President Obama finally declared an end to the Iraq war and promised to refocus on getting the economy revved up in the U.S. But where are we?
- The FDIC says more than 10 percent of banks are on the verge of failure.
- Americans are still losing their jobs in droves. This week, the unemployment claims slipped a little but were still at 472,000 for first-time unemployment claims. That signals a troubled economy.
- Mortgage interest rates dropped another tick this week. I just locked in on a refinance: 15-years at 3.75 percent with minimal costs. That replaced the 15-year 4.25 percent refinance I closed on last November – just 9 months ago. That alone tells you where we are with this crazy economy.
- And yet, the stock market went up 254 points yesterday.
It’s a confusing mess and unfortunately leads to one conclusion – no one really knows what is going on. The economists seem puzzled, and Washington seems puzzled. A big fight is brewing at the Federal Reserve, where half of the governors seem to believe we should just let the economy take its hit and move on and the other half feels as though pumping money into the economy will still do some good.
The Wall Street Journal reported that the president’s economic advisors have been meeting frequently. You can almost hear the tick-tick of time as we count down the days to the election in November. The president supposedly favors tax credits (hello Republican voters) and infrastructure improvements (hello Democrat voters). But can you get enough people employed, and enough taxes lowered to save the election for the Democrats?
The real question is whether what gets pumped into the economy next is going to make a difference. Whether keeping people from defaulting on their mortgages will keep home prices from dropping again, as they are widely expected to do. Whether you can get banks to lend no matter how many dollars you deposit in their vaults.
Again, it all goes back to jobs, and creating an environment of trust and optimism where small business feel flush enough to bring on a warm body.
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