Things are not getting better, Folks.....

Recently the Congressional Budget Office released an analysis showing the so called “fiscal cliff”, we as a country is scheduled to jump off by end of this year, will likely spark a new recession in 2013. A recession would obviously mean even less people having jobs, more companies closing down, new catastrophe in the housing market etc, etc. As a reminder: “this fiscal cliff” is there because our politicians decided last year it was too hard to agree, so they postponed the issue till this year (I know - OMG)

And this week the Commerce Department released the latest report on “Durable goods Orders” - a way of evaluating how the manufacturing sector is doing, and how they will be in the near future. Bad news again. “Core Capital Goods” fell 3.4% - the biggest drop since November last year, and the fourth decline in five month. Lot’s of other news in the report - none of them good!

Now, none of this would be a catastrophic issue if we all had confidence that our elected politicians had a plan, and were working on a solution to the problem.... But alas, we all know they are not. In fact, they do not even seem concerned about solving this. They seem to think, this is somebody else’s problem and we can always fix things downstream. Maybe in the “lame duck period” after the election? Or, if everything else fails, surely a new administration with a new mandate will take care of things!

We should all know better. The last few years should have taught us it is highly unlikely.

Which brings me to the real problem: Sentiment!

The Economy moves on sentiment. In other words - on the expectation on what is going to happen in the future, as opposed to what has happened so far. So if “consumers” do not believe in their near term prosperity, they will hold back on spending. And when “business” - large and small - see no demand, they will not invest. Simple and proven facts - you do not need a MBA to figure this out.

So how do you change “Sentiment” you might ask?

Good question! Usually you work on everyone's perception of what will happen in the future. In other words, you promise them things will change! Unfortunately people are getting cynical. They do not believe in the speeches any more. The last few years have taught them not to. And businesses have head no good speeches from the Government for a few years, so they are not likely to invest.....

Since we can’t change the “consumers” or “the businesses” I guess there is only one way to fix things:

A new Government!!!!