The Dollar gets its Respect Due!

So now what? Where is the economic rebound?


In my last post I discussed why we needed this recession to fix the dollar. The dollar is now a lot stronger vs commodities. Where is the rebound?


The problem is that this economy is a very big boat. Its hard to turn it on a dime. I believe that the republican plan was to have a nice little recession at the end of 2007 and turn it around in 2008 just before the elections. I believed that they learned that that its not so easy to steer a ship so big that you can't even see its bow in the horizon. I believe it took much longer then they anticipated to slow down the economy. They were looking for that "soft landing". The economy was still going full speed into July of 2008. To slow an economy this big you have to put the engines in full reverse. To the dismay of the Republicans, the economy slowed down and went into reverse on the eve of the 2008 elections. They should have started the recession a few months earlier and slammed the brakes rather then look for a soft landing.

If the Republican's had won the election the recovery would not have been a problem. It would have came within six months. The problem is that now you have a new administration in place with no ties to the old and no idea how or why we are where we are.

The biggest mistake I see President Obama making is that he is really pissing off the upper classes with his talk of raising taxes on them. I don't think he realized that once you get past the upper middle class, taxes are indeed voluntary. Rich people have many options in how they will participate in the economy. They are not wage-workers who get a W2 at the end of the year and take that gross number and write it into their form 1040. They get to pick and choose what is going to appear on the W2's, K1's, 1099's... etc. They have money flowing in and out of the country like water. There are in fact more US dollars outside this country then inside.

The people that President Obama is now irritating pay accountants like me to put whatever numbers they want on their tax forms. Beyond that... they don't even have to work. They can wait out President Obama 4 or 8 years. They can just keep their money inactive and out of play in this economy. Does President Obama think that his petty 900 billion will really have any impact in the face of hundreds of trillions that the upper classes control? The stock market has dropped over 27% since Obama took office int Jan 09 from Dow 9,000 to Dow 6,500. The only reason the stock market as a whole falls is because people are converting their stocks into cash. Cash that is not invested or spend is dead money. Dead money keeps an economy in a state of recession.

There is a reason why the nobility traditionally does not pay taxes... they were equally powerful to the King, if not more. President Obama better wake up and smell the coffee. If he wants to see this economy bounce back in his term, he had better court the rich people of this country who create the jobs for the people who voted him into office.