Thursday, May 21, 2009

Looking ahead

The landscape in Michigan for 2010 promises to be strikingly different.Granholm is gone whether it be as a Supreme Court Justice or simply filling an Obama administration position.The UAW will have morphed into it's role as owner operator.Consensus seems to have GM relocating to "greener" pastures probably in a right to work state.Certainly seems appropriate to have the Duracell CEO now run Chrysler as they are forced into developing electric cars.This will also be when Obama coerces Ford into playing by the new rules thru a variety of pressure.Rest assured,whatever remains of the Big 3 will be in lockstep in producing the cars Obama wants.He owns the UAW,the EPA,the Fed and all other regulatory and legislative entities that may be required to insure Ford complies,bailout or not.

Unemployment will still be in double digits.I've heard 20% thrown out there,but don't see the "official" number climbing that high simply based on the metrics involved.The alternative numbers such as the U-6 Bureau of Labor Statistics measure is much more telling of the complete picture.To see any large scale hiring in this state seems improbable for the foreseeable future.Certainly bottom is not here yet with the bankruptcy fallout to play out yet.

Michigan led the nation into this economic funk and is likely to lag it coming back out.The tools are everywhere to easily tie John Cherry to Granholm and with the economic disaster still in full force,there will be no excuse not to unseat the liberals from the Governor's seat.One could argue the value of taking back the seat at this point.Michigan faces an unprecedented period of stagflation.We will have high inflation.We already have high unemployment.The rise in interest rates to attempt to curb inflation will stifle any recovery efforts hurting housing,construction,buying cars or homes or student loans.A return of higher interest rates will also spur savings which is a good thing but will be portrayed as bad because we won't be investing in Obama's economic stimulus.Of course,talk is already starting about raising more taxes to balance the budget which will furthur crush recovery.Granholm's successor will be hard pressed to show much improvement under these conditions.

You really need to prepare for some fundamental changes globally.The renminbi or yuan will become well known as the Chinese currency replaces the dollar as the majority reserve currency in the world.The IMF and World Bank are laying the groundwork now with the full support of the Obama administration.Does this mean the dollar is useless?No,however,the devaluation is written in stone and will occur.Whether it's climate or fiscal policy,everything returns to equilibrium eventually.The dollar will still be our currency as well,not replaced by a world currency,at least not anytime soon.

I can't even begin to calculate the adverse effects of the debt.Today's Federal debt is $11.25 trillion.Obama projects over $20 trillion by 2019.47 states currently run deficits estimated at half a trillion over the next 2 years.I question that as too low with the stimulus,bailouts,health care reform and the carbon tax to come.Americans currently owe $2.5 trillion in unsecured credit personally.The Federal debt interest has been approaching half a trillion annually and will surely balloon with all of the damage Obama is inflicting.

It's no accident our economy is based on credit.The Fed runs it's fiat money scheme.Credit is the prime component is executing the scheme.If we don't do our part in spending beyond our means,the system will fail.All of the details like quantitative easing,CDO's,derivatives and the myriad other financial terms we are learning about these days are just how money transfers hands from us to the those smarter than the average Joe.This is not a conspiracy theory,just business as usual.

The bottom line is as always,prepare.Prepare for a long run of depressed economic events in our great state.

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