We’ve been sitting around stunned by the financial crisis. What to do? We don’t trust the experts, and rightly so. They lurch from one answer to another. There is little confidence that they are doing anything more than thrashing around, grasping at straws.
Actually, since their starting point is their religious belief in a simplistic and flawed ideology, whatever ideas they come up with seem to benefit the very ones responsible for the situation.
Even the pros, the speculators, the gamblers on the street have been very wary. The market collapses. The market zooms. After far more time than you would think it should take experts to come to some understanding, the market seems to have found a bottom.
We’ve reached the point where, though we know it will take a considerable time and money, we think that the crisis will be managed over a period of two to five years. Some of you have begun to breathe again, however labored it may be.
Sorry, but that crisis is one of credit and liquidity. That isn’t the recession. The recession is a whole ‘nother kettle of fish. The numbers that just came out show that the recession actually began before the revelations of September. Also, the numbers are quite troubling.
The recession that followed 9-11 did not see a drop in consumer spending. This past quarter did. A loss of over 760,000 jobs in the first nine months of this year preceded the appearance of the banking crisis. A drop in consumer spending will cause many more job losses.
Few people purchase new homes, cars, appliances or televisions with their unemployment checks. Those still drawing a paycheck will at least hesitate to make similar purchases. Some may delay for awhile. Some may defer for the longer term. Reduced spending doesn’t translate into increased jobs.
This recession is already showing signs of being worse than what we commonly experience in periodic downturns. Add to that the reluctance of the banks to provide credit to consumers, businesses and even other banks. The prospects are extremely bleak.
Consumers are not playing their common role of sustaining a constant infusion of cash into the economy. The credit situation would not allow them to were they willing. The business community is, turtle-like, instinctively pulling their head in. We are told that our system rewards risk. Yet we see the business community desperately trying to avoid risk. Again, the credit situation has the same effect on businesses as it is having on consumers.
That leaves one other player. The government is they only one at the table capable of taking positive action. I am not naive enough to believe that it is likely to always make the correct move but move it must.
This is not a game. It is not an academic debate. Anyone who brings ideological blinders and a collection of childish labels to the table needs to be sent back to the sandbox. The situation is drastic enough that the government should do what is required to save the economy. Until those responsible are removed from the levers and positions of power and appropriately punished, you can be assured that the government is not serious.
So, what steps should the government take? We are fortunate that FDR took care of the basics. Social Security, unemployment insurance, et al. put a floor on how deep a recession can go by pumping money into the economy.
The obvious answer for what else needs to be done is to follow FDR with public works projects. Restoring our infrastructure is necessary. It is an investment in the here and now as well as in our future. It isn’t creative. It isn’t sexy. It is better than another stimulus package of giving everyone a few hundred dollars to pay down their credit cards with.
One path we definitely don’t need to follow is Bush’s. We can’t afford another couple of hundred billion dollar borrowing from the Chinese just to see a teeny weeny blip in the economy a few months later.
Although I see the need to rein in the deficits, borrowing to pay for renewing our infrastructure and to begin the greening of America is a greater need at the moment. We will benefit from such expenditures with both jobs and tangible results.
As I continue to harp on the subject, there is no such thing as a tax cut when we have so much debt. It is simply a tax deferment that will burden our children and grandchildren.
We hear every day of the $10 trillion national debt. That represents only what is in the budgets. Counting our off-budget indebtedness we owe more than $54 trillion. That makes a mockery of any talk of a tax cut.
I’m sorry to be the bearer of such bad news but ignoring it or being ignorant of it will not benefit us, individually or collectively.
{ 1 comment }
Well said, I dont agree 100%, however you make a great point.
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