US Economic Trend

  As we head into 2013 and attempt to predict the US economy and it's inherent opportunities as well as the outcome, we should  take a brief look at what led up to this point. The 2008 financial collapse was predominately caused by the high risks incurred by banks through mortgage backed securities, predatory lending, sub-prime lending, and inappropriate borrowing on the part of many borrowers without true capacity to pay, as well as the compound effects of market fear and consumer confidence dropping to all time lows. As the market often sees, when the herd gets spooked, so follows the stampede. We should have learned valuable lessons from over borrowing. It appears that we, as a society, have not.
  The burst of the housing bubble, as well as the meltdown of financial entities from exposure to too much risk, caused markets to tumble.
  The reaction was "We have to do something!" and "We have to do it now!", leaving only the government in a position to apply "the solution" to the problem. The government answer was to implement a gigantic stimulus package to the tune of 860 Billion Dollars that was to help create jobs and attempt to put back in the economy, the plug that was pulled allowing jobs to drain out. The stimulus has had little lasting effect. Additional short term moves such as implementing a 3% cut in social security taxes withheld from tax payers, which was most recently (January 2013) allowed to expire, have only added to the debt and when taken away, citizens change their buying habits to accommodate the change in pay.
  I have words of advice that are unlikely to be heard or revered. Never apply a short term solution to a long term problem, or a long term solution to a short term problem.
 
  My prediction for the 2013 US economy, is that we will slowly slip into another recession, and that the value of the dollar will continue to decline through deflationary measures, that will eventually (within 5 years ) lead to a significant financial collapse of the US economy.

  In future blog posts I will explain in more detail why I believe this to be true, and what effect the economies of China, Japan, Europe, and Russia will have on the US economy and the global economy. I will also go into more detail regarding the inability to raise interest rates, and the effects of more domestic energy production and its effects on the markets.