The Truth About Our Economy?

“You want the truth…You can’t handle the truth!!!”  Hey, Peachtree City Remember that famous line from the movie A Few Good Men that pitted Hollywood giants Jack Nicholson and Tom Cruise against each other searching for the truth about the death of a U.S soldier.  Not to mention Demi Moore looks good in uniform. So what is the truth? 

Well we’ve already seen things continuing to go south. This year will be the worst year for the stock market since 1937. Trillions of dollars has been lost causing a serious shift in how folks not only think but spend. 

You’ll remember, the Bush administration worked hard to make people fearful. They came up with those preposterous “threat levels,” trying to convince the public that it was in constant and consistent danger. Of course the public actually feels in danger - in danger of losing its jobs and houses. Fake fear has given way to real fear. So, the Obama administration will be doing its darnest to doing away with that atmosphere of fear to trying to give people their confidence back again.

And so now many Americans would gladly give up our freedom in the hope that it will keep us from losing any more money. So now, when the feds come a knockin’, we all open the door and invite them in.
Because we need them to give us money, bailout our banks and our auto industry…to provide financing for our homes, save our economy, and yes our jobs!

Just a few short months ago we were naive enough to think that people should look out for their own finances.  We believed that free market should decide which businesses survive and which fail.  We thought that buyers and sellers should set prices for assets…and that capitalists should finance their own banks and insurance companies with their own money. Isn’t or wasn’t that the American way?

However, we’re so much smarter now! Remember, the only thing we have to fear is fear itself. One thing is for sure George W. Bush’s popularity is the worst of any sitting President and nobody likes Wall Street right now. The two are probably going to be punished in the months ahead with more restrictions and a thorough flushing out of the Bush administration and all its workings.

Meanwhile, I’m hearing folks shouting advice for the Obama team to cut taxes.  And then there is the talk of continuing this Big Bang Bailout as if it were the next World War. Well maybe it is on a financial level!  We’re hearing about another stimulus package and even more advice that next year we should continue deficit spending by borrowing  about $2 trillion dollars to rebuild the nation’s infrastructure.  Building and repairing our roads would immediately create jobs.  Building up the infrastructure was a big part of China’s huge 849 billion stimulus/bailout strategy.

So here is what I think may happen.  The average Joe right now is desperate for cash.  He’s also desperate to rebuild his balance sheet by paying off debt and adding some savings.  A tax cut will probably help him do that. It will also allow the savings rate to go back to where it was before Greenspan’s bubble years - around 10%… or about $1. 3 trillion. That cash will go mostly into U.S. Treasury debt. Probably the only place where it is believed to be safe right now.  So if you cut taxes, the money will come back to the U. S. government,
allowing the bailouts and spending to continue.  

Of course, at some level the whole thing is still a massive cluster.  All you’re really doing is replacing private spending with government spending. But that’s what you want to do anyway. This is just a way of gaining more government control over the economy while appearing to save people from a depression.

Okay can these actions actually stop a depression you say? Well, Yes and No. The key thing is that Americans’ wealth and our standards of living must come down and fall in line. The President’s
objective should be to allow them to fall without revolution, or national despair. Under this plan, standards of living will fall - except for those few who are likely to get a sweetheart deal.  But the numbers will look fairly decent. There will be jobs. There will be economic activity. Confidence will be restored. Well sort of.  But it will appear a bit like the U.S. economy during WWII when living standards fell but savings increased. It will look good to most people. President Obama has a lot on his shoulders but he has an opportunity to go
down in history as one of our greatest presidents.  Only time and his plan will tell!

Gordon Brown the Prime Minister of Great Britain at the financial summit in Washington, D.C.  stated it very appropriately. “Uniquely in this global age, it is now in our power to come together so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed,” 

Further, if we learn from our experience of turning unity of purpose into unity of action, we can together seize this moment of change in our world to create a truly global society.  The message is this:  We must be; internationalist not protectionist; interventionist not neutral; progressive not reactive; and forward looking not frozen by events. We can seize this moment and in doing so build a truly global society. ”

Folks, we are all Americans and collectively we all can contribute to restoring this country to its previous splendor regardless or race, ethnicity, religion, sex, or national origin.   We have all been affected and trust me we all have plenty skin in the game….And that the whole truth!!!!