Economics

I recently attended a forum discussing, among other things, stock valuations, mortgage trends, and real estate markets (both commercial and residential).

Here were a couple of takeaways:

• Stocks are closer now to fairly valued. Many people are saying that stocks are very much undervalued, but the question they posed was 'compared to what?'. What I find interesting is that if jobs are disappearing, what is the level at which people will be able to afford to consume? It's economics 101- supply vs. demand.


• Look for a 'V' shaped recovery, but don't be surprised by 'W'. For those of you wondering what I am talking about, many people expect the economy to bounce back as quickly as it has gone down ('V'). But what some analyst are saying is that there will be another recession following this one ('W'). This reasoning is based on the simple question that once all of the cash that is sitting on the sidelines goes into the market, what will stimiulate the economy? We have already printed trillions of dollars with growing unemployment and a disencentive to the rich to make more. One dollar out of every 6 is supporting a government program today. Obama thinks that he can create 600,000 jobs. When? How? Borrowing money from the richest taxpayers? That's not job creation, that is simply 'fuzzy math'. As a nation, we have essentially stopped manufacturing, we have shipped out our industry for cheaper labor, and deviceiveness is the order of our lawmakers today. As a nation, we lack unity, lack production, and still expect a higher standard of living.


• Housing and inflation: Both are a direct result of jobs. On the one hand, housing will support a floor (and we are starting to see it) because of employment. It may loose its footing for the same reason. Inflation is largely income based. If incomes are decreasing, companies will find it difficult to charge more for the same things. One exception to that are short-term economic shocks such as oil and gas spikes.

Anyway, an interesting economics lesson using today's events as a backdrop. What I find encouraging is that despite the negativity and all of the ills that CNBC, CNN, etc. will spout off, we are still the greatest country in the world and account for nearly 35% of the world's GDP (http://www.cia.gov/). China, our closest competition, accounts for only 18.5%.

And finally, despite everything that is happening in the world around us, God still loves us and cares for each of us. That is the truth.

Grace & Peace