AMERICAN REACTION TO ECONOMY

Most recently a Federal government publication of data confirms that America is suffering from a quarter-of-a-century high unemployment rate officially set at 10.2% but in reality is more likely at 17.5% or even higher. This report has raised some even more disturbing premonitions that the near future promises little hope for an economic recovery much less a period of prosperity.

The last time our economy was in this bad of a condition was over 25 years ago when in 1982/1983 the unemployment rate was also in the 10% area. Then, Washington's attack on the problem was to take the then high, double digit interest rate and slowly modify it to lower levels thus making funds more available for growth and to revitalize the economy. This program was successful. Unfortunately, this particular door to recovery is closed to the Obama Administration since the Washington controlled commercial borrowing rates are currently at zero and, obviously, cannot be lowered any more.

It seems rather simple to comprehend that to grow the economy and as a result rehire Americans, the demand for products and services must increase. Since few Americans have the financial confidence to spend or the financial willingness and/or ability to borrow, this increased consumer demand is not yet foreseen by any economists. In fact the trend is that American homeowners are not spending money but are rather diminishing their debt obligations. This year those particular obligations will fall by $200 Billion. Banks and businesses are doing the same. Again expenditures have not increased but rather there has been a reduction of existing debt by an estimated total figure of $2.3 Trillion. This trend is also true for small business to whom lending has decreased by $113 Billion.

What all this means was well put by Mort Zuckerman with his comment that America could seriously be looking at an economic deflation as we have "too much supply and too little demand".

There is good news from this economic situation. Fiscal conservative groups, like The Tea Party, are exerting their voting power as can be easily seen in the governor elections recently held in New Jersey and in Virginia. In both of those States, 1/3 of those who cast ballots carried independent party status and were not therefore registered Republicans or Democrats. They were, as properly defined by Dick Armey, the personification of "fiscal conservatism" and "the dead center of American politics". In both of these States the Republican candidate won and by these victories sent a clear message of hope to all Americans unhappy with Obama.

Cultivation of this "dead center" can only result in further ballot box victories for "fiscal conservatism" in the United States in 2010 and 2012.