From “Change” to the “Economy”

Over the years I have observed that when there is an economic slow down or even a recession, two factors are always present.  First, there is an over abundance of something such as credit card debt, automobiles in inventory, or as now, too many houses for sale.  Second, there is a general lack of confidence in the future and the “stand in” measure of that is confidence in the President.  If we are not ready for a recession now, we never will be.  The question is what have the Presidential candidates learned from the current mess and what would they do differently if they were President?  Let’s look at some underlying factors:

1. The current slow down in house sales would not be such a big deal if it did not also affect the construction on new houses.  New construction stimulates the entire economy broadly.  People are paid to build house, others supply raw materials, and still others supply furniture, appliances and garden items.  All this slows down when new houses are not selling.

But why has it slowed down?  You could say that like all fads it has run out of energy and we should not be concerned.  There is undoubtedly some truth to that but if we look at the last ones in, that is those who were buying just before the slow down occurred, we will see that they are largely people who probably should not have been there.  Largely this group were speculators (buy now and flip it) and others who may deserve housing but were being encouraged by subprime lenders who were literally throwing money at these people (who could not afford the house especially if their costs increased).  We are now seeing companies such as Merrill Lynch and Citigroup posting write offs in the billions!  This is stagering and to compound matters, when they dismissed their CEOs (who watched over this misjudgement on risk), they paid them about $ 60 million each to leave.  What’s wrong with this picture?

2. Consumer confidence is drooping and this is always more difficult to answer.  It is easy to cite President Bush’s approval rating (low 30’s%) and you can go to the bank that not many people believe anything he says.  But what are people thinking about the 2008 Presidential candidates?  The Republican race is a shamble with no clear preference and signs of strong dissatisfaction by some of each candidate.  The Democrats look to be coming down to two (Barack and Hillary) but it is not clear whether both are ok for all Democrats or whether the selection process will alienate some.

3. The rising cost of energy can not be overlooked.  Everything will cost more and there will be less discretionary money for those fun things.  With no serious energy policy (other than Bush’s “buy from my friends” policy, the next President will start from behind the starting line.

4. A hidden factor that most people do not think about is the growing weakness of the US dollar.  This will cause all imported items to rise in price since it will take more dollars to buy the same amount.  But more important is why is the dollar sinking in value?  Look no further than the 1 trillion dollar Iraq war that has been used to cover the War debt, and absence of sound fiscal management in the Bush Administration.  The Bush Administration conveniently spared the Country any hardship from his war by putting its cost on the cuff.  But chickens come home to roost in strange ways.

I do not know what we will hear as economic fixes but I am sure that

  • attacking gays and lesbians
  • putting a gun in every hand
  • driving out Mexican workers
  • pushing for intelligent design
  • denying due process
  • goading pro-lifers into action
  • crying out about terrorists

will not do anything to help the economy.  It will take sound thinking and a spirit of inclusiveness and confidence in our abilities.  Our economy has been getting sick for most all of Bush’s term and the day of reckoning is here.  So let’s here from the candidates on what would be fundamental change!

Explore posts in the same categories: 2008 Election, Barack Obama, Blogroll, Democratic Party, Fred Thompson, George Bush, Hillary Clinton, Iraq War, John Edwards, John McCain, Mike Huckabee, Mit Romney, Politics, Republican Party, Rudy Giuliani

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