Who is Driving the Bus?

Since Labor Day we have been beat over the head with how bad the economy is. I attribute most of this to the presidential election and the party out of power talking it down to win the election. Nothing new about this, regardless of party. However, with the willing assistance of the media, the Democrats have outdone themselves this time. But before you think this is just another "bash the Messiah" piece let me explain how our economy went wrong well before the election.

Historically our country and the world for that matter has gone through recessionary periods, inflationary periods, and amazing growth periods many times. Every time we have a recession people get laid off, businesses close, and the survivors adapt and become more efficient. Many times our economy has been revived by a war or conflict that mobilizes the manufacturing base to support the war effort. This was the case with WWII, Korea, and Vietnam. Couple that with consumer spending increases that were amazing and you have the last 60 years of the our history. However, our economy has become almost exclusively driven by consumer spending and less reliant on our manufacturing base and demand for our products abroad. And consumer spending is heavily influenced by consumer confidence. If confidence in our economy is low then consumers will pull back on their spending, fearing the loss of their job and the ability to repay the funds they borrow to buy cars, various consumer goods, etc.

The current situation was exacerbated by our reliance on debt to facilitate consumer spending. As we were encouraged to spend more and more credit was provided with no reasonable expectation that the borrower could repay it. The real estate boom is the glaring example but credit card debt is just as bad. So as banks began to fail the normal reactions of those banks capable of surviving was to pull back on the risky loans. The housing market ground to a quick halt and so did consumer spending. Businesses reduced their workforces in light of reduced demand and consumer confidence goes into the toilet.

Here comes the government to the rescue! Their solution is to throw more money at it, increasing our national debt exponentially to reduce the pain, protect the financial system, and bail out selective industries "too big to fail". The problem is that these idiots are the ones that encouraged the irresponsible behavior that got us into this mess. Tax policy incentives entice us to borrow money this year to reduce tax liability as a means of economic stimulation. The federal government leaned very heavily on mortgage lenders to make loans that were not supported by the income to repay them, especially loans to minorities. This all started back with Jimmy Carter and was supported by both parties since. So now they are trying to keep these families from "losing their homes" by making the rest of us pay for them. Insanity seems to be ruling the situation.

In my opinion we need less government involvement, not more. Businesses that have not adapted should be allowed to fail. Period. Jobs will be lost, assets will be sold to new owners, and consumer demand will be met. Government propping these losers up has kept them from facing the music and it is about time they did. You keep making products that are inferior to your competition then you should go out of business.

However, there is light at the end of the tunnel. In a little over a month Barack the Magnificent will take office and you will see a new tone in the media. Nobody will call him stupid or lacking intellectual curiosity. Camelot will return and he will lead us from the wilderness of economic despair. Consumer confidence will return and more massive government spending programs will drag us from the recession. Or so it would appear. But the auto industry will have billions of our money that they will likely never repay and will still not learn the lessons they should.

So enjoy the ride! You really don't have much choice.