LOOKING FORWARD
I may be preaching to the choir but a few things need to be said. Electing Barack Obama is crucial now more than ever. We need this man to move our society forward which is, arguably and not discounting the economy, the most important benefit of his election. As president, Obama will have a mandate to re-direct our economy and to re-establish our leadership in the world.
With Obama as president we would again be seen as the leader of the world not just the free world but the whole world. People may not believe this but most people around the world are rooting for us; they want us to win because they want to be us; they look up to us; and why? – Because they are us and we are them. The U.S. melting pot is the model for the world because the world is us. In another 100 years, or whatever, the world will be the United States of the World. This is the real reason for our Muslim confrontations. Their Muslims never went through a renaissance like the European Christens did in the middle of the first Millennium. The governing of the world has to be secular or it won’t work and 1.3 billion people out of the system won’t work.
Our economic/political system is basically designed like a pendulum. Put simplistically when the country needs to rive up its economic engines traditionally the Republicans would lead the charge. As the pendulum swings to the right jobs and wealth are created as taxes for the wealthy are cut hoping for the questionable “trickle down” to simulate the economy. Inevitably as greed drives too much money into the hands of the wealthy at the expense of the common good, our social safety net begins to fray and our infrastructure begins to deteriorate. As cries of “throw the bums out,” become common the pendulum swings back to the left. The wealthy are taxed and the social fabric is sown. The problem was that this time the Republicans decided that they were above the laws that were put in place to keep the system working and to prevent the exact things that happened. When you put egomaniacs in power bad things happen, like ill-advised wars and the deregulation of Wall Street.
The current economic situation in the U.S. is governed by fear. It is the same fear that dictated the 1929 crash. The difference now is that we have an historical reference. Their have been 10 depressions in the U.S. since WWII and we have not only survived but have prospered after them. Remember, our economy is about in the $14.5 trillion range. We have a large amount of recourses. The closest economy to us is the EU at $10 trillion. We are still the big dog and you never want to bet against the big dog. The deflation which we are now going through is across the board – we’re all going though it. Once re-regulation is back in place equities will come roaring back.
Normally, when one economic growth cycle ends it settles into a relatively stagnant period. The normal real estate cycle is about five year. The market would go along then shoot up and then back off. This back off normally bottomed out above the prices at the start of the cycle so everyone was happy. What happen this time was that there was too much money looking for maximum returns with to few investment opportunities. The housing market was in the boom part of the cycle and all this money wanted to get in on it. The mortgage industry then changed the rules to accommodate this demand with disastrous results.
This deregulation caused an artificial housing boom which built too many houses for an artificial market. If these subprime loans were fixed rate and required people to have real income this problem would never have existed – but they weren’t and so now we are in this mess. Once the ARM loans adjusted the unqualified home owner defaulted. The defaults snowballed and the builders were left holding unsold homes, ergo too much supply for demand which translates to “bust.” Once the ARMs have been replaced with low, 30-year fixed loans and foreclosure prices have reached the “I just can’t pass up this deal” level while at the same time the lack of new construction affects a still growing population, the market will stabilize and homes will again appreciate.
This administration took a traditionally foundation industry and turned it into a giant, deregulated security. If this happened within, say, the hedge fund industry the average person would have never known about it let alone be affected by it. But when a foundation industry, like housing, food or clothing, gets deregulated everyone is affected. This current administration is not only dangerous and greedy they also seem very stupid.
What has to now happen is that to stop the fear the government has to step in and take control of, first, the financial institutions. We (the U.S.) shoul buy all bad debt dollar for dollar and take an equity position in the banks. The U.S. should do this for any bank around the world (the British have already do it with Barclays’ and The Royal Bank of Scotland). This would liquefy the credit markets which will allow the financial markets to start trusting one another and get back to business.
Second, we need a ground up U.S. stimulus package to grow jobs. Did some one say WPA? It worked before and it can work again. The other “project” which pulled us out of the Great Depression was WWII. Well, since in this day and age I doubt another WW would go over very well, we need another “boom” to drive our economy. How about this? Instead of putting all this money into foreign wars and the oil industry we put it into developing a working system of complete energy independence by, say, in ten years.
Now we really don’t know if global warming is completely man made since the earth goes through these warming and cooling trends about every ten thousand years, but since we have the technology to develop clean energy and stop using fossil fuels why on heaven’s earth not do it? We can do solar, wind, nuclear, clean coal, electric and air (the Germans are working on an air compression engine – you know kind of like a BB gun). This would lead to an economic boom every bit as big as the dotcom or housing booms.
The U.S. auto industry is in dire straights. They are now paying for making an inferior product and being blind to the future. Toyota and Honda have long made comfortable, fuel efficient, highway friendly cars that are inexpensive and last for years with minimal repairs while Detroit continues to produce an inferior product with planned obsolesces. You can only thumb your nose at an educated populace for so long until the chickens come home to roost. With the latest U.S. loan to the auto industry we now own a piece of these companies as well. As owners we should direct that Detroit stop sucking at the oil industry’s tit and build energy efficient cars that contain the latest technology regarding fuel efficiency and quality of construction. Why can’t we have a car that uses air as fuel?
We need jobs and we need our infrastructure rebuilt. If we gave every person in this country, over the age of 18, an equal share of the $85 billion (it’s now $120b) AIG bailout, each person would have about $250k after taxes. Now this would create an unprecedented economic boom in this country and, for that matter, the world. The only problem would be that this would do nothing for the country’s work ethic especially with the 18 year olds. So – if a WPA program was initiated it could be paid for by taxing the upper class that got rich off the past eight years and by cutting oil and war expenditures. This is known as the “bottom up” instead of the “trickle down” which worked like not at all. A WPA worked once and it can work again.
Obama is this generation’s JFK. He’s young and smart. John McCain is old (can senility and Alzheimer be too far behind?). At the beginning of this campaign I had respect for John McCain. Although I thought that either Hillary or Obama would be better suited to move our society and culture forward, I felt that if the Republicans’ were to win again, I hoped that it would be McCain.
He seemed to be a moderate and he seemed to put America first. Now I’m a Vietnam vet and my daughter is an Ensign in the Navy and I had respect for the man. Then he goes and gets this Sarah Palin for his VP. The question I have is what has made John McCain so bitter at the U.S. that he would put this woman so close to the White House? I can never forgive him for this. As far as I’m concerned he has betrayed us all.
As Obama has said we need change. We do need change to take us into the future of an ever shrinking world. But we also need to change back – change back to the market regulations which served us so well until greed and stupidity brought the system to its knees. “Throw the bums out!”