Over the last six months the economy, our debt problem, and the problems in Europe have largely taken a backseat to the presidential race. Though things have often appeared calm, the truth is that nothing has changed.
Greece is still in trouble, as is Europe. Our debt situation has been ignored for yet another year. The Federal Reserve is still standing by with QE3. And our fiscal trajectory is still on a course for economic collapse.
President Obama, Democrats, and the mainstream media have been trying to spin the news to convince the public that we're recovering. Two years ago the White House kicked off what was supposed to be "recovery summer." Now, in 2012, we're supposed to believe that the economy is really recovering this time.
There's a growing inability in the mainstream media to ignore the problems.
Even liberal Huffington Post ran an article titled "Unemployment Rate Falls To 8.1 Percent As People Give Up On Looking For Work." When the unemployment rate goes down because people have given up looking for jobs, that's bad news. When a liberal publication such as Huffington puts it in their headline, that's catastrophic news for Obama's campaign.
Yet we must recognize that it's more than just Obama.
The presumed Republican nominee doesn't really inspire much confidence that he'll take our fiscal situation seriously. Aside from some trimming along the edges, it's doubtful that he'll champion the kind of significant cuts that are necessary to change our fiscal trajectory.
The Republican House has demonstrated impotence with the power they've had over the last year and a half, and there's no indication that conservative principles will become dominant even if Republicans hold the House and take the Senate and presidency.
France has now elected a socialist president. This means that one of the stronger economies in Europe that has endured far less austerity than other countries wasn't even willing to tolerate their level of spending cuts. As a result, they've elected a socialist that opposes the modest austerity measures and advocates for a 75% tax on the wealthy.
Meanwhile, in Greece, the parties winning the most votes Sunday have advocated either renegotiating their bailout deal or overturning it completely.
In a nutshell, the U.S. economy remains weak.
U.S. government spending and debt remains out of control with no real expectation that any of the players in either party will change it. Entitlements have been similarly ignored, while the housing market remains weak with a floodgate of foreclosures on the horizon.
It's likely that Fed Chairman Bernanke will soon unleash QE3, and it's unlikely we'll address our problems regardless of whether we elect a Republican or Democrat president or Congress.
Greece elected parties that to varying degrees reject the austerity their country must confront and France just elected a socialist as president, meaning fiscal stability in Europe just hit the fan.
This economic storm isn't over yet. We're in the eye.
But the storm is strengthening and we'll need to go through even harsher conditions before the storm has passed and we can recover.
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