It Doesn’t Have to Get Ugly

By Bob Bregman
Yes, Eddie everything you say could come true, but like they say in Gershwin’s Porgy & Bess; “It Ain’t Necessarily So.” There is a way out of this mess
A little background first. Since WWII, the recessions in the USA have generally been caused by our penchant for over selling; autos, housing, capital goods (steam shovels, diesel engines, jet aircraft, etc.). Not all at once mind you, sometimes it was autos, sometimes another industry.
The auto companies in order to keep their factories going would give bigger and bigger discounts; however the buying public would eventually have all the new cars that they could afford, and then some that they couldn’t afford. At that point there wasn’t anyone left to sell a car to and inventory piled up in the dealers lots and in rail yards and in factory lots. The result was that the auto manufacturers had to shut the factories down and lay off workers. So, we had an inventory recession which lasted until the public decided that they had paid down enough debt and started to creep back into the showroom and the same cycle would start again. The exact same scenario played out with micro-chips, computers, swimming pools, hula hoops, you name it, but at different times vs autos or capital goods
The big deal this time is that we pushed the string on autos, housing and capital goods all at the same time and now we have an inventory recession in the three biggest industries at the same time and that’s why we feel this recession so deeply. One doesn’t have to point fingers; we were all in on it. Oh, some more than others, but there is hardly anyone who didn’t participate one way or another, on the front side or the back side (except, of coarse, me and you ;-) ).
Why is it so difficult to get out of this unholy mess? One main reason is that while the country is waiting for the inventory of homes and cars to get chewed up; there are no new industries for the workers to get jobs. Another reason is that the public’s credit has to be replenished, this takes savings. If the public is saving, the public isn’t spending. 70% of what happens in the USA, sales wise, is done by the public. Without that number growing, the economy doesn’t grow. The economy runs on credit, if the consumer is not using his credit, we get a serious slow down. We get what we are going though now.
What happens now? The government steps in and honestly like the horse cavalry, comes to the rescue. Hooray! We need an energy policy; the government can provide one that sponsors alternative energy projects. The USA, the most efficient and inventive country in the history of mankind, is falling behind in the race to become the preeminent manufacturer of alternative energy systems; wind, solar, geothermal and nuclear. As an example take the wind turbine industry, of the top ten turbine companies in the world, only one, GE, is in the United States. How can the congress let this happen? Another example is China. The Chinese are building solar power manufacturing facilities as fast as they can. Why aren’t the Republicans as up front as the Democrats in trying to craft an energy bill that will eventually create millions of well paying manufacturing jobs? I believe that an energy bill will get through the congress and lots of money will be spent on partnerships between the government and the private sector. Lots of money will be saved as we reduce our dependence on foreign oil. Venezuela’s Chavez has recently threatened to cut off oil to the U.S., if we don’t stop helping our allies in Columbia. Plus we can cut down on the billion dollars a day we send to OPEC and other oil producing nations, ONE BILLION DOLLARS A DAY! In order to start job building immediately, the government, through the private sector should cover the roof of every government, state and municipal building with solar panels. This will produce hundreds of thousands of jobs, particularly in the building trades, where the job market has been hardest hit. Whatever the government does to help, it will require less carbon based energy. Carbon fuels do not put more people to work, except in Saudi Arabia, Nigeria, Venezuela and Iran. Photovoltaic power puts people to work here. China the leading producer of photovoltaic modules sees the future and is investing in it. We in the USA let the oil and coal industries lead our Republican and some Democrats congressional representatives around by their noses, like a bull with a ring through his nose. It’s embarrassing to watch. The oil and coal industries are doing everything that they can to ensure that no energy bill goes through, which to me proves the need for an energy bill. If they don’t want it, then it must be good for us, you and me, the people.
In the past we could take our time with reviving the auto, computer industries and the like, because we had a lock on those businesses. In the old days people were laid off, now they are fired, never to be rehired. The manufacturing has gone overseas. We set up this free trade nonsense. It’s free trade for everyone but us, we abide by the rules, no one else does. We lost the advantage of mass production to countries that under ordinary circumstances wouldn’t have a prayer against us. We still have the most productive workforce in the world. Let’s use them!
It’s time for both political parties to get together and start working for the benefit of the people, not the banks, not Wall Street, the people! Bottom line, things in this country could get a lot better faster than anyone believes.