THE CURMUDGEON CHRONICLE ©
AN IRREVERENT VIEW
Time Line: December 12, 2008
Date Line: Flemington New Jersey
It is easy to pontificate on the economy if one has no personal economic problems. Can someone squeezed by recession understand the issues better than one who knows the theory but not the pinch? Perhaps, but consider FDR’s brilliant pitch: the only thing we have to fear is fear itself. FDR understood physical pain and weakness but was never without courage or money. He knew a nation that lost almost all hope had to win a battle to get off the floor and moving again. To counter fear, he tried to arm people with hope.
Perhaps FDR’s physical condition taught him that hope could be a weapon that might win a battle. What better weapon than hope to defeat fear, if “fear itself” was the only enemy? Unfortunately, fear alone was not what the Nation faced then: it is not what we face now.
Then as now, confusion, political maneuvering, distrust, and incompetence characterized an outgoing administration. Now as then, some bankers, financiers, and economists are overdue for punishment at the pillory. In both eras there are those who foster fear for profit.
Short sellers of securities and commodities help fear thrive; corrupt legislators and sectionalist pleaders make National recovery harder, and hoarders of wealth postpone recovery. During its term this outgoing administration, like Hoover’s did not lift a finger to stop or regulate the causes or growth of today’s fear. On the contrary, Bush has issued Executive Orders that will take at least a year to undo and will give the country a stomach ache until the job is completed.
The paradox is that outgoing administrations which set the stage for collapse have charge of the funds needed to correct their mistakes and act out the British Tommy’s description of inept leadership:
“When it trouble, when in doubt
Flap your arms and rush about.”
The $700 billion “rescue financing” was overkill if properly applied. It has disappeared into the banking system; is not being used for its intended purpose: is not providing credit to the manufacturing sector of the economy, and has not restored confidence to the credit and securities markets. The result is that many small and mid-sized businesses needing short term revolving credit don’t get it. They are unable to function and go bankrupt.
Some banks that got “rescue funds” covered obligations caused by their speculative excesses. Worse than those are banks that hoard “rescue funds” to strengthen their balance sheets and provide no help to the economy.
It is not hope alone that we must be armed with. The weapons we require are know-how and intelligence to use it wisely. The Chronicle will consider some of the things we believe are major issues to be dealt before we can recover from the years of speculative excess, greed and disdain for our institutions. We hope to exchange our thoughts on those and other issues with you in the coming months.
The present circumstances are not the same as they were in 1932. The differences make hope a weapon second to intelligent regulation and affirmative, (albeit temporary), Federal government participation in industrial development activities.
You cannot legislate or regulate what you do not know at first hand. We need to monitor the use of our capabilities carefully to assure regulation does not strangle growth but curbs conduct inimical to the needs of the country’s economic health.
The things we hope to consider include:
…re-establishing manufacturing and capital goods capacities;
… amending trade policies to create industrial opportunity at home;
… national debt reduction and the value of our currency;
… re-regulating public utility functions
… re-regulating securities and banking activities;
… the power of the Presidency;
… how to make higher education effective and affordable;
… husbanding natural resources to assure strategic capabilities;
... the need to end divisive political and sectional competition.
Of course those matters are not the entire litany and perhaps there are others more urgent. However, as the Ringmaster says,
“That is only the beginning Folks!”
Howard Stamer
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