The main article in the NY Times today dealt with the fact that the U.S. voters are now shifting towards the GOP. They state, "Republicans have solidified support among voters who had drifted from the party in recent elections, putting the GOP in position for a strong comeback in November's mid-term campaign according to a new Wall Street Journal/NBC News poll. The findings suggest that public opinion has hardened in advance of the 2010 elections, making it tougher for Democrats to translate their legislative successes, or tentatively improving U.S. economy, into gains among voters." They went on to show the data moving from Democrats to Republicans in virtually all arenas-from independents, seniors, blue-collar workers, suburban women and small town and rural voters-all of whom had moved away from the party in the 2008 elections, in which Republicans lost control of the House.
Mr. Peter Hart, a Democratic pollster noted that, to his own party's detriment, a series of major news events and legislative achievements-including; passage of a sweeping health-care law, negotiation of a nuclear disarmament treaty with Russia and making a quick arrest in the Times Square terrorism attempt-has measurably increased support for Democrats. "A lot has happened," he said, "but the basic dynamic of the 2010 elections seems almost set in concrete."
Comstock, on the other hand, has been trying to the best of our ability to explain what we think is, has been, and will be in the future the problem with why virtually every constituent has wanted "CHANGE". They wanted "change" when they voted out the GOP in 2008 and they want "change" now. They feel extremely uncomfortable with the state of the economy and they don't seem to understand why. They only know that they do not feel the way they did when they were able to borrow at low interest rates to buy "stuff" (especially houses) that appreciated and this made them happy. What they don't understand is that it is the debt that this whole country has taken on starting in the 1980s and accelerating into the 1990s and accelerating even further into the 21st century. We started the 21st century with 26 trillion in total debt and we now have more than doubled that debt burden.
Now, they don't know who to blame but they know that they just plain do not feel comfortable. They go to "Tea Parties" because they think that the reason they don't feel good about themselves is because it must be the administration (whether it is Bush and Cheney or Obama and Biden). They only know one thing -and that is that they must have CHANGE-without realizing that most of the problem lies with them and the "free lunch".
We, at Comstock, have predicted in past "special reports" that the debt burden of the U.S. government is awful, but that is not the only problem. The private debt is even worse. We have explained that the total debt is more important than just monitoring the government debt alone. The total credit market debt is over $52 trillion and the total government debt (when you take into account the State and Local Governments and the debt used to fund the Social Security) is about $15 trillion of that. That leaves $37 trillion of private debt. We have stated in the past, and will reiterate now, that we believe the government debt will head towards $30 trillion while the private debt will decline towards $20 trillion (as the private sector either defaults on their debt or pays it off). The government debt increases will not be enough to ease the pain the public will suffer during the debt contraction of the private sector. This is no different than what Japan experienced during their two lost decades.
It is the invisible hand of the interest on the debt burden that is making the U.S. public so uncomfortable. And until they realize that the problem lies with them, they will continue to go to "Tea Parties" and protest the party in power (whichever it is).
But that is not the end of the story. As onerous as the private debt is near term, the unfunded liabilities of the government will also have to be dealt with in the not too distant future-- and that amounts to almost $80 trillion (according to the GOA) with just Social Security and Medicare and Medicaid alone. This is not a very pretty picture for this country and the stock market.