The economy will Blossom

The U.S. economy will do a normal recovery and the government mob will take credit for great planning.

Yet President Obama has even one more trillion dollar plan, a plan to buy toxic assets from banks. If these were "assets" the banks could sell them. Only the government will buy or loan money for something that is so worthless the private sector will not buy it.

The consumers are deleveraging, as they always do, after going on a spending binge for years. They have increased their savings rate to 5%, the highest in 5 years. When they pay off more debt and increase their savings to about 7%, the historical average, they will start spending again. As people save, banks' balance sheets will improve and the banks will have more money to lend. The credit crisis is not a crisis.

House prices are falling as rents increase. The renters will find house bargains that are too good to resist and will start buying houses.

For 2009 the unemployment rate will increase. However there will still be over 160 million people employed in the U.S. These 160 million workers will start buying again, as soon as they pay off some debt. The U.S. will still be the world's largest GDP economy. The U.S. per capita GDP is almost $48,000 per year! https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

Even as the unemployment rate for 2009 increases there will be millions of retired people who have incomes with cost of living increases in their Social Security checks. Millions of government retirees have cost of living increases in their retirement checks. These millions of retirees will see many bargains in the market place as retailers of products and services lower their prices. These retirees will start to spend. The economy will bloom.

Though state and local governments may reduce employment, the federal government is increasing the number of federal workers.

It is amazing to see state teachers protesting job cuts to balance state budgets. It is as if government employees think they are entitled to a job. They think the government mob is entitled to confiscate even more money from the producers to keep the government employees working. No such options for private sector employees.

The many people who have not been employed but have lives on welfare will continue to receive those benefits, with a cost of living increase. Millions of people on the Women, Infants and Children (WIC) program will continue to receive monthly checks and will spend the same amount they spent before. Millions of people receive food stamps and they will continue to buy.

The economy will recover and blossom in time for the 2012 election year. The incumbent president will take all the credit for the economic recovery, a recovery that would have happened without any government stimulus (political rewards).

The government mob always takes credit for good things and blames the private sector for bad things.

"Governments don't control things. A government can't control the economy without controlling people." Ronald Reagan

Charles Tolleson