September 9, 2011

• Trust, Hope And Something To Believe In

  In the last few years, I decided to study the Great Depression. It was a period of history I tended to overlook, in part because I had grown up hearing about it from my parents, who lived through it  My mother was three years old, when the Market crashed. My dad was two. When I was in school, I considered the period boring. So people were out of work. So what? The arrogance of youth. But I was also raised on stories about the Depression that spoke to our ability to help others, to reach beyond our own lives and experience. The desperate times touched EVERYONE…so there was no arrogance, no judgement. You weren’t poor because you were lazy, stupid, or in some way unworthy. It was just the times.

  Hoover was elected before the Crash…and believed the Government should not interfere with the economy. He opposed regulation of the financial industry, and his four years as president culminated with a whopping 24.8 percent unemployment. There were no jobs to be had, and the impact on American lives was profound. There was no unemployment insurance. Social Security did not exist. If you were out of work, or too old to work…too bad. As more Americans found themselves in desperate straights, the underlying arrogance og these opinions became more and more galling.

  When FDR came around with the New Deal, the country was on its knees, and had been for years. It was clear that there would be no natural return without some drastic changes. Relief, Recovery and Reform were the buzz words of the times.

  http://en.wikipedia.org/wiki/The_New_Deal

  Reading this piece, I am struck by the parallels to our current times. And I am appalled by our current Congress, for playing the “waiting game”. We have not proven to be a people who take bad news well,  which encourages those in power to tell us what what we want to hear. rather than what we need to know. I’ve formed a few opinions on the current economy, based mostly on observations.

  1. The Great Recession is not going to be fixed any time soon. The damage caused by the Crash of 2008 ids profoundly deep, destroying not only the investments of millions, but the retirement  savings of many more. The market at the time was deeply entrenched in Real Estate. The current market is back up to almost the level it was at the time of that crash, which is worrying. What are people investing in now? Real Estate had a rule of thumb…that the value of land would always increase. But the market is soft. Housing starts are abysmal. A house is back to being a place to live, instead of an investment, and we have not yet bottomed out on that front. So recovery there will take time…and no one wants to hear that.

  2. There is no quick fix for the Economy. Job creation will help certainly, but companies are about their current profit line. Corporations stopped having long range goals in the last two decades. Years of corporate piracy, and unfriendly takeovers changed the thinking of the high level executives. Henry Ford understood the correlation between a robust economy and his bottom line. Modern executives do not. They no longer work to establish long term goals for a company they assume may not exist in a decade.  Immediate profit has become the focus and emphasis. Outsourcing, and down sizing fatten that…but once people have no work, they also will have no money to buy goods or services. The unemployed or underemployed will not fuel a recovery. The real bottom line is that business and the population ARE linked. For one to survive, the other must thrive.

  3. Regulation MUST have teeth. There hasn’t been a “free economy” in decades, so assuming that regulation will damage industry is a fallacy. The current “consider the lilies” school of finance is part of what caused the 2008 crash. The analysts have admitted again and again that they knew they were selling junk. They insist they were simply giving the investors what they asked for…high rates of return. But they ignore their own complicity. Junkies demand heroin too…but supplying them with it is still against the law. If corporations faced serious financial sanctions, and their executives faced stiff penalties, we would never see another Enron. But instead, we excuse white collar complicity and crime, and offer slaps on the wrist—for fiduciary malfeasance that nearly destroyed our country.

  4. Education should be a priority nationally. Our children are taking on huge amounts of debt assuming that they will find jobs that allow them to pay it off. But the graduate with 100K in debt will not be putting that money back into the economy. They will not be buying homes, cars, or durable goods. An entire generation will spend much of their first decade out of college trying to pay for the education they hoped would lead to employment. We don’t offer much in the way of academic scholarships anymore. Athletes can attend college based on their prowess at sports…but scholars can only go with a huge debt as a graduation present.  We have to start the process of thinking AHEAD. Action, not reaction, is the best hope we have to repair our economy, and have a future. Educated citizens will never be a liability, regardless of their career path.

  5. We MUST repair and maintain the infrastructure. The roads, bridges, and various forms of transportation that were built to life us out of the Depression were a fine legacy. But they will crumble to dust if left to decay. It helps commerce when trucks can reach their destination. It helps the economy when things can get from point a to point b…but without roads, all of it comes to a grinding stop. Thinking ahead instead of in the now is essential. We will never be “number one”, so long as we do not understand the connectivity of our lives. For the economic sector to flourish while the population sinks deeper into debt and insolvency is a disaster waiting to happen.

  • 8:55 am
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