Many among the status quo have defended the last 8 years as a productive “recovery” from the abyss of financial armageddon unleashed by our criminal banking sector. The efficacy of the recovery depends on the person responding to the question. For the vast majority of the U.S. population, there has been no recovery, but instead a steady decline. If you have been paying attention to the early release of season 5 of ‘House of Cards’, speaking of the email data dump exposing our corrupt political machine for all to see, the reasons behind the phony recovery become clear.

The status quo (namely Wall Street and the educated “professional” class) have gone to great lengths to preach the merits of meritocracy, open borders, and asset inflation. Embedded within the process of this neoliberal trickle-down horse manure is the inconvenient fact that the “recovery” was just another wealth transfer mechanism cooked up by the status quo revolving between Washington and Wall Street. This is why our politicians must have a public and private message prepared for their audiences depending on who they are playing to. We can’t have something as anathema as the truth coming out on a regular basis.

Of course the end result of this duplicitous back-room policy parading as progress leaves us with nothing more than a growing pile of debt, deficits and unaffordable housing. This growing inequality is creating a more polarized society both here and abroad. That whole asset inflation thing has resulted in YTD home sales in the Bay Area that are now down 12 percent. Apparently San Francisco residents are having second thoughts about paying $1.3 million for a crap shack. Here in Houston Texas new home sales continue to stagnate while actual home prices are rolling over as well. New vehicle sales have crashed 20 percent year-to-date in the Houston area, indicating there may be more trouble ahead for the local housing market as consumers balk at taking on more debt.

It has been fascinating to watch the last 8 years of distortions in the housing market. I, like many others, was hoping that we would have purged the system of the fraud and corruption that plagued the financial markets during the last go around, but that illusion was quickly buried when Obama allowed Wall Street to basically build his entire cabinet during his first term. It was at that point that I knew for certain that the American public had been duped and it was going to be business as usual. As we can see from the tape, business has usual has meant more inequality, more fraud, and a growing pile of debt and deficits.

For all of the talk of “hope and change’ what America has experienced during the last 8 years is simply more wealth and income inequality…


While reading the latest quarterly review from Hoisington Investment Management, one thing that resonates clearly is the degree to which debt and deficits have driven this phony “recovery” that followed the Wall Street bailouts. Interestingly, federal debt and related annual deficits have garnered little attention as they have gone parabolic in recent years, probably not surprising since our captured main stream media is now part of the corporate apparatus. In this Orwellian election year the establishment is pulling out all the stops to put another puppet in the oval office, so the growing pile of debt supporting this “recovery” has been buried under the latest news cycle of who’s groping who.

To see the house of cards that America has built, a simple glance at the spiraling federal debt and the Fed’s balance sheet serve as a quick reminder from whence the “recovery” came. What we have to show for it is also easy to see as organic growth continues to slow under the weight of the debt, waste and fraud. To prevent a premature breach of the U.S. debt limit, Congress has even gone so far as to employ a few accounting tricks of its own recently, understating the actual size of the debt which has now likely eclipsed the $20 trillion mark.

Federal Debt

What do these spiraling debts and deficits have to do with the housing market? As Hoisington points out, the debt increase during the last 10 years was a staggering $10.9 trillion. What is more concerning is the fact that the latest CBO estimates likely understate the coming deficits, meaning that the next 10 years will bring us a federal debt that could easily exceed $30 trillion by 2025.

“by 2025 the debt increase will be in the neighborhood of $13 trillion, based on the $9.2 trillion increase projected by the CBO.” Hoisington Quarterly Review and Outlook

Higher debt resulting from failed fiscal and monetary policy will create unintended consequences, the same consequences we have seen playing out in recent years as savers get buried and workers find it more difficult to keep pace with stealth inflation in the things they really need. The growing deficits and slower growth will ultimately lead to lower interest rates in an economy that remains on life support, a living monument to the house that fraud built.


As the latest occupant of the oval office prepares for his victory lap, here’s another look at the U.S. economy and the problems that were never solved…

Harvard Study on US Economy Under Obama