The economy will not begin full recovery until the building industry recovers. For a number of reasons, the home buying public has decided that this is not the right time for them to buy. When the buyers decide to release the huge pent up demand for housing, the industry will quickly recover. With that, the economy has the greatest chance of complete recovery.
It sounds simple, but we can't forget the 535 articulate incompetents in the Congress. In their constant pursuit of re-election, they will tinker and tinker some more. Antecedent probability tells us, by looking at at least six of the recessions since World War II, that it makes little difference that the interest rates are at an all time low or that housing prices are probably, in most markets, as low as they are going to fall. People are simply not ready to buy. Tinkering with the economy may do more harm than good. Don't forget that FDR tinkered continually and started more programs than all his predecessors combined. Ten years after the Wall Street crash, and six years after he assumed office, in 1939, unemployment still stood at 17%. We'll just have to wait and see if the great minds of the Congress don't end up stifling the recovery. Keynesianism has its limits. It's axiomatic that recessions begin and recessions come to an end.
The National Debt
In 2000, the National Debt of the United States was a little more than $5 trillion. When George W. Bush left office, in the year 2008, it was over $11 trillion. It is now almost $13.5 trillion. As a result, other developed countries are beginning to lose confidence in the ability of the United States to contain its spending. The national debts of most European countries relative to GDP are in the 70+% range. In Zimbabwe it is 300%. In Chile, the national debt is 11% of GDP. In the United States it's racing towards 100% of GDP. This is a result of the free spenders in Congress spending for political purposes with little regard to the state of the union and a President who was unwilling to veto even the wildest of spending bills.
On the other hand, President Gerald Ford, with 2 years in office, vetoed 49 spending bills. He, at least, did what he could to restrain the Congress from their insatiable drive to spend our money. For this, at the end of 2 years, he was asked to leave. Apparently, he didn't live up to the political standards of the American public. The national debt the size of ours is a very serious problem, which will take years, if ever, to narrow down to workable proportions. It would be interesting to finance an independent study to determine where we are compared to during the 500 year decline of the Roman Empire.
As we painfully watch the saga of “The Mosque” drag forward, we see bigotry, ignorance, shortsightedness and a barrel full of demagoguery; all combined will probably lead to major problems for us in the future.