Time for more.
More leadership that is.
U.S. markets will be tumbling again later today when they open if what the Asian markets are doing now is any indicator.
Those markets typically take their cues from ours. We were down for not just the day, but the year, this past Friday.
Markets have the jitters and rightfully so.
It’s mostly a crisis of confidence and being the world’s leading economy still, we need to once again show the way in order to calm them.
Earnings for companies are mostly up. Many are sitting on stockpiles of cash, yet due to the uncertainty in the euro zone and elsewhere, hiring is down and unemployment is once again ticking up.
As job creation is in limbo, so is the housing market, still.
Many house flippers of the pre Lehman Bros. crash days that survived the recent downturn, are at it again.
They are gobbling up foreclosures with low ball cash offerings. Banks are taking a bath on these properties just to be done with them, and those with cash to purchase are getting great deals, fixing them up and turning them over to albeit diminishing buyers who qualify, once more.
These bank-held, priced attractive foreclosure properties are not available for very long. Flippers make their money with undercutting cash offers to banks who wish to unload them before most of the general public is even aware they’re available.
Some things don’t change. And since many folks are still recovering their skin or hoping to, the new buyers that would be, are just a small segment of the purchasing market.
So, housing really still has not hit bottom. Properties remain overvalued. There aren’t many realtors in the residential market who aren’t nervous as hell. And those who deal with commercial real estate are not faring much better; they are actually even more nervous, save for those overseeing apartment building construction. The overbuilding has taken its toll and you need look no further than the still scary number of office buildings with vacant suites, in our cities.
Combine those properties with those that have never been rented out again since 2008, and you get the picture regarding the enormity of the problem.
The U.S. economy is a triangle of corners that includes housing, employment and capital market sectors.
The stock market is finally coming back to earth. Although companies’ cash flows are healthy, generally speaking, many of the peak gains have already been realized via workforce reductions, outsourced manufacturing and efficiency-in-process improvements. There is nowhere else to go to derive gains or generate growth.
Although companies could easily hire again, they are not. And it all comes back to the uncertainty, the lack of a plan, the lack of vision that our leaders have for the country, the global economy and how to dig out and grow via the “next big thing” – which as yet has not been identified.
We’re a services-based economy now. We don’t actually make much anymore. The products are made overseas and the deals/sales/delivery of services is made by mostly customer service based individuals here.
As consumer demand goes, so goes the economy.
Demand by U.S. and European consumers of goods and services, however, is down, way down. The average Joe is back in restraint mode once again after running up some credit card debt recently with all the “good news” being delivered by our leaders until now, about how things were getting better.
Unfortunately, the numbers behind the previous forecasts were dubious at best, and were more based in rhetoric and wishful thinking. We were trying to drink the kool-aid while our heads remained buried in the sand. Those of us with jobs, even those of us with stagnant wage and underpaying jobs, were feeling at least somewhat optimistic that things were improving.
I think this is mainly due to the psychology of it all. After all, we have been mired in the throes of stunted growth, inflation, up and down gas prices, high unemployment and a lousy housing market for the past four years. We desperately need things to be better for our collective psyches by now, as so many of us are exhausted from it all.
We’ve cautiously looked at marginal-at-best gain news reports, as signs that things were improving, while quietly understanding that might not be quite the reality.
It’s an election year and a very important one at that.
The recent signs to the contrary regarding improvement have the nation on alert.
The world is watching as we enter our summer of discontent.
I wrote a piece awhile back regarding the best is yet to come.
I still feel that way.
But our leaders must emerge from the shadows and be accountable.
It is not being accountable when they would blame deficiencies or failures on those other than themselves.
Our leaders need to man up, stop the rhetoric and make some tough decisions, risk their popularity and their place in the polls, for us to truly find hope and get behind them moving forward.
If you want to be a politician, you try to do and say the things that can get you elected.
That would be fine if it were business as usual in the United States of America.
These times of crises, however, are staring us in the face. We have to begin talking about new ideas to improve things, about how we can be accountable and how to take responsibility, while we are doing so. Now is not the time for the blame game.
The world needs leadership from America more than ever.
Are any among our leaders up to the challenges?
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Ajay Kaul
We the people have a role to play as well. If we continue to cheer speech instead of action, it will continue to be status quo. This election we need to push both side to present concrete solutions to us, instead of telling us things will be magically fixed.
But, your post was a very enjoyable read. Loved the thorough analysis.
hittingthesweetspot
Thank you, Ajay. I agree we need to press our political leaders for fresh ideas and new solutions to ongoing problems. Americans have mostly grown weary of rhetoric and are craving substance to go along with real problem-solving from our leaders. Come November, we need to choose wisely based on what our leaders would do, rather than what they might say.
Thanks again for reading and best regards,
Bob Skelley