Economists, politicians, columnists and most people have not yet fully figured out what has happened in the U.S. and the rest of the world. Very few even saw such a complete mess coming and many people are still being surprised by current events. Overall, everything began to unravel last year and suddenly picked up steam a few months before our November elections.
We won’t know for awhile whether we’re in a deep recession, a light depression, or more likely something else we’ve never seen before. We should avoid trying to find what prior era our current period resembles, because we are really in uncharted territory now. However, to get some coherence out of our mass confusion and massive collapse, we need to quickly give this time in our history a simple and memorable moniker: The “Big Bust” fits the bill perfectly.
Bust is the shortest word among many similar ones such as “broke, bankrupt, beleaguered, burst, broken, bombed, belly-up, over-leveraged, de-leveraging,” and the like. The “B” sound is strong and we need a forceful yet short name to attach to this very complex unfolding disaster. Bust is also similar to “Burst” as in what a bubble or balloon does when it gets pricked.
One could think of it as the opposite of “The Big Bang” which meant the sudden start of a great expansion that occurred 13.5 billion years ago. Instead we need a phrase to signify the simultaneous occurrence of a quick end and a big implosion involving untold trillions of dollars.
“Bust” also means getting caught in the legal sense. That description fits this crisis since our decades of greed, avarice, lax regulations, endless borrowing, multiple bubbles, Ponzi-Madoff schemes, and failing to properly assess assumed risks, were finally exposed. Wall Street Executives got busted in a figurative sense. (We’re just waiting for the indictments and trials, or at least the bankruptcy filings.) In addition, all of us collectively share some responsibility for creating this huge mess and now we’ve been busted by our children and grandchildren.
The years of borrowing, leveraging, low taxes, senseless investment bubbles, and shameless pursuit of narrow self-interests are over. We have to say good-bye to McMansions and gas-guzzling SUVs. We need to save, plan ahead, rebuild our country, and know the difference between wants and needs. We have to leave our children something more than a massive debt.
Some economists argue this economic period started at the end of 2007, but we really didn’t notice that until well into 2008. Everyone, except the most trapped in denial, realized things had seriously gone awry by the November election. For over a year many experts said that a recovery was just months away. Now most experts are predicting things will get worse and last longer than we had ever imagined. Our multiple and interrelated messes are so huge that they defy easy comprehension and the sheer dollar amounts (hough real) are still shocking.
Some Republicans will attempt to fix blame for everything that has gone wrong on August 28th, 2008, the date Barack Obama accepted the Presidential nomination from the Democratic Party in Denver. (Some partisans may even start the clock when Barack Obama became a member of the U.S. Senate that was slightly more Democratic than Republican back in January 2007.) That conveniently ignores the fact that the many Republican Presidents and Congresses since 1981 pretty much established the overall political and economic trajectory that ended so dismally during the last 12 months of George W. Bush’s Presidency (remember him?).
Everything we have seen and will see in 2009 is pretty much the debris from our bankrupt and misguided economic and political policies of the past 27 years. Only when and if President Obama’s new budget and stimulus packages, and bank reorganizations finally start to get into the pipeline, can any major blame be fixed on his administration.
The Treasury Department’s disorganized efforts towards reorganizing the banking and financial sector is giving many people second thoughts about Mr. Geithner. But remember, we’re still less than 100 days into this Administration. To think that we can only afford to wait weeks or even months to sort out the huge problems that developed over the past 8 to 27 years is very unreasonable. However, the U.S. banking/financial/insurance system has to be fixed soon and no later than December 2009 or else any recovery will be further delayed. We do not have to actually get banks and AIG completely working again by that date, because after stress tests and stiff audits, some may be forced into bankruptcy or receivership.
By the end of 2009, a comprehensive set of laws and regulations should be in place for all financial and banking entities, transactions and products. Furthermore, a new nationwide professional investigative and enforcement agency over our entire financial sector should begin work looking back, contemporaneously and forward.
Our economic problems will not be solved by dumping more taxpayer money down a black hole without requiring full accountability and thorough oversight. We might not control the circumstances we find ourselves, but we will be judged on how well we respond to them. Our fragile economy really demands prompt action with respect to fixing the financial/banking sector. We cannot afford to dither and delay for many more months.
It takes a long time (decades in general when viewing history) to actually move the huge American economy and the federal government. It is in everyone’s best interests, Democrats, Republicans, Liberals and Conservatives to collectively work for a prompt end to this deep recession for the benefit of all our citizens.
We’re now in a “war” for our very economic survival. We know too well how long military wars take to succeed or even to just wind down. We should be using everything we have in our political, financial and economic arsenals to remake our country so it can fully recover from the Big Bust and successfully compete in a global economy. Furthermore, the different policies and programs are all interrelated and must be pursued simultaneously.
We have to fully address each of the following all within the next 2 years:
(1) Reorganize and comprehensively regulate our entire banking and financial system,
(2) Get millions of Americans back to work in both public and private sector jobs,
(3) Stimulate the overall economy through targeted government policies yet provide a transition to sustained private sector expansion of our economy,
(4) Address our structural budget deficits over the long term including enacting fair and rational public spending, healthcare and progressive tax policies,
(5) Invest sizeable public resources to rebuild our long-neglected infrastructures of transportation, education and energy,
(6) Encourage Americans to save more on a regular basis through changes in our tax system,
(7) Fund new scientific and technological developments, and finance many new start-up private business ventures as they are the prime engines of long-term prosperity, and
(8) Build a new sustainable financial, environmental and economic world order.
If we start on that multi-faceted difficult agenda now, by 2014 we will be well on our way towards living in a completely new period of sustainable prosperity. After decades of pursuing immediate gratification in our personal lives and our business ventures, the big question is whether the American electorate will have the patience to see this long process through. We gave the prior Republican President and Republican Congress 6 years to work their magic on our economy. We probably should give the current Democratic leaders at least the same amount of time to reverse the course of the prior 27 years in order to ameliorate this economic mess.
3/20/09 by Marc Pascal in Phoenix, AZ.