With oil futures spiking by $7, Wal-Mart reporting miserable sales, the Dow futures already starting the morning down 115 and the NASDAQ down 12.50, it will be a very sad day in the market.
Even though the Obama administrations and his so-called financial whiz kids have said that the worst is over, it really isn't. I still read articles about a possible double-dip recession. With the Federal Reserve monetizing our debt through the QE2 and uncontrolled spending by the Congress, our economy and our way of life may become things of the past.
68% of Wal-Mart's business comes from households that earn less than $70,000 per year. My family and I shop at Wal-Mart and we make more than $70,000. Although I would prefer to spend money at other stories especially local stores, we prefer to save money and pay off any remaining debt. In the past, I would normally put an item on a credit card. Not anymore. I pay everything with cash.
Most Americans have started or will be starting their own austerity programs. When I was laid off and I did not know how long it would take for me to find another job, my family economized wherever we could. We cut back our spending and tightened our belt. We never missed a mortgage payment and we continued to eat very well. Every bill was paid on time with money left in the bank for emergencies.
Right now, our economy is based on consumerism. According to some economists, consumerism accounts for 68% of our economy. Some say that number is higher. In either case, it is completely unacceptable to base an economy on consuming things. If a society does not produce anything and only consumes, it cannot sustain itself. That is simple economics. If you have no money coming in, you do not have money available to go out unless you are the government and can run huge amounts of debt.
The Obama administration is about to add another $1.6 trillion to our national debt. With more and more Baby Boomers retiring and tapping into Social Security and Medicare, our unfunded liabilities skyrocket with each day. Think about this. We current pay $169 billion just to cover the interest payments on our national debt. Over the next decade, according to the Congressional Budget Office, we will be paying $5.5 trillion dollars.
With unions screaming for more benefits and strangling our economy and pension plans with completely unreasonable terms, our economy is spinning out of control and will not recovery. Timothy Geithner and Ben Bernanke are telling us that our economy will not return to a pre-recession economy for another 4 to 5 years. By that time, most states will be on the verge of bankruptcy. There will be more riots and uprising in the streets around the world as food and fuel prices skyrocket out of sight. We will see riots in our own streets. You do not have to go far. Just look at Wisconsin.
Whether they like it or not, Congress must slash entitlement programs. The President said that Congress is using a machete and he would prefer to use a scalpel. I say it is time for a chainsaw.
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