Here is a good post from Michael Pento, Senior Economist at Euro Pacific Capital, regarding a few sobering statistics. Here is an excerpt:
The website Zillow.com reported today that [Year On Year] home price declines were 5.9% and that of those homeowners with a mortgage, 27% were underwater on their property. Maybe this concrete evidence of a double-dip in the real estate market has something to do with surging borrowing costs. Today, the cost of a 30 year mortgage hit 5.13%, up 32bps in just one week!
Not only is the cost of homeownership rising but so is the cost of food. Thanks to the government’s genius decision to burn 40% of the corn crop on ethanol production, corn stocks are now the lowest in 15 years—with a stock to use ratio of just 5%. That means corn prices are set to increase yet again from their already lofty levels.
So let’s see, rising costs for pretty much everything and a stagnating job market, all after the Fed threw TRILLIONS of dollars at the problem, sounds like a recipe for recovery to me. At least there are some people out there, the non-Keynesians, who understand how an economy works and realise that printing money and giving it out to the Fed’s friends (you know big bankers, and corporations who can no longer cut it like GM) is NOT the path to recovery, much less prosperity. In fact, it is making it worse, much worse.
The only path to recovery is to cut spending and start saving, both government and people living above their means. Neither seems likely.