Why it's not over yet...

Reasons why the stock market and everyone who is so optimistic on the whole economy might be taking a turn down the path of unhappiness once again:

-Companies reporting earnings numbers based on cost cutting (layoffs/office closures) vs. top line revenue growth. You can slash and burn a lot of things, but if you continue to lose revenue (in a lot of cases a 70%+ year over year difference) sooner or later there won't be any revenue to pay the employees you have left. A growing economy is not one that continues to cut it's workers to make (or beat) analyst's estimates.

-10% unemployment or more in 15 states as of today. And soon many unemployment benefits will expire. Think of all the workers who have been living off unemployment, slowly running out of time to find a new job. Soon enough even their $300 a week will be gone too. Then it becomes a matter of survival. What do you pay for? Food is always first. Everything else is not necessary. More houses become vacant. More credit cards unpaid. Less revenue generated for "luxury" goods - in even this case anything that is not edible. And what do we get from this?

-Downward spiral with commercial mortgages. Every day I cringe at the sight of the big "FOR LEASE" signs. All of those strip malls out there. Heck, even all of those actual malls. Those were big investments for someone - for some company. And when that domino effect starts (which it already has begun), watch out. Let's take one of your local malls. I'm sure plenty of us have them near us and know what kind of stores are in them - many of which you've always wondered how they remained in business. Guess what? Some of them may be out of business soon if they are not already out of business. Mrs. Field's cookies become a luxury. No one sees the point of pretzels from Auntie Anne's (and actually can find the recipe online). iTunes, Amazon and even Walmart continue to dominate stores like FYE, Gamestop, Barnes and Noble, Borders. And those last two companies take up a lot of space which costs them a lot of money in the form of a lease. And as soon as that rent stops getting paid, the owner of the mall cannot continue to take the loss on their multi-million dollar property...who's going to be left holding the bag on that one again?

Probably us, the tax payers. Which brings me to my last reason why this isn't close to being over yet...

-Politicians still unable to agree on anything - we're seeing the same old gridlock as we always haev in the past. In my opinion nothing has changed except the talking head on TV. The stimulus is a joke. I laugh every time I see an ad for Cash for Clunkers - although for at least the last month things will look rosy just because of an incentive that tax payers are paying for anyway. Driving down to Charleston I saw a lot of "stimulus projects". Lots of roadwork. Yes, many of the roads we drove on needed a little work. But were they bearable? Absolutely. Couldn't this money have been spent somewhere better? I don't think I-90 needed to be completely repaved. The whole health care situation is a mess. States like California are basically bankrupt - I heard a story where they were considering releasing thousands of inmates to cut their budget. Absolutely hilarious. I can already sense the wave turning on all that "Hope for Change." Things could get ugly in regards to our talking heads pretty soon.

-Statistics lie. In June there was a .5% increase from month to month in the Case Schiller home price index, (meaning that home prices actually increased from June to July) however if you really drilled down on that number there was actually a 17% decline in prices since last July. So you're telling me that across this nation that homeowners lost almost 20% of the value in their homes? Some homes out there which have already lost that much over last year? Some homes (like my parent's house) which was completely paid off and they just continue to lose that equity? How must each person who goes to the market to offload what is now a depreciating asset - how terrible must they feel to take a loss on something they've dumped years of hard work in to? Sickening.

-Inflation hasn't even hit yet. All of these dollars to "stimulate" the economy have to go somewhere right? I give it 3-5 years assuming we continue down this path. Imagine gas over $6 a gallon. The oil companies have to continue to make their money too. And yes - I forgot, there is "alternative energy", but remember it's much easier to build/service a solar panel/wind farm than it is to constantly be mining for coal or drilling for oil. More jobs lost (although we've been told that this green revolution will create more jobs - I'll believe it when I see it).

-Of course all this bad news sets us up for what I'm assuming will be the worst retail Christmas ever. Because that is what counts. What happens when you have an economy based off of 70% consumers - meaning they actually consume things - who back off their spending by even 10%? Disaster. I even looked around at Old Navy today and saw 3 moms shopping with their kids for what I'm assuming was back to school stuff. 5 years ago I would've had to squeeze past shoppers in the aisles, wait for a fitting room and then wait once again to purchase my old navy performance fleece. Now? *crickets*

Currently I'm still in the mode of "cautiously optimistic" for the US. However, over the next few months (possibly until late 2010) the ugliness is more than likely going to continue.