Tuesday, November 11, 2008

Life support

Banks. Investment banks. Insurance companies. The big 3 auto giants. Individuals who have defaulted on their mortgage obligations. The list seems to get bigger by the day. The costs of stabilizing our economy seem to have no end. It is like we are learning a lesson in the actual meaning of infinity.

Those of us who watch the events swirl around us and who are not recipients, or potential recipients of the government's economic interventions have a natural inclination to recoil and ask, "when is it going to end". I think the answer is that we have no idea, but that does not provide an appropriate rationale for shutting off the spigot now.

Let's say we don't give the monies needed to prevent the collapse, by year's end, of our largest automakers. The projections are that at least 2.5 million jobs will be lost ( in the auto industry, and related industries that rely on their business from the big 3). The present true unemployed and underemployed rate is now estimated at 11.8 %. This means that of those who want full time employment, more than 1 in 9 can't find it. Add in those segments of the working population who have revised expectations as to the level of their compensation, and you can see why the economy appears to be in free fall.

If we voluntarily add to the roles of those who are without work, if we permit millions of foreclosures to move forward unimpeded, if we allow segments of our banking industry to go under, a recession will seem like a walk in the park.

If the economy shuts down, the economy shuts down. You may be the last man standing, but you will be holding a lot of nothing in your hands. President elect Obama has apparently suggested in his meeting with President Bush that he not oppose immediate assistance for the Big 3 (with caveats that the Democrats want on environmental and energy conservation in the production of new automobiles, as a condition for handing out financial aid). The legacy of Bush can ill afford another blow. His tying his support to unrelated free trade agreements, is another short sighted mistake. Step aside, Mr. President, and do the right thing for once.

I know we will have hell to pay in the future for all these handouts. There can be no question that we will all have to figure out some method of righting the economic ship in the future, before it sinks from the overload. But if we do not continue to pour the necessary funds into all segments that are on life support, I am afraid we will already be sunk.


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