U.S. Economy Is Going To Hell In A Handbasket

First, Fannie Mae and Freddie Mac are two U.S. government sponsored entities that buy mortgages from banks and either keep them in their own portfolios or package them and sell these packages to investors. They are owned by investors and traded on the NY Stock Exchange. Their liquidity (the money used to buy mortgages) has been challenged as well as the strength of their investments and they may have to issue more stock. Shares of Fannie Mae have dropped from $23.81 to $10.25 in the past month. Freddie Mac's shares have plunged moreso in this same period, dropping from $22.49 to $7.75. Though they will not be allowed to fail, their problems will have an impact on the housing market.

The housing market is already reeling by foreclosures, losses in homes' values, construction slow down, rising mortgage rates and the tightening of credit needed to obtain mortgages.

Everyone is familiar with the dramatic price increase in oil and gasoline. (I hope you don't live in an outlying area far away from the job market).

There's inflation in food prices. The rising price of corn and corn's government subsidies has given farmers reason to grow that crop in lieu of others, thus lowering the supply of those other crops and raising their prices. Since corn is used in cattle feed, the price of beef is going up. Gasoline prices have increased the cost of transporting these crops.


Electricity prices are going up. Airlines are dropping the number of flights and raising consumers costs of everything imaginable. What's going down in price? Shares of stock in many companies.

The U.S. dollar has been in a free fall for years, and since oil is priced in dollars it only makes oil more expensive for Americans. This should have been addressed long ago.

This year, federal spending will exceed federal revenue by more than $400 billion. One answer to this problem, per both presidential candidates, is to slash earmarks. But earmarks make up less than 2% of the federal budget.

And now the first of the baby boomers is reaching retirement and collecting Social Security and using Medicare.