Obama's Elkhart Indiana Show

Yesterday, Mr. Obama had a campaign-style, town hall meeting in Elkhart, Indiana. The selection of Elkhart was very intentional and extremely "showboaty" because this city has the highest unemployment in the country; due to their primary dependence on the manufacturing of recreational vehicles (RV's). Their unemployment rate is above 15 percent. If you've happened to look at RV's lately (and I have been for weeks now), you will find that prices are being slashed by the dealers to unload their inventories of both new and used models on their lots. Many aren't taking any more 2009 vehicles than their dealer contracts mandate; and, almost all are still working off of large inventories of 2008 models. It sort of sounds like the auto industry's problems; but, on steroids.

The Elkhartarians that were interviewed after the town hall meeting seemed to be very optimistic about what the President said his plan was doing to save and regain their jobs. However, I'm not sure what they think is specifically in his stimulus plan that would actually get people back to buying RV's. Certainly, there are no credit assurances in that plan that would make getting an RV loan more available or affordable. While some workers in this country may be able to maintain or get work in all those shovel-ready projects, as defined in the Obama stimulus plan, all those projects are all supposed to be done within 19 months. But, there's no job guarantees beyond 19 months to warrant someone going out to buy something as non-essential to their survival as an RV.

If anyone read the Drudge Report yesterday morning, the top, red lettered headline noted that the amount of money in this stimulus package could pay off 90% of all the mortgages in this country. The entire Federal Budget for 2007 was $2.7 trillion and, with this stimulus plan, we are literally spending 1/3 of what that budget and spending was (Click to see 2007 Federal spending breakdown). We could literally give every single taxpayer in this country a 4 month tax holiday for that amount of money; and, I think, there would be more stimulus in that kind of action than what is in the currently planned, pork spending (not stimulus) bill. And, believe me, the folks in Elkhart, Indiana would probably get a bigger boost, that way, than in the fixing up of some old Federal Buildings in Washington D.C. In fact, you could give everyone making less than $200,000 or $150,000 a year a full-year's tax holiday and still have money left over for a lot of Obama's pet, green projects. A tax holiday would have to be more stimulative than handing out of a measly $500 tax rebate check as defined by Obama and the Democrats. With a program of tax holiday's, I think there could be a real possibility of some having enough money in hand to buy an RV. Of course, the problem with a tax holiday is that those silly people getting the holiday might actually spend that money on what they need and what they might want and not what Barack Obama and the Democrats want them to spend their money on.

Barack Obama is absolutely the Schmoozer-In-Chief. He got his partisan crowd together in Elkhart and, then, smoothly convinced that crowd that his stimulus plan was going to get their jobs back. But this is just a continued extension of campaign rhetoric and his electioneering smooth talk lacks any real and discernible management skills. My bet is that, if he went back to Elkhart a year from now, things wouldn't be any better for the RV industry. In fact, I'll bet things will be significantly worse. The same will probably be true 2 or 3 years from now. There is nothing that this stimulus plan will do to get the broader job market back to work. It won't alleviate the fears of people working in the non-stimulus driven construction arena and make them feel anymore secure in their jobs. And, my guess is that all non-essential spending, like buying RV's, will continue to be on hold until the economy is, once again, healthy and growing and jobs become plentiful.

Now, I may be wrong and, for this country's sake, I hope I am; but, that's the way I see it right now.

Please note: While a massive $900 billion tax holiday might be stimulative, I am concerned about the long-term possibility of the uncontrolled inflation that may follow that kind of spending and the spending in the current stimulus plan. I would prefer that the government guarantee/insure credit to stimulate the economy without the massive cash outlays. The costs would be substantially less and would be more targeted to stimulative much-needed consumer spending. More importantly, the potential of long-term inflation would be greatly lessened. The problem with inflation is that the Federal Reserve's only real mechanism to fight it is to raise interest rates. That in itself is inflationary. I still believe that Greenspan's months of consecutive interest rate increases in 2005 and 2006 setup a situation where the holder's of Adjustable Rate Mortgages got caught with substantial annual rate adjustments that they were incapable of paying for. If rate increases had been slower and over a period of years and not months, things might have been better. Certainly, Greenspan's Federal Reserve actions weren't the only reason for the housing credit market collapse. Government mandated, low-income housing expansion was also at fault. And, also at fault, was the private sector's sharing of toxic mortgages by bundling them, securitizing them, and, then, trading them around the globe in some false belief that spreading the risk is minimizing the risk. As we all know now, the risk was more like quicksand and the whole world-wide credit market collapsed into it.