The Economic Crisis

I was going to address both the Health Care Bill and the current economic crisis in one rant. That would require a rant that would be 23 pages long which be a book with dry facts, flow charts, and figures. I am not saying I wouldn’t do something like that, but I don’t want to drive people away from my blog by being just so damn dry with facts and figures. The other problem I had was getting information that didn’t have an opinion attached to it that could possible cloud my opinion and affects my views on the subjects. I am going to just address one of these right now which will be the economy.

I know people blame President George W. Bush for the current mess we are in, but they would be incorrect in their thinking. The truth of the matter this current crisis can be trace back to President Regan and was encouraged throughout the next two Presidents. In other words, there is enough blame to go around for the current mess and cannot just put on President’s action or lack action. Congress also has to shoulder the blame too due to them not questioning these policies being effect and not recognizing the worst case scenario. The American people have to shoulder the blame for turning a blind eye to what was going on around them and falling for the feel good train that was put out there by the U.S. Government.

Those that have heard me talked about the economic crisis heard me say,” Greed is ok. Uncontrolled Greed causes this mess.” Meaning in principle deregulation is a good thing, but the reality is that it is a bad thing for the country’s financial well being. There was a reason for those regulations being put in place. It was to prevent exactly what happened. Now, some will say it discourage financial growth. I would argue in encouraged growth at a steady rate without causing false bubbles. Sure, there are real bubbles in any economy like the Internet bubble of the 1990’s, but those types of bubbles happen when there is a new technology comes on the market. It happens when the telephone came out and when the automobile was introduced to the market place. These other bubbles are created by the U.S. Government trying to create something that didn’t need to be created. In other words, this section of the society is being denied something and that has to be fixed. When that happens, it is rushed and poorly thought out by those thinking that they are helping.

I am all for capitalism. I think it is the greatest thing that was created by man; however, I understand human nature at its worst. “What’s in it for me” syndrome runs rampant in all of us. There is nothing wrong make a lot of money. Truth to be told, we all love to be billionaires, but there is a thing as being too greedy. That is what happened. People got too greedy and allowed themselves to take a sucker bet in the housing market. Banks and other industries decided to hedge their bets in the housing market. They love those bets on people, who really shouldn’t be buying houses in the first place, because it was fast money and thought they could get rid of those high risk mortgages by selling them to other companies. They also bet on people that should never have been given a line of credit for business. High risk business that have a low return rate meaning restaurants and clubs that were popping up to feed our hunger for entertainment. All this time we as a country were just consuming and not building which in turn is one of the least talked about factors of this crisis.

We don’t make anything to sell to other countries other than our troops. Our automobile industry hasn’t been relevant in decades due to bad management at the companies and the unions. Our commercial aircraft industry doesn’t exist. We don’t have a steel industry. Our computer industry is slowly going away. There hasn’t been a significant invention since the personal computer in this country. I am not an environmentalist, but I am for going full steam ahead in inventing “green” technology because it would mean would be build something in this country again. There is this misconception that we can build wealth and survive on that, but my question is how? How can you build wealth without a product? We could print money like no one’s business, but that just causes the dollar to go down in value. We must have products to be sold on the world market beyond what we are offering now.

Do I have an idea how to get out this mess? My idea is really simple. Lower prices on goods and hire people now. It is that simple. Sure, there will be a short term loss for the companies, but there will be long term gains by those companies. One, they will gain employees which in turn will strengthen their talent pool for the future. Two, they will create a loyal customer base for future products. It will also require to for people to be hired for less pay with a promise of future in the company for hard work. I am basically saying that we need to get back to the basics of capitalism. You keep growing and project strength no matter what is thrown against you. Yes, that would mean upper-management would take a major pay cut, but it would mean that the company would survive beyond next year. Right now, no one should be making an excess of 20 million year at those companies that got a bail out. There are which is why people have issues with the bail out.

The Bail Out that was done under President Bush and then President Obama was wrong. I am sorry to be this harsh or cold about it, but those companies should have gone under. That is the capitalist system. You are rewarded for taking the good risk and punished for the bad. You don’t get a “do-over” by the U.S. Government because it hurts the future of the country. Yes, that would means millions would have lost their jobs and things may have gotten a lot worse than they are now, but we would be stronger for it. There is also the fact that our great-great-great grandchildren wouldn’t paying for other people’s mistakes that were done for the last 20 years.

Worst case is that the country would financially bankrupt, but I don’t think that would have happened because it would force the business sector to make some decisions that would have prevent that from happening. Those companies would have been absorbed by smaller companies in turn creating wealth and credit. It wouldn’t happen overnight, but it would have happened. Those mortgages would have been defaulted and housing market would take a major hit, but it was out of control. The housing market need to be corrected and have reality set in for people who wanted to sell their 60,000 dollar home for 200,000 dollar. The market over-valued homes that were really worth 25% of the asking price. Control is the key.

Lastly, we must put those regulations back because we are odiously unprepared to deal with them gone. When you do something like that, you need to create laws that would prevent people from going crazy with greed. You would have to enforce those laws. A law is no good if let yourself to think in grey areas. With the law, there is obey or be punished. It is that simple really. I know that my answers seem way out there for people, but I contend that the simple solutions are the best one. The problem we have in this country is that we ignore the simple solutions and go the complicated way due to panic. In times of crisis, the worst thing you can do is to panic. Look for a solution and go with the simple one. I am not saying it would be easy; I am saying we will be stronger for it.