BREADLINES

BREAD LINES

I’ve never been known as an alarmist; however I am reaching for the alarm button now. Alright, let’s man up now and admit that we are in a depression. In fact some economist are predicting that this will be the worst economic down turn in 100 years. Now if my math is correct that would include the Great Depression of 1929.

Many people believe that the Great Depression was caused solely by the Stock Market crash on Oct 29th of 1929, but Black Tuesday was more a symptom rather than a cause. Well the stock market today has lost almost half of its value in the last year or so, but that’s just the start of our problems. We now have a major melt down in real estate, business, housing, and manufacturing, topped off with a huge liquidity crunch.

Generally when one segment of our economy takes a dive, there are others that remain very solid. The old saying was that “smart money” would always move to solid ground. Well, ladies and gents, this time is different. Smart Money would move out of stock and into real estate, but real estate is in the crapper also right now. Ok, then smart money should move to business, ahhh you guessed it, most businesses are sucking wind right now also (just ask G.M., Circuit City, Ford, Wachovia Bank, or a host of other previous behemoths.) Well, then smart money would move off shore, except this time the crisis is global.

Let’s take a little stroll down memory lane for a moment, back to the early 30’s. Now, even though most of us are too young to have experienced that time of economic ruin, it left a scar on not only our nation, but on a whole generation of Americans. The previously robust economy took a nose dive that devastated our industry, banking, job base, and stock market. Good, hard working Americans walked the street in search of work. Millions had to take government handouts. It breaks my heart till this day to see pictures of proud people standing in bread lines and soup kitchens for something to eat. It was a terrible and humiliating time, and an experience that I never imagined our country would ever go thru again.

Lets not kid ourselves, the current economic disaster is heading in the same cataclysmic direction. Without a well conceived plan, executed immediately, we will all be in line for government cheese. The government stimulus package must be massive and immediate, however the funds must be well appropriated to create demand and jobs, and not just be a handout. This is not the time to bundle in “Pet Projects” and pork with the purpose of giving favorable treatment to one sector of our constituency. The danger of this government sponsored stimulus package would be to cripple future generations of Americans with a huge debt they can not repay. This situation is not to be taken lightly; this time, it is a world wide meltdown of business, finance, and credit.

Headlines this week announced loss of American jobs climbing to a rate of 500,000, per month. Hold on, maybe you glossed over that fact, yes I said 500,000 more jobless Americans per month, are out of work. This is an unprecedented drop in jobs, and the effect on human lives is horrendous. To add insult to injury the unemployment rate is skyrocketing, and there is no end in sight.

What’s even worse is that most people’s nest eggs, their life savings, investments and “store of wealth” are decimated. The stock market is down from a previous high of 13,900 in July of ‘07 to under 8,000 lately. Millions have lost their investments and young people and old have devastated their retirement funds. It’s particularly challenging for people in their 60’s and 70’s that had relied on those carefully planned retirement accounts to help them survive for the rest of their natural lives.

The government decided to intervene by offering “bail-out money” to large banks and insurance companies. In their wisdom they acted to keep these large institutions afloat. The concern was that if they failed, hundreds of thousands of jobs would be lost, and the American people would loose faith in the banking system. Well, in retrospect, I’m not sure it was a good decision, because soon afterward a long line of business lined up with their proverbial hand out. I can tell you that this kind of interference in the economy is neither art nor science, and the ramifications are not yet known. Being that the government screws up most things they try to fix, don’t be surprised if they don’t mess this up also.

Perhaps, we should have let these businesses fail and let the free marketplace make the adjustments. The banks were given millions in bailout and TARP money so that they in turn could inject liquidity into the housing and business market place. Well, guess what, the banks patched up their wounds, consolidated with other banks and institutions and kept a tight fist on the bulk of the money. Many are using the bailout money as a way to increase their profits rather than as a way to help deserving individuals keep their homes. (While an ever increasing number of Americans loose their houses and businesses each month.)

I’m not trying to place blame here, this is not a partisan political issue and because that will do no good. Was it greed, impropriety, lack of controls, or just an inevitable economic cycle? American capitalism, free enterprise, and home ownership have always been the backbone of our way of life; and now these ideals are threatened. I ask you, what went wrong? Why are honest hard working Americans being thrown into financial turmoil and many are loosing their houses, their business, and their much needed retirement funds? More importantly .. how will we get the economy back on the right track. Don’t let anyone kid you, it’s going to be a while.

Please feel free to contact me at: pooritalianboy@gmail.com

P.I.B.