping on about how resilient the US economy is, how much the Chinese will never be better than them and how they will always be top of the roost? The US has been waning for decades now on a credit-rich, cash-poor economy where the order of the day is reduced salaries and increased taxation while the unemployment numbers just keep getting cranked up one more notch.

The shutdown ended after 16 days and the people have now forgotten.

Despite the fact that it will rear its ugly head yet again by the time 2014 has rung in the New Year and before the decorations have been taken down. The US is doing what it has always done: it’s living on credit. Even the time that it has voted for the federal workers to get back to work is nothing more than borrowed. It can’t even buy time these days.

There are some that sit back in the US and laugh at the crisis that is going on in the European Union pointing their accusatory fingers at the countries that joined together, doomed to failure in their less-than-humble opinion. But, they are so caught up in finger-wagging ‘I-told-you-so’ declarations that they can’t see the whacking great big log that is in their own eye and that truly needs felling right now.

Analysts have suggested that there will be a loss of 4th-quarter revenues and rightly so for US companies.
US GDP forecasts were reduced by 0.6% for the 4th quarter 2013.
That’s a loss of $24 billion to an already hard-hit economy that is having trouble picking itself up out of the dust.
US GDP growth will probably be around the 1.6% mark rather than 2.2% that had been previously suggested.
Before the revision to 2.2%, growth in the 4th quarter had been predicted at 3%.
Confidence has never been lower in the US and the Bloomberg Consumer Confidence Index dropped to minus 31.
That’s the lowest that index has been since the end of 2011.
September was already bad enough at minus 9.

US: Obamacare

The federal workers may be getting their money back in a deal that was passed to back pay them for salaries that had been lost due to the shutdown. But, what about the contract workers and the companies that were sitting there twiddling their idle thumbs while Congress battled out the Obamacare stakes and everyone stood their ground?

Uncertainty about the future (as the waters have only be calmed for a few months) will mean that the holiday season will see reduced spending and further damage to the economy. The bill is becoming rather heavy to pay because of playing around in Washington.
US Republican Party

US Republican Party

The Republicans never lost support despite what some might have said. They will be in a position come January to pursue their political goals and wage their budget warfare once again. 38% of US citizens polled by the Pew Research Center said that they still saw the Republican Party favorably. The slogan of the Republicans right now that is hitting home is that they are the ‘Real Americans’. Sweeping reforms that will push the country into self-government and liberalism along with spending cuts that are reminiscent of the Reagan era might just hit home with today’s economic backdrop against which President Obama is being strongly criticized for spending more than any other president in the history of the US.

President Reagan once said in 1985 “you didn’t send us to Washington to feed the alligators, you sent us to drain the swamp”. He certainly drained the swamp and took away all the water. That’s for sure. But, he should have done away with the alligators as they have certainly been getting their teeth into the rest of the country for the past three decades. The country has been drained dry. The alligators took a sizeable bite worth $24 billion out of the US economy.
America: If you want your dreams to come true, then don’t go to sleep.
January 15th will be your wake-up call, Uncle Sam.