Top Ten Signs the US Economy is in Trouble

Here are my top signs the US economy remains in trouble. These are in no particular order, just the way I wrote them.

1. White House economist Christina Romer noted the stimulus provided a jolt, but the unemployment and slowed growth is likely to return. Not a surprise and second fall, like coming down from a Mt. Dew high is likely to be worse than the original fall.

2. Unemployment continues to go up. Numbers for September showed 531,000 more people are receiving unemployment benefits. Not good, but even worse are states such as Michigan were unemployment is at 15%.

3. The State of California is as close to complete collapse as a state economy can get. Riddled by sky rocketing unemployment in the farming sector, caused by government regulation, and out of control spending, California is a disaster. Add it to Michigan and it is hard to imagine a recovering economy with two major states in economic disarray.

Fannie and Freddie Are Worthless

It appears the spiral downward continues for Fannie Mae and Freddie Mac. When the bank crisis hit in 2008, there were many voices yelling that the main player was Fannie and Freddie. However, driven purely by political reasons, those voices were drown out. The reason is simple,exposure of the truth would have destroyed the public approval of the bailout plan.

The process was as follows.

Politicians pushed for mortgage loans to the "underprivileged" guaranteeing a large segment of the population would vote in a specific manner. To accomplish the goal mortgage approval had to eased and this is where the large banks entered the picture. Fannie and Freddie, established as mortgage companies were used as quasi purchasing agents for the government. The banks approved the loans, sold them to Fannie and/or Freddie, for a profit and continued rolling in the mortgages and sending out the cash. As the process grow wildly out of control and the bad mortgages piled up faster then they could be sold, the bubble started to burst. When the real estate market sank and oil prices sky rocketed the banks were in trouble. The banks were left holding loans nobody could pay and they were stuck. Thus, the bubble burst. Enter the crisis talk, the bailout plan, the scare tactics and rush to fix the problem.

The end result is the American taxpayer is paying for two things; 1. Politicians buying votes 2. Large banks abusing a system and taking advantage.