I predict another 2 years before the economy gets better. I say this knowing that the economy and the jobs needed to fuel it are based on growth in the private sector not the public sector, otherwise known as the government. It is business that is going to rescue us from this recession. Much is speculated about and predictions are made but every economist worth his/her weight in dirt knows that government is a bane to free market capitalism. The government we currently have is more involved in the economy than any American government has been since the Roosevelt New Deal years. Years during the depression that were perpetuated to many more years than should have been by an over spending government. If Roosevelt had not spent anything more during the depression it would have been over at least 5 to 7 years earlier. The same thing is happening now. The Obama administration has it's opportunistic "crisis" and they are perpetuating this recession to pursue leftist dreams like taking over the private sector, health care in particular. These are lessons that should have been learned from the past.  

     It really annoys me to no end when someone blames the President for everything. They have a big part in it. They are the ones that are setting the course, but are powerless if Congress is not on board. Of course if anything bad happens while he or she is in office they are the first to take blame. However, most people seem to forget or simply do not know that Congress controls the money. Congress appropriates all expenditures in the federal government. They are also the ones that pass all the laws. Some of these laws can look innocuous at the time of passage but end up causing great damage in the future. One of these laws was the "Community Reinvestment Act". This law passed by a democrat Congress and signed into law in 1977 by then President Carter and revised a few times down the road, caused all kinds of problems later on.

     The law was meant to stop the practice of "redlining". Redlining was the practice of lenders marking off bad areas of town and refusing to grant loans for those areas. On the surface this sounds racist because most "bad" areas of town were black. I have talked to lenders about this and they all said to me it is all about risk assessment not race. If the borrowers had been black and taking out a loan for a house in a "good" part of town they would have received it based on the same standards as whites or any other group. It was the bad part of town that was the problem. The bad risk being that keeping property value was harder in these areas which leads to more foreclosures, higher insurance rates and more risk altogether.

     Fannie Mae and Freddie Mac are two government operated lending institutions. Both started with good intentions but ballooned into disasters down the road. Fannie and Freddie were forced to back loans to people that might not be the best risks. This created the "subprime" loan market. Subprime loans are just that, not prime. An "A" paper loan is a loan that is given to people that are the best credit risks for the bank and were the standard for loans from the beginning. Subprime loans are the exact opposite and are what caused the housing crisis leading into this recession. In order for other banks to compete with the government they too had to offer subprime mortgages. This is where the seeds of this decline started. The government is solely responsible in my mind for this by over-regulating the banking industry. Tax breaks should be the way the government helps it's citizens, not creating entities that compete with the private sector. 

     This bad part of this happened in earnest when people realized they could get a loan at will for a house. Loan officers were more than happy to do as many loans as possible like this. They were making a fortune on commission. The decline came when the prices started to max out, then investors who had bought 2, 3 and sometimes 4 or more houses to rent out started finding the renter market dried up. The renter market shrunk because why would you rent when you could buy. The loans were crazy, no money down, no documentation other than identification and social security card, stated income, interest only, the list is endless.

     The renterless investor now stuck with paying multiple mortgages, foreclosed. Thousands of them foreclosed. Then prices started taking a nose dive because no one was buying. This left the banks with foreclosures and falling house prices with nobody buying, the house of cards came crashing down. Some of the first to go down were companies like Lehman Brothers who were an investment firm and not a lender. Lehman had bought alot of "bad paper" mortgages because of the monthly cash flow involved. Lehman and others obviously did not do their homework before buying these loans, but even if it hadn't been them that crashed it would have been someone else. When AIG cracked the government decided to rush in for the rescue. The government were the ones that caused the mess and now they were going to act like the savior. Obama was chomping at the bit at this time, right before his inauguration because this was his "crisis" to take advantage of. 

     You all know the story from there. TARP 1 then TARP 2, Stimulus, then Omnibus etc. The beat goes on and on over 2 trillion worth of deficit spending and nothing is happening. Nothing is going to happen. The government does not have enough money to put a dent in this economy. The only way the economy is going to recover is if investor confidence is restored. Investors are scared to death of investing with Obama and the spend happy democrat 111th Congress in power. Democrats are about taxing and spending, or spending then taxing if need be. No one wants to work hard then have the government take it. Now, with the trillions that government is in the hole with more coming next year and on and on, taxes are coming. Investors know this. They also know that the government is printing alot of money to pay for operations. This is going to cause inflation soon and that is going to hurt the economy even worse. Inflation will raise the cost of everything. Obama and the communist 111th Congress are doing the exact opposite of what they should be doing all for the purpose of power and control.  

     Obama could fix the economy by Christmas if he were to sign into law new tax cuts and put the "stimulus" money back in the Treasury and not spend it. He will absolutely not do this. Therefore my prediction is that gauging the anger in America over what is going on in government, democrats are in for a landslide loss in 2010. Hopefully this will give back control of Congress to Conservatives and then Obama can be stopped cold. Spending and new taxes will be stopped and this will create investor confidence paving the way for the recovery to start. The economy should pick up alot more when Obama is voted out in 2012. If the concept of stealing from the producers and giving to the non-producers is not debunked in this recession it never will be. I know we will have to fight forever leftists that want control over all of us in every aspect. Patriots armed with logic and the Constitution will always prevail in the end, too bad the leftists will never realize this.