Can I just find a hole to crawl into?
Given the world economic mess and the probability, according to leading economists, that recovery is a year or more away, I really want a hole I can crawl into, pull the dirt in over me, and not have to think about it again.
The news coming out of the World Economic Forum (WEF) in Davos this week is gloomy at best. While the number of politicians and corporation CEOs attendance declined significantly this year because of the economic crises at home – or because they realized the public relations views were negative at best – the Forum seems to have provided little in the way of positive news. Indeed, all attendees seemed to be looking to the U.S. to fix its myriad of financial market problems before the world can “get back on its feet again.” Only China seemed to think it’s economy would revive in 2009.
The news coming out of the Obama Administration regarding setting up a “bad bank” that, essentially, would pull the toxic assets out of banks worth saving, while letting other, less worthy banks be taken over and sold off, brought a flurry of good and bad responses. Most appeared in favor of the idea, but several worried about the ultimate cost and what that cost would mean to the world economy, given the risks of future inflation and the fact that residential homes prices continue to fall combined with the newly falling commercial property prices.
The word from Davos is that reasonably capitalized banks would be willing to lend, and indeed in some cases have, if they knew that they investment was reasonably stable. In other words, their thinking is, if I lend you $100k today, will the property be worth $100k tomorrow or will it be worth $80k? Or if I give you a loan today, based on your current income, will you have a job tomorrow to pay back the loan? Essentially, it all comes down to: is my investment safe? However, the current plan may change over the coming weeks.
As the US economy rapidly continues to roll downhill, taking every market sector (and employment) in its path with it, no one knows what is likely to happen. All anyone really knows is that the giant, growing economic snowball must be stopped and stopped quickly.
Meanwhile, as the powerful were discussing the world economy at Davos, the U.S. GDP dropped to its lowest in 26 years, since 1982. Inventory levels, considered far too high for economic (spending) levels, means even more layoffs to come. The stock market decline the highest ever recorded in U.S. history. Unemployment the highest since the end of WWII. And consumer confidence at its lowest in more than a half century.
There simply are no easy answers. The current problems have been in the making for more than 30 years and culminated under the penultimate Bush free market, anti-regulation policies–a set of policies that had China and Russia publicly fuming while the rest of the world silently mouthed epithets at the U.S. Essentially they were saying, “So much for Reagonomics cum Bush. The U.S. made this mess, now the U.S. better fix it!”
So, where is my hole?
Unlike members of Congress or the Masters of the Universe on Wall Street, the rest of us don’t have economic surety. Most middle class Americans, for at the least eight years, have been scraping by from paycheck to paycheck, using whatever economic resources, i.e. mortgage equity and credit cards, to supplement their incomes. Always hoping for the best, Americans prayed for better days ahead when that pay raise occurred or a decent sized bonus headed in their direction. Little did anyone know – or even suspect – that Wall St. was rigging the game all along and gambling against us with products outlawed after the market crash of 1939 and reinstated while Bush was President.
Push the dirt in over me.
Now the American public is left with the wreckage of Wall St. excesses and all of its subsequent fallout. I’m no economist, and I don’t pretend to be. My subscriptions to Fortune, Forbes, Inc. and Business Week during the ’80s and my college macroeconomics class forty years ago mean nothing now. But what I do know is that the U.S. has an enormous pit out of which to dig itself. To prevent the recurrence of soup kitchens and bread lines, the U.S. will be forced to spend massively, not unlike the spending required for and during WWII. It was the massive government spending…and subsequent employment requirements…that finally brought an end to the Great Depression. But that spending, in and of itself, leads to another problem: an unimaginable national debt. If Bush had been more fiscally conservative, instead of going on a wild spending spree (i.e., the OMB estimated the costs for Iraq alone amount to $3 Trillion), we might have an easier time of absorbing the necessary increase in the national debt caused by this economic crisis. But now, who knows.
Can I hide now?
I don’t know what the next 20 years will bring. I can’t even predict the next 10. However, in the very short term, the Stimulus Package will be passed. Afterward, the U.S. will likely face two more enormous spending packages as Congress grapples with a continuing credit crisis and banking failure.
As for me, I just want to hide from it all. A nice job, where I can see the results of my accomplishments, with a reasonable income, and the ability to look forward to a secure retirement will do just fine. At 62, I’m ready to be an ostrich and duck my head in the sand.