OBAMANOMICS WILL FAIL
Short Economic Lesson For Obama and His Supporters
Definition of Recession: source Wikipedia
a recession is generally associated with a decline in a country's real gross domestic product (GDP), or negative real economic growth. According to widespread definition, a recession occurs when real growth is negative for two or more successive quarters of a year.
History of recessions in the United States
According to economists,[27] since 1854, the U.S.A. has encountered 32 cycles of expansions and contractions, with an average of 17 months of contraction and 38 months of expansion. However, they have been shorter and much less common in recent years. Since 1980, there have been only seven recessions (see charts to see how stocks did in these periods). The charts show the impact on stock market indices.
January-July 1980: 6 months [28]
July 1981-November 1982: 16 months [29]
July 1990-March 1991: 8 months [30]
November 2001-November 2002: 12 months [31]
During March 1991 to November 2000, the U.S.A. experienced the longest economic expansion - 116 months, dipping into a true recession in the final months of the Clinton presidency.
We have not experienced 2 consecutive negative growth periods in 2007 or 2008. We have experienced high fuel and energy prices which has had an effect on our food prices. These two factors with non rising incomes created a false sense of recession. We should be concerned about inflation. The Bush administration despite public belief that they haven’t handled the slowdown has averted a real recession.
Therefore when OBAMA made this statement TODAY (6.14.08) “there is "little doubt we've moved into recession” he is off the mark. Just what does he understand about economics? If he were to raise the SS tax cap that would tax everyone because of retirement investments we have been making.
Another thing you have to think about which most people are unaware is that the Construction and Development loans are made by companies that lend HARD MONEY. Hard Money is loans based not on current value but on future value of a developed project.
For example if you were a City and you wanted developers to develop a side of your city that has been experiencing job loss money would need to be available to fund this project. The Developer would plan the project and for sake of a simple math number maybe it would cost him or her 25 million to build the project. When completed the value would soar to 60 million. Investors would lend the money to the Developer using the land and future construction value as collateral and guarantee that their money is safe. It is a huge risk and that risk comes with a price tag. A developer may have to pay as much as 20% interest including points and fees to obtain the loan. If the Investor did not have such a large return on his investment he or she would not feel inclined to take this risk with such a large sum of money.
If Obama were to put restrictions on this type of lending the consequences would be enormous. There would be less trade jobs, no new creation of manufacturing jobs, no new retail stores which have a large percentage of new growth in jobs in recent history. We would be shoved into a deep recession and steady decline. Obama’s economic plan will defiantly result in job loss in the building trades, manufacturing and retail industries. We can not afford this on top of rising fuel, energy and food bills. McCain on the other hand would expand business opportunities; Lower taxes on investments which would encourage more lending and future growth that will produce more employment opportunities for everyone.