Recession 2007?

© WithComment.com

Will the democrat win in November, and now a clear movement emotionally by those being polled to get out of Dodge (Iraq), lead to a recession both in the U.S. and by default globally?

World connectivity drives economic growth both in the "Core" (Europe, North America including Canada, & Mexico, Asia and Australia) and the "Gap" (All those not in the Core). If the U.S. now has a mentality of withdrawal from the world conflicts will this mean a slow down in buying from the world?

Just last week the U.S. concluded meeting with China about the under valuation of the Yuan. The U.S. doesn't like it because it creates a large trade deficit and dollars flow out of the country undermining its value. However, China snapped back that the reason we have enjoyed low inflation in the U.S. is because of the cheap goods and if they change their valuation we will experience inflation. That would lead to the Federal Reserve raising rates, which would tighten money and slow the economy. A sneeze in the U.S. economy will cause a cold in the world economy.

The democrats also are looking to raise taxes in certain areas or just don't extend some of the 2001 tax cuts that have helped the economy. These variables signal a possible change in the last two years of the Bush administration. The media has never properly covered the expansion in this economy, and a lot of America never knew we have a good economy with historically low unemployment, low inflation, wages increased and savings was up.

So far the new leadership in Washington is not making claims one way or another on how they will govern, but their party will demand they act in a way that will lead to a recession.

Chris Mendelsohn
reply@withcomment.com