Double Dip recession is coming

“Mainstream” economists are putting the odds of a double dip recession around 20%.  I put the odds of a double dip recession at about 80%. 

There are many reasons I think the economy will take a turn for the worse in the next year:

  1. The main reason is that I feel the unemployment rate will fluctuate between 9% and 11% nationally.  The Government has spent well over a trillion dollars trying to stimulate the economy and trying to create or “save” jobs.  This stimulus has only served to somewhat limit the increase of unemployment.  Many economists argue that without stimulus unemployment would be between 12% and 14% at this point.  A majority of the stimulus money has now been spent; hence, the effects of the stimulus will diminish over the next year or two.
  2. The Construction industry is in dire trouble.  New home construction has plunged (as it should have plunged).  The first time home buyer credit (one of the dumbest policies in recent memory) served to drive home demand forward; in other words it caused some people to purchase homes a year or two early.  Now that the tax credit has expired residential real estate is going to be even more sluggish.  There are also a large number of houses on the market; so many in fact that few new homes should be built.  There are also millions of homes that will be foreclosed on in the next couple of years; once these houses are put on the market housing prices will drop even further.
  3. Construction is also in trouble due to commercial construction.  Commerial construction has the exact same problems listed in #2 above.  The United States is overbuilt with both residential housing and commercial buildings.
  4. I am happy to say the the national savings rate has increased to 6.4%.  This is good for the United States in the long term; however, personal consumption is about 2/3 of GDP.  The increase in the national savings rate comes at the expense of current expenditures; which in turn drive GDP.  The fact that Americans are saving more today actually increases the chance of a double dip recession.
  5. Credit has contracted in the United States which is great news for our long term fiscal outlook.  It means that Americans are actually slowly paying down their pre-existing debt (Or banks are writing off bad loans) and are taking out less new loans (which drives consumer spending).  Since less credit is being taken out that means less money is currently being spent.
  6. Many states are in dire fiscal trouble; heading the list may be California, Illinois, and New York; however, many other states are not far behind them.  Even with the silly bill Congress recently passed which gives the states 10 billion dollars so they can lay off fewer teachers the job losses in various state and local governments is going to be relatively large.  Do not get me wrong most states and local governments desperately need to downsize their number of employees; however, this downsizing will cause more unemployment and will increase the chances for a double dip recession.
  7. Many local Governments and schools districts are also in dire trouble.  Read #6 above.
  8. Our Federal Government seems paralyzed and unable to act largely due to politics.  The Democratic Party has no long term solution to our economic troubles and seem afraid to undertake any actions that could improve our short term economic prospects because they are afraid of the Republicans.  The Republicans are instead focused on our long term economic prospects and are less concerned about the short term economy.  Basically our Government has no plan to deal with our economic conditions and the two major political parties are chiefly concerned with blaming the current economic conditions on the other political party.

I currently feel that we will have a double dip recession.  I think it will occur early - mid 2011.

What do you think?

Mike Sylvester

Is President Obama “weak” on terror?

I have heard several Republican pundits and Republican politicians claim that President Obama is “weak” in regards to prosecuting the “war on terror.”

I have no idea what these “morons” are talking about.  Consider the following:

1.  We have just as many troops in the Middle East under President Obama and a Democratic Congress as we had under the Republicans.

2.  We are spending even more on our military under the Democrats than we spent under the Republicans.

3.  We are spending FAR MORE on Homeland Security under the Democrats than we spent under the Republicans.

The “war on terror” is insane and should be stopped.  It serves absolutely no purpose except putting our troops in harms way, killing a bunch of civilians, and killing a few terrorists.  It is wasting hundreds of billions of dollars that could be better spent.

President Obama has continued the policies of his predecessor in regards to the “war on terror” and that is shameful.

I do not know why the Democrats in Congress are not continually lambasted by the “Peace Wing” of the Democratic Party.  The Democrats are hypocrites in this issue in a big way.

Mike

Its the economy stupid…

The Democrats are going to lose a significant number of seats in Congress this coming November.  This is due to several reasons:

  1. The Party in power almost always loses seats in the mid term elections.
  2. The economy is struggling and headed for the toilet again. 
  3. The Democrats have irritated a large number of Republicans and Independents with their health care reform bill.  Worse yet for the Democrats their own base is not excited by the bill they passed.

I do not expect the Republicans to take both the Senate and the House; however, I do expect them to gain a significant number of seats in both the House and the Senate.

Mike

Gulf Oil Spill

Watching the Gulf Oil Spill unfold has been sad; however, it has also been interesting.

I would think almost any intelligent observer could agree to the following facts:

  1. The MMS (Federal Regulator) is corrupt and has massively failed in its oversight duties.  A large number of people in this organization should be fired for incompetence. (Likely tens if not hundreds)
  2. At LEAST one of the private companies involved in the accident was negligent at the very least; and likely grossly negligent.
  3. The Obama Administration’s response had been horrible and should in all fairness be considered at least as bad as President Bush’s response to Hurricane Katrina.

These are my observations; what are yours.

Mike Sylvester

My Caucus Predictions

A few days ago I posted my initial caucus predictions.  Those predictions have changed a small amount due to several factors.  First off Phil Troyer dropped out of the race.  Secondly Mark Souder sent a facebook message that seems to attack Stutzman.  Third the phone calls I received from candidates.  Fourth the direct mail pieces I have received so far.

I was called by the following candidates:  Stutzman, Borror, Brown, Elijah, and Morris.

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Local Fox TV 55

The local FOX affiliate is polling 125 3rd Congressional District Committeemen concerning the Saturday caucus.  They will post their results online tonight at 10 PM and it will be discussed at the 10 PM newscast.

Tonight I will also be updating my predictions for the Saturday Caucus.  Several things have changed and I will change my predictions accordingly.

Mitch Harper over at Fort Wayne Observed has decided to endorse a candidate around 4:30 PM today.  It will be interesting to see who he endorses; however, I would be willing to bet you that he will endorse Marlin Stutzman.  That being said; I have no idea who he will endorse; I am just making a wild and uneducated guess.

Updated at 4:38 PM.  Well I completely missed the direction of the Fort Wayne Observed endorsement and I should have known better.  You should check it out.

Mike

The actual Souder Facebook message

This post contains the actual email sent to three media sources on 6/7/10 at 3:07 PM and it contains the actual facebook message that former Congressman Souder sent.  There are no editorial comments in this post; it is provided so that you can see it as is.

First the email:

From: Steven Clouse [ mailto:stclouse@gmail.com]
Sent: Mon 6/7/2010 3:07 PM
To: jeffn@indianasnewscenter.com; Niki Kelly; mattg@kpcnews.net; bhowey2@gmail.com
Subject: Congressional caucus - message from Souder

Last night at 8:03 PM I received the attached personal message from former
Congressman Mark Souder.  This repreents the only communication I have had
with Mr. Souder since his resigation from office last month.  I do not know,
nor do I care to speculate, as to his motives for sending the message, via
Facebook, to me last night.  According to the header of the message, the
message was sent to myself, and Randall Kirkpatrick, chariman of the Noble
County Republican party.  After much deiberation with Mr. Kirkpatrick, it
was our decision to release the statement so that the voters on Saturday
have as much information before them as possible. At the time I am sending
this to you, Mr. Kirkpatrick will soon distribute the message to his fellow
county chairmen, as well as to the Noble County precinct officials.

As far as the ethicacy of releasing a message that appears to have been
intended to be a private message, let me state that given the subject matter
at hand, to not share this message would be as reckless as the acts that
drove Mr. Souder from office.  Mr. Kirkpatrick did attempt to contact Mr.
Souder for an explanation this morning, but was not successful in reaching
him.

Sincrely,

Steven Clouse

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Souder Facebook message concerning Stutzman

The press is reporting that former Congressman Mark Souder sent a lengthy email to The Noble County Republican Chair and the Noble County Prosecutor. 

The Howey Political report has a lot more on the story.

Angry White Boy (Fort Wayne Blog) has his own spin on the story that is well worth your reading.  The comments on this post at Angry White Boy are also well worth your time. 

I have a lot to say about this; however, I am trying to secure a copy of the supposed email.  I currently have two copies; however, there are some subtle differences between them; hence I am not sure which is accurate.

I have reached out to several sources and hope to get a copy to review and post in the next 24 hours or so.

If you have a copy of this email please send it to me.  I feel that it should be posted in its entirety.  Currently several news sources have the document and are just printing parts of it and then commenting on it.  Just email it to me at  sylvester@fortwaynepolitics.com.

It will be interesting to see how the usual “Souder apologists” try to spin this.  

Former Congressman Souder needs to get entirely out of politics and stop trying to play “kingmaker.”  He needs to focus on fixing his life and his marriage and stop trying to be involved in politics.

Pat Miller discussed this on WOWO today and was “spot on.”   

Mike Sylvester

Phil Troyer drops out of 3rd District Congressional Caucus

Instead he is now running for the Indiana seat to be vacated by Matt Bell…

Troyer dropping out will change the caucus somewhat and I feel that his dropping out will help Stutzman in the early rounds.

Mike Sylvester

Congressional Democrats are out of the their minds

HR 4213 passed the House of Representatives on a largely Party line vote.  Every Democrat reading this blog should be ashamed to be a Democrat after reading this bill.    This is an awful bill.  There are several reasons it is awful:

  1. The Democrats campaigned in 2006 and 2008 on a platform of allowing the “Bush tax cuts” to sunset.  President Obama specifically campaigned on this.  HR 4213 extends many of these tax cuts for anywhere from 2 - 10 more years. 
  2. This bill serves to make the entire tax code even more complicated.  Our government needs to simplify the tax code; not make it more complicated.
  3. The bill has four broad sets of increases or revenue offsets embedded in it.  These four provisions are expected to increase Federal tax revenues by almost 56 billion dollars from 2010 - 2020.  The Democrats are calling this bill the “American jobs and closing tax loopholes act of 2010.”
  4. The first set of revenue offsets (about 15 billion) are all designed to enable the US to tax more foreign income.  I do not prepare tax returns for many people with foreign income and hence do not know a lot about these provisions.  I am not sure if these provisions are a good idea or not.
  5. The second set of revenue offsets (about 18 billion) are designed so that those people (hedge fund managers etc) who earn “carried interest” are taxed at a higher rate than they are currently taxed.  Currently most “carried interest” is taxed as a capital gain.  The new law is complicated; however, it will eventually cause much of the “carried interest” to be taxed as regular income.  I would favor this provision if it were done in a simple and fair way; however, Congress is incapable of that.
  6. The third set of revenue offsets (about 12 billion) is a 34 cent per barrel tax on oil.  This is supposed to go into an Oil Spill liability Trust Fund.  I oppose this provision; the oil companies are already responsible for paying to clean up oil spills; we do not need another tax at this time on oil.
  7. The fourth set of revenue offsets (about 11 billion) is a special tax that will only target certain small business owners.  Basically this tax will only be levied against certain subchapter S corporations.  It will target certain professional service S corporations and will ignore the rest of S corporations.  This tax will effect only certain professional service S corporations in certain industries; it also will only effect those with three or fewer members.  I think this provision is extremely unfair and I hope it is killed in the US Senate.  I will post more about this in separate posts because the way the House Democrats worded this provision it could cost my wife and I well over $12,000 in additional annual taxes starting in 2011.  Worse yet it will effect a large number of my clients who own small businesses.

I am so angry at the Democratic Party that it is hard to put my feelings into words.  The Democrats in the House are complete idiots and need to be voted out of office in November.

The United States economy is extremely fragile.  Why is the Democratic Party targeting professional service businesses in only certain industries with a new tax if they have three shareholders or less?   How is this fair?  For example I own an Accounting firm with two owners.  I will have to pay a higher percentage in taxes than an Accounting firm with four owners.  Does this make sense to anyone? 

Would any of you Democrats like to defend your brethren in the House of Representatives?  

Mike Sylvester

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