Tuesday, October 9, 2012

Reality Check

We keep hearing and reading everyday from our politicians and the media that we are facing unprecedented problems in this country and that things are worse now than they have ever been. In short these are the worse of times for the United States. Given the drumbeat of gloom and doom, we start to believe it.

Nonsense. Let's put things in perspective.

1929- 1939-- the Great Depression, massive unemployment , dust bowls, runs on the banks, Hoovervilles, breadlines, labor union clashes,etc.

1940-43 -- Nazi Germany marching through Europe and advancing on Leningrad, Britain under siege, Pearl Harbor and Japan sweeping through the Pacific. We were losing the war and many thousands of our men were dying.

The 1950's -- The Korean War and the expanding Communist Soviet Union and it's nuclear threat ( remember those drills hiding under school desk), culminating with the Cuban Missile Crisis in 1961. McCarthyism and its fall out.

Racism and bigotry were rampant. Eventually strife arose from the Civil Rights Movement in the 1960s and beyond , including the riots after MLK's assassination.

The Viet Nam War, with so many killed and wounded, and massive demonstrations, protests and civil disobedience in the 1960's and early 70's. The country was torn apart.

Remember all the years when we constantly lamented Urban Decay , the Rust Belt and the loss of our Farm Economy. Don't forget the era of Stagflaion and long gas lines from the Arab Oil Embargo . The Savings and Loan Crisis that we were told would cripple our economy for generations .

Our cities were crumbling , factories were closing and farmers couldn't make a decent living. The "inner cities " were dying.

Women and minorities did not have the rights and opportunities they have today.

We had some very bad recessions in the mid 1970s and early 1980s and 1990s. The stock market crashed in 1987. We had  the bursting of the DotCom bubble in 2001, with the sharp economic down turn that followed. Of course let's not forget 9/11.

Remember that in the 50s the top tax rate exceeded 70% and has been essentially falling since to where we are at today.

If we honestly examine it, the "good old days" weren't all that great.

Our current problems , while very serious, don't compare to some of the problems we have  dealt with in the past.  Maybe that is why we have to amplify the problems we  have today.

Of course the unemployment rate is a terrible problem, and our debt and deficit are very serious problems that have to be addressed.  Foreclosures and housing prices are dreadful after the sub prime lending crisis set off the housing collapse which lead to the financial melt down and resulting Great Recession.

However inflation and interest rates are low.

We are in the painful , but ultimately beneficial, process of de-leveraging our debt levels.

Those who have jobs are doing reasonably well, and are now feeling less worried about losing them.
While home values have plunged most people are secure in their housing situation and the market is finally recovering .

The stock market , where so many Americans ( at least 50%) have their retirement accounts and the like, has come back strongly from it's lows and the main market problems today appear to be from Europe and with our politicians.

Our corporations are operating at very profitable levels and basically are awaiting increased demand ( and the election) to justify new hiring. Reportedly they are sitting on a mountain of cash but need to have confidence in the economy to invest it.

Notwithstanding Standard and Poor's, the world believes that US Treasuries are still the safest investment in the world. The only threat to our credit rating is our Congress.

Our farm economy is so strong that it should be embarrassing to them to still be getting large government farm subsidies.

The wars we are involved in are winding down and are being fought by volunteers who, for a variety of reasons, have chosen to be in the military. Therefore the rest of us really haven't had to sacrifice to fight these far off wars. The risk of a terrorist attack is real but sadly it is the nature of world we live in.

The one thing that really is broken, and is worse than our past,  is our political process.

Our politicians, abetted by the pundits, have created a toxic atmosphere over things that in reality can be relatively easily dealt with by people of good will and reason. For example, Simpson Bowles would do the job on the deficit and the debt, and relatively painlessly.

Why hasn't either party embraced it? The so called Gang of Six are on the right track but partisans on both sides of the aisle block compromise at every turn.

Since our country's strengths are so extensive and our assets are so strong , we can do the things that need to be done, if the political will is there.

We can afford to raise revenue. There certainly are areas where spending can and should be cut significantly. Meaningful adjustments to entitlements can be made in a relatively minor and thoughtful way which would have a major impact on bringing down the debt and the deficit.

Once a program which includes these things is developed and implemented, confidence in our political process will be restored and the economy will start to grow again and finish the job of solving our debt and deficit problems; as occurred in the 1990s when economic prosperity generated increased tax revenues from increased incomes and profits.

We are lucky our problem are so solvable -- think Greece and other countries in Europe .

However, there are too many politicians and pundits who don't want to solve our problems . No , they just want to win elections to gain or retain power.

When will we all wake up to the fact that they care more about winning elections , with all the spoils that provides, than what is in the best interest of the country.

Maybe that has always been true, and is just a part of human nature, but it's so much more apparent these days.

Shared sacrifice through political consensus is the answer. Compared to what we have had to do in the past, it shouldn't be all that hard.


Update : 2015

Housing prices have largely recovered; foreclosures mostly over.
The stock market remains strong.
Unemployment  at 5.5%; millions of new jobs created since date of this original post.
Inflation still tame
Deficit has been cut in half.
US economy leads the world. Dollar strong and oil prices low.
Yes, we still have some serious problems, but to hear the politicians and media ( from all sides) things have never been worse in this country.
How crazy is that. Why must we always beat ourselves up?