Not Enough Time to Say What Needs to be Said
Posted by Michael A. Kamperman on July 20, 2009
On Tuesday, July 21, 2009, I will be interviewed on the Mind Your BIZness on-line radio program. The program is broadcast continuously for 24 hours only on July 21. The link for those of you that are interested and would like to listen is: http://www.mindyourbizness.com/ If you do happen to listen feel free to post your thoughts on the comment section for this post. After my 15 minute interview I thought gee I wish I had said this, or I wish I would have emphasized that point. I simply had way too much to say and way too little time to say it. This led me to think what would I say to President Obama about the economy if I only had 2 minutes of his valuable time? I certainly wouldn’t have time to go into the background of analyzing how the economy wound up in the position it did. I wouldn’t have time to waste saying who was to blame for the mess we are in. I would only have time to emphasize the seriousness of the situation and what must be done about it.
The first thing I would say is this, “Mr. President, the number one problem facing America is the never ending stream of foreclosures . We currently have a national supply of single family homes to accommodate 70% of all Americans. However, well under 50% of Americans currently qualify to purchase a new home because mortgage standards are way too tight. There is a huge discrepancy between supply and demand. As long as there are more homes to buy than there are buyers, the foreclosures will not stop. The first step in fixing the economy is providing access to affordable mortgage credit to far more Americans. Mr. President, the same problem exists for autos. Fold Fannie Mae and Freddie Mac back into the federal government and start guaranteeing home and auto loan securities.” Well, after those few short sentences my first minute of the President’s time is up. I now have only one minute left to make another point. I need to make sure it is the most important point I have to make.
My second point would be “Mr. President, we have millions of people who are unemployed with many more on the way. Last year one in two college graduates had a job offer upon graduation. This year it is one in five. This has to change now. Lower the eligibility age for Social Security and Medicare to encourage older workers to retire and open up jobs for younger workers. To pay for this have a heart to heart meeting with the Federal Reserve and have them buy back most of the outstanding Treasury bonds in existence. This would save the country $400 billion a year in interest payments, which can then be used to pay the $400 billion cost of lowering the retirement age to 60. Quit letting China and the bond vigilantes dictate U.S. policy. Print them their checks first and tell them thanks for their respected input, but at this time the U.S. is choosing to avoid any chance at re-entering a new great depression.” That’s it. My two minutes are up. For a rambling version that fails to concisely make the above points you can tune in to Mind Your BIZness.
Badtux said,
I don’t see demand increasing for homes and cars even if we do loosen standards, not while unemployment is at 11%, which is Nouriel Roubini’s prediction for the next year (and he’s been pretty much right so far). When 11% of the workforce is unemployed and another 9% is underemployed or counted as “discouraged”, i.e., when 20% of the workforce is in no condition to spend, that puts the middle 60% of the workforce on notice that things could go to $%@@ in a handbasket for them too, and they don’t spend either. They’re too busy saving to create their own “unemployment insurance” in case they’re next on the jobs chopping block. And because we don’t have a working social safety net to keep people from falling into poverty and homelessness during periods of joblessness, they really don’t have any choice but to do that — spending simply isn’t possible, without such a social safety net.
I don’t see any sign that President Obama is willing to create such a social safety net by greatly increasing the length and amount of unemployment insurance so that people no longer lose the homes and cars if they become unemployed, by creating programs for health care during unemployment so that people no longer lose health care during unemployment (which, remember, is a *huge* portion of the economy — 17% — and the unemployed slam the door on health care spending while unemployed because they simply have no money to purchase even COBRA coverage with), job creation credits for businesses that hire Americans, insourcing credits for businesses that fire Indians and Chinese and hire Americans, or any of a number of other things that could be done. Because he is utterly terrified, petrified even, of being called “socialist” or “Communist” or worse. Which is ridiculous, because the Republican minority is going to call him all that and worse even if he was Ronald Reagan reincarnated simply because of his skin color and party affiliation, so why not run with it rather than cowering in terror? Yet President Obama appears to prefer cowering in terror to exhibiting the bold leadership that is going to lead us out of this crisis.
So anyhow, my bet is with Roubini, Krugman, DeLong, Feldstein, and a variety of others who say that things have pretty much hit bottom but they’re going to *stay* on the bottom for a long, long time because there just isn’t any “up” anywhere that can be seen short of a new stimulus package that simply isn’t going to happen. It may officially be a “recovery”. But for far too many Americans, the only “recovery” in sight is going to be whatever tasty morsel they found at the bottom of a dumpster behind a supermarket at night…