How can it be the U.S. economy is floundering? The Fed is pumping huge amounts of cheap money into the economy and the federal government is spraying funds like a fire hose into military spending both of which supposedly should be uplifting the economy and providing jobs en masse.
There has been a strong recovery from every U.S. Recession since the end of World War ll in 1945, 67 years ago, but not this time. Why? Because while the U.S. economy still has vibrant parts to it such as Silicon Valley firms Apple, Cisco, Facebook, Google, Intel, Twitter and other high tech companies, the last two Recession recoveries were based upon bubbles.
In the late 1990's, Wall Street worked closely with the U.S. government to finish the job of ridding itself of financial restrictions and government oversight of its exotic financial products.
In the Recession recovery of the late 1990's into 2000, it was the Dot Com bubble in which the "New Paradigm" for the "New Millennium" Wall Street promoted companies were supposed to revolutionize how everyone did business. They raised staggering sums of money to invest in firms with little or no track record, often run by people with little or no business experience.
This defied good business sense, and no surprise, most of those firms went bankrupt and investors across the globe lost massive sums of money. Desperate to avoid a collapse of the U.S. economy especially after 9/11 (2001), the Fed rushed huge sums of cheap money into the economy, and soon that money triggered the next recovery, a real estate bubble.
Everyone seemed to be making big money on real estate and it became a global boom. Unfortunately it was based upon real estate only increasing in value, something which has never happened in the history of mankind. And when this boom collapsed, it nearly took the global financial system with it and it required taxpayers all over the world to bail out the banks and other firms involved in creating this mess.
And that is where it stands today. No bubble, no recovery.
The Euro Zone is a basket case in which it may bailout Greece for the third time since 2010 and it has giant economies in Spain and Italy on the verge of collapse. While in the U.S. the housing market is dragging along near its bottom in a so far weak recovery and the jobs market often doesn't generate enough jobs to even provide for all the new people entering the jobs market.
The U.S. jobs market only appears to be making a mild recovery because the government doesn't count the people who have been unemployed for over 99 weeks, calling them "discouraged," nor does it count all the people who are working part-time when they need full time work.
And speaking of jobs, many large U.S. employers are announcing disappointing earnings and issuing profit warnings. In this environment, they will cut their spending and not hire more people.
Meanwhile the U.S.'s student loan defaults are mounting, for many of the students who borrowed money to get a college education either can't find jobs, or they can't find jobs that pay them enough to make the payments on their student loans. In many cases, their parents now in their 50's and 60's guaranteed those loans and so they too are confronted with potential defaults at a time in life when they had hoped to plan for their retirements.
But the U.S. and global economies will eventually recover, although not before some very bad times to come from all the financial folly, bad times that are already hitting Europe. For now in the U.S. we are at a stage in which our politicians don't even address our mounting financial problems, nor tell us of the sacrifices we are going to have to make.
But dear reader, please take heart. Especially in the worst of times, most people set aside their differences as happened during the Great Depression of the 1930's, and they help one another. I believe we as mankind will do the same in the times to come, as together we unite and solve the global problems that confront us.