Many have lost sight of what drives an economic recovery. With all the focus on better unemployment and a better housing sector, everyone has forgotten the key to this puzzle, cheap gasoline. As the price at the pump continues to climb higher and higher things are looking worse and worse for the consumer. AS the price of gasoline increases consumers are adversely affected. The consumers that are most affected are those in the lower ends of the economy, consumers that we know are already having their pockets squeezed. These low end consumers are in such dire straights that they have switched their shopping from Walmart to dollar general, to save mere pennies. The American recovery is going to be built on the backs of all Americans, not just those that can afford to feed big SUV’s. Don’t expect a robust recovery until Americans can afford to drive to work.
“Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men”. – Franklin D. Roosevelt
With the markets never ending their surge upward, it makes you wonder. What the markets and the people with money in them fail to realize is this is not an easy fix in Greece or even here in the recovering U.S. One point that struck home over the past few days while watching the riots in Greece, is the expectation for the Greek people to change. The Greek people are expected to change their way of life, point blank. Now compare that to the your world. Ask yourself, could I take a 20% pay cut on top of minimum wage. Those reading this obviously don’t work for minimum wage, but that is a price decrease from $7.50 to $6.00. Imagine the effects that would have on our economy. What many fail to realize is that the Greeks no longer care about the “European Union” but instead care about themselves. The people that represent the masses, the politicians will do as the people want, and if they don’t they will find ones that do. Those in Greece are expected to live a new life inline with these guidelines that their neighbors set out for them. Though we may never get to the point when the Greeks are required to change their lifestyle (see them kicked out of the Euro), one thing is for certain, and that is they won’t.
For the past few months the volatility indexes have taken a hard hit. In the last few days their has been volatility in the volatility indexes themselves. The VIX has foreshadowed some major events in the past. Is the VIX foreshadowing something now? The answer to that question is simple, maybe. The VIX has broken its downward trend and done so on a high volume. The volatility indexes may not be heading through the roof, but were dramatically oversold, meaning their is still lots of room to the upside. With macro and geopolitical fears rampant (watch the evening news) the chances of something dramatic and negative in the future is not unheard of. At these levels the volatility indexes may be a better place to be then not to be.
“Continuous effort – not strength or intelligence – is the key to unlocking our potential.” -Winston Churchill