By Dode Hammack from Lander
As the celebrations of an upcoming inauguration begin and we sweep up the confetti from the acceptance speeches, America begins a new year-a year full of hope, proposed change and prayers that our newly-declared recession ends sometime during the next 365 days and not in future years.
The National Bureau of Economic Research has finally given politicians the “go ahead” to say the word recession. It would appear, by their calculations (which, by the way nobody can understand or duplicate), that the US has been in a recession since December of 2007. Hopefully part of the change coming in the new year will be a renewed effort by this particular group to actually call these economic downturns in a timely fashion. How tough can it be for them to call a recession a year later? Everybody on Main street knew it was happening at least 10 months ago. Remember the taxpayer stimulus bill that was signed on February 13th?
While we quietly recognize the need to avoid panic in America, or give cautious concern to our foreign lenders, let us, at the same time, hope that the promised change will also bring some honesty in Washington. For too long, we the people have been given the cordial wink and a nod with a gentle pat on the back telling us that “all is well and they’re taking care of business at the Ivory tower. Sit back and watch T.V., we’ll take care of the economy, illegal immigration, global warming, and terrorist threats. You’ll be just fine. Drink a beer and relax.”
The bailouts, rescues, bridge loans and liquidity infusions (nearing $5-8 trillion by most accounts) all are part of a last-minute, thrown together, master plan to stave off further decline in our economy. The problem is this: The Titanic has already hit the iceberg. According to the NBER, we hit it last December. The government stewards (a.k.a. The Treasury) are pumping water out of our proverbial bow in an effort to keep ‘ER afloat, yet they’ve neglected to fix the damn hole in the first place. The proposed auto bailout is a perfect example: The big three are bleeding red ink to the combined tune of anywhere from $5-8 billion each and every month. The hole in the automobile industry’s Titanic is their ridiculously high labor costs, legacy costs and union mandates that force these companies to pay health care costs to over 800,000 retired workers and pay continuing wages to over 12,000 employees to sit idly by in the break room for eight hours as part of their “jobs program.” Until these holes in the hull are mended, these companies will continue to sink. Unless and until the underlying fundamentals are corrected, no amount of money will fix this problem. Perhaps a hundred billion will buy them time, but inevitably…they will fail.
No amount of bailing could have saved the Titanic. The only possible savior would have been to drain the sea. Our economic issues appear to have reached a similar crescendo. The only thing to save us now is to completely cut back on spending (reduced size of government) and begin saving again. It doesn’t take a rocket scientist to realize that you can’t borrow your way out of debt. It’s called “Keynesian economics” which advocates increased government borrowing during recessions.
All of the stimulus activities and bailouts will get us closer to the shore, but the bow continues to drop lower in the water with the passing of each day. The time will come when the Chinese realize that they’re just giving us temporary fixes to continue our Titanic voyage. They can see us bailing, but not repairing the holes in our infrastructure. As the water slowly rises above our heads, the only words we’ll be able to muster are: “Where were the government-provided life jackets when we needed ‘em? |
