We face a rising tide of concern as companies and individuals realize that more taxes are coming. The financial sector, which has been very cozy with Washington are facing "Fees" (TARP TAX) and will surely push back, being an election year many of the Democrats are becoming fearful of alienating much needed financial support of business. However, the populist sentiment and the need for tax revenue is pushing them into a corner. For all the finger pointing at Bush's spending (rightly or wrongly), the Obama administration has increased it into jaw dropping territory and the new Health Care plan is going to pile on another TRILLION (that's with a T) - yet ironically it has shown that savings to consumers on health care may only be 3% at the most (and in small business or self employers it will actually go up and face possible fines for not having health care).

            On the Monetary front - keeping rates at ZERO is creating another bubble, the Economist article points out that while the market has seen a buoy reaction from government stimulus the economic conditions on the ground continue to worsen (abed more slowly). Obama expected that unemployment would not rise above 8% with his stimulus package, it went over 10%. The administration expected that foreclosures would end and housing prices would rise if we put a moratorium on foreclosures and gave out money for first time buyers, yet prices continue to fall and foreclosure rise to record levels. They thought that bailing out GM and Chrysler, as well as a cash for clunkers would kick start the auto industry and the economy, but all it did was increase car sales for two months before we saw the biggest drop in monthly auto sales in over 50 years and both GM and Chrysler went into bankruptcy regardless of how much money was given to them.

          We forget that stimulus is sometimes necessary, but it is NOT the answer to the recovery. We become cloudy to economic data and believe things are improving, but what we are experiencing is not a recovery, but rather a massive government subside that is keeping the economy from collapsing. Many would argue that is necessary, but I believe it just delays the inevitable. Not that we will collapse, but we NEED to find a bottom on our own. We need to deleverage , companies need to fail, and we need not only companies and consumers to strengthen - but also the government balance sheet. Now is not the time to be spending, but rather reducing budgets, saving, and paying down debt.

          The government scolds companies and tells the people that WE should be saving and paying down debt, as they balloon their own balance sheet and spend like never before. It is like your mother telling you cigarettes are bad for your health as she puffs away on her Marlboro Light.

         How much more stimulus can the government continue to inject? They are running very close and we are seeing treasury auctions at the breaking point. They desperately need money to keep their own spending up and are looking for new taxes, disguised as Fees to help.

         States are failing or have failed and the government will not or maybe cannot help them. I don't know how many more IOUs California can give out, but as some point people/companies are going to require to be paid.

           For now - the party continues - but there is a bubble inflating. When it pops or if we are able to deflate it slowly is anyone's guess. We just can't ignore it.