The Medicine Is Going to Hurt

After 8 years of living a risky life style, our country and economy is in need of serious changes, and some of the methods that will inevitably be used, we are going to find that medicine is going to hurt. 

 

1. Exit from Iraq

·        There will be troop reduction from the services (we simply do not need as many.  Where will these soldiers find work?

·        There will be even more “contractors” displaced from their work supporting the military in Iraq.  Where will these citizens find work?

·        There will be military equipment and supply firms that will lose contracts and be forced to lay people off.  Where will they get jobs?

 

2.   Reduction in the Defense Department Budget

 

·        In order to save $ 200 billion for use elsewhere, the Defense budget should return to levels seen in the Clinton years.  What will the firms, people, and researchers do that were funded by the $ 200 billion?

·        Even at a reduced Defense Budget of $ 400 billion, the US will still be spending more than ten times as much as the next largest, but that will not quiet the neoconservative chicken hawks or the greater military industrial community.

·        We will find that the $ 200 billion a year reduction is being spent in just about every State, and the loss of this funding will bring the State to its knees economically.  We will all be embarrassed by these selfish expressions.

 

      3.   Proper bailout of banks, investment firms, and insurance companies

 

·        We must learn that the double digit returns most of the publicly traded financial services firms sought are dangerous and should not be enabled.  Regulations including efforts to break the largest players into smaller and more manageable sized companies should be pursued.

·        Since this involves “big money”, there may be all sorts of unexpected consequences.  We should not panic at this threat and remember that not all financial services firms went over the line and there is nothing similar to brain surgery about banking.  New firms will arise if given the chance.

 

       4.  Lending to the Automotive Industry

 

·        This is a necessary but slippery slope.  The correct end point is with the emergence of a restructured General Motors, Ford, and maybe Chrysler.  This will most likely not come as part of the initial loans.

·        The Big 3 will most probably require many more loans to make it through the current recession.   If the Big 3 do not restructure themselves as a normal course of business, then the Federal Government should seize one and restructure it, and then privatize it again.  One of the Big 3 with a proper Union contract, fresh new management, and a properly sized and motivated dealer network will show the way for the other two.

·        There will be a lot of other companies lining up for Government money until they see the take over.  If the Government does not force the reorganization of the Big 3, there will be no end to the whining of other cash strapped companies.

 

It is ironic, indeed, to think that we did not need to have gotten to this position where this type of medicine is necessary to take.  There was neither the need the Iraq invasion and occupation nor the drastic increase in the Defense Department budget.  Routine performance by the SEC of its duties or the proper curiosity by the President and executive branch could have easily slowed the housing bubble before the sub-prime fiasco and the explosion of casino like credit default swaps.  And with a gentle economic slow down, commercial credit would have been available to the Big 3.

 

But alas, we have not been living in ordinary times.  The medicine I have prescribed, unfortunately, is not guaranteed to work or not produce unintended consequences.  I just know that no action is like voting for 4 more years.

Explore posts in the same categories: Barack Obama, Democratic Party, George Bush, Iraq War, Politics, Republican Party

Tags: bail out, defense department budget, economic recovery, economy, ford chrysler, general motors

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