Hennessy's View

Each day, more economists jump onto the Double-Dip bandwagon. Signs abound that the natural economic recovery that would normally follow a deep recession won’t happen. Instead, the economy is now saddled with so much debt, so many regulations, and such onerous new taxes that the Obama Administration tells us to be happy with 9.5 percent unemployment.

Barack Obama is an economic disaster of the first order.

So why all the pessimism? 

Well, every week it seems we’re hit with wave after wave of bad news. At the same time, Biden and Obama tour the country telling the unemployed they never had it so good.  Here’s today’s top stories on Drudge:

Here’s a link to one of the stories—on CNBC—that says we have left recession and entered . . . economic DEPRESSION.

And that brings us to this week’s triple-play of disastrous economic news.

First, existing home sales fell by 27 percent in July to the lowest levels in 15 years. At the same time, inventories climbed and interest rates fell.  That means prices will have drop dramatically before the housing market can recover.

Second, durable goods orders, excluding transportation, fell by 3.8 percent in July. Economists and analysts expected a 12 percent rise.  That means businesses have abandoned hope of recovery.

Third, existing home sales plummeted 12 percent in July to the lowest level on record. 

Why can’t the economy find solid footing?  Because America can no longer afford the government in Washington.  With government workers earning twice as much as people who actually produce value in the economy, wage earners can afford only two things:  subsistence and taxes. Truly, the government has erected a multitude of New Offices and sent hither swarms of Officers to harass our people and eat out their substance.

Either we cut the cost of government or die.  That’s a stark choice.  But it’s the one we’ve been given.

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Technorati Tags: depression, economic depression, Economy, Hindenberg Omen, housing, obama, recession, unemployment

For months I’ve been echoing the warnings of Peter Schiff and others:  when China stops buying American debt, we’re in deep, deep trouble.  The possibility for hyperflation, prices rise by double-digits on daily or weekly measures, becomes palpably high.

Even though this article from IHT failed to suprised me, I have a sick, frightened gnawing in my stomach:

China has bought more than $1 trillion in American debt, but as the global downturn has intensified, Beijing is starting to keep more of its money at home – a shift that could pose some challenges to the U.S. government in the near future but eventually may even produce salutary effects on the world economy.

Thanks to Hank Paulson’s Bailoutpalooza followed by Obama’s promises to pile on more bailouts and $1 trillion or more in stimuli, the US single-year deficit for 2009 will be between $1.2 trillion and $2.5 trillion.

There are three ways to finance that deficit: tax, print, or borrow.

A tax increase, as we have been told, could push us into a deep depression.  We don’t want that.

Printing $2.5 trillion in new cash would lead to hyperinflation.  Unless you want to buy bread for $3,000 a loaf, that’s not good.

Borrowing delays the reckoning.

One way or another, we will deal with depression, hyperinflation, or–like Germany in the 1930s–both.  At least in a depression with deflation, cash will save you.  In hyperinflation, it’s every man for himself.

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Technorati Tags: china, economic depression, Economy, hyperinflation