RGTyler: American Recovery? What Recovery?

Last week I was in America at Ground zero, no not the one in New York that was the site of the tragic 9/11 attacks, but Florida. The economic Ground Zero. You see the way I see it Florida was one of the sites of the economic bubble that eventually burst helping to cause the 2008 collapse. I would argue that Florida was one of four states that acted as a catalyst for the Housing and Subprime Mortgage bubbles. The others being New Jersey, Nevada and California.

At the peak of the boom around 1000 people a day, including weekends and holidays, were moving to Florida from all across the US. This lead to a need for housing and naturally the entrepreneurial minds of the American people lead to the rapid expansion of the housing market. Gated communities began to pop up all over the state. Land that had once been woodland and swamp was being turned into prime location real estate.

Very quickly these entrepreneurs and realtors got greedy and thought that they could make more money and encourage more expansion by using money paid to them for one house to build another in anticipation that someone else would come along and buy it. This slowly built a bubble as rule one of economics was broken… Supply and Demand. Naturally this couldn’t go on and of course the bubble burst, the market collapsed and the rest is history.

Fast forward to 2013 to the sleepy town of Sebastian Fl on the Indian River inlet. It’s a small town of around 21,000 people who were all hit hard by the collapse. Sebastian was one of those towns that grew at a phenomenal rate during the boom. At one point the Gated Community that my grandma lives on was growing at a rate five houses a week, all pre-sold. Like a lot of America a lot of people were out of work after the collapse as well.

However on my most recent visit there are clear signs of a very weak and slow recovery. For a start the estate my grandma lives on is now building again, however not at the same rate as before, and the houses that already exist are selling as well. I encountered an estate agent one day whilst swimming down at the community pool who said that the area was extremely popular and that it was selling. I also saw new small businesses that had been added since the last time I had been. There were more trucks connected to small businesses on the roads and people looked as though they were spending money.

But if you stopped to talk to people about how optimistic they were for the future or about the Obama administration’s economic plans things don’t look nearly so chirpy as the real estate lady. People were very clearly cynical. Many of them pointed fingers to a broken political system and to the failure of the Obama administration’s intervention in the economy rather than just letting it be.

A surprising number also seemed to point fingers at the federal reserve and to Ben Bernanke’s money printing/Quantitative Easing. (This was mainly surprising as I wasn’t expecting to find people who would know much about it). Most of these people were small business owners who had learnt that the dollars that they were earning no longer had any value.

I also talked to a few people who said they were close to giving up on paper money and had plans to move their pensions and investments into gold just in case worse came for worse and the dollar collapsed completely. Which was something else that surprised me. On American TV there are now huge numbers of commercials encouraging people to put their money into gold or keep their insurance policies in gold.

It’s clear that once again all is not what it seems. As you dig down beneath the surface the American Recovery is all talk. The dollar is still weak and getting weaker. The housing market is yet to recover. And the Obama administration won’t do anything about it. I hope to one day go back to Sebastian and see a real recovery but I fear that won’t be the case so long as there’s a Democrat in the White House.

Feel free to comment in the space below or get in touch with me on Twitter @RGTyler. I am always happy to hear other points of view or if you have any feedback on this blog.

Trackbacks/Pingbacks

  1. Five reasons why the Conservatives deserve to lose the next election – Telegraph Blogs - July 30, 2013

    […] (Nor, suspects Rob Tyler, is it any different in the US.) […]

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