What’s After the Recession?

The question of the day has two parts.  First, when will this recession end, and second, what will follow.  If anyone is thinking that it will be solid growth with results that look like those we have seen in China during the Olympics, forget it.  But it is reasonable to ask why not.

The recession is here for a while and is unlikely to bottom out until there is reason for the country to have confidence again in their government.  That will not happen, at the earliest, until after the election and I would guess it will be a good six months after the bottom out before economists tell us the worst is behind.  Unfortunately after 8 years where the average wage earner’s income did not increase, the light bulb must be going on that something more will be needed to revisit the Clinton years where all boats rose.  Be sure of one thing, further tax cuts and a blind eye to building the “commonwealth” is not the path to a better future.

Following the election, we need a bipartisan review of the economy and what measures are needed short and long term.  Simply returning to more excessive profits and huge bonuses by Wall Street banks and investment houses is not in America’s best interest.  China has an export mentality with a highly developed infrastructure.  It has a business friendly climate and grants a wide path for innovation.  It honors education and science and looks for ways to put them to work. 

To be sure, America is a more mature country and has already done once many of the things that China is doing today.  But why not do it again?  With the right leadership and “tone at the top” from the next Administration, America can get back on the right path.  The path will not be a speedway given the current dismal monetary and fiscal mess that Bush/Cheney have produced.  The next Administrations needs to act sensibly and this will mean increasing taxes in order to develop more government revenue.  We need to spend much more wisely than Bush has.  We need another “peace dividend” where the current bloated defense budget is reduced by $100 billion off the top and the unbudgeted costs of Iraq and Afghanistan need to be reduced by another $75 billion.  With wise investments we can lay the foundation for a real growth based upon bricks and mortar and not CDOs

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Tags: budget deficit, China, economy, recession

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