As the economy inches closer to a spectacular implosion, you might as well take the usual run of presidential politics and throw it out the window.
Many of the issues that were once key are irrelevant now. Forget about universal health care; it's not going to happen any time soon. As far as your favorite entitlement program, you can do the same with that. Social Security may become a moot point. Even any talk about "staying the course" in Iraq becomes irresponsible blather. We can't afford any of this right now.
Back in '92, Bill Clinton steamed into the White House on the strength of his personal mantra, "It's the economy, stupid." But that was 1992, when we were in a mere recession. That's nothing compared to now; this has become a very scary time for anyone who has money, needs money, or ... did I leave anybody out?
As John McCain and Barack Obama face off for the big prize next month, the biggest -- scratch that, the only -- issue is the economy. Especially dissecting it to find out exactly when and how the wheels came off, and to find out where those wheels went.
How bad is the economy right now?
-- It's so bad that gazillionaire Warren Buffet referred to the mortgage meltdown as an "economic Pearl Harbor." Other pundits are using the word "Armageddon" to describe the mess.
-- It's so bad that two rock-solid banks -- Washington Mutual and Charlotte-based Wachovia either a) went into the tank or b) were quickly bought up to stave off failure.
-- It's so bad Congress debated a $700 billion package to bail out the mortgage industry. The first attempt was voted down in the House under a morass of partisan debate Tuesday, and the Senate is picking up the scraps right now. But after the House rejected the bill, even rock-solid conservative commentators -- the kind that would ordinarily scream socialism at the thought of the government taking over part of the financial industry -- were instead taking about the sky falling. I'm talking about Bill O'Reilly here, for goodness sakes.
The picture doesn't get any prettier with age.
The causes of this meltdown have been explored ad nauseum. The upshot, though, is that crashes of this magnitude always seem to follow easy-money times. It's a self-adjustment. The 1920s were another season of the fast buck, janitors were looking at the stock market, the good times were rolling. Then the bottom fell out.
I saw this phenomenon close-up during the early 1980s gold fever. I worked part time for a silver and gold broker, and a lot of ordinary folks were scraping their money together to buy Krugerrands (if y'all remember those things). The gold market topped out at around $850 per troy ounce, then did an unbelievable swan dive to the $300-something range, practically overnight. This taught me something: When you see taxi drivers looking at a certain investment, expect it to crash. (Back then, I used the term "taxi drivers" as my metaphor for average Joes, and this was nearly 20 years before I became one of those taxi drivers. How prophetic is that?)
Here, a lot of ordinary folks were buying homes, getting low easy financing. So easy, in fact, that even I managed to qualify for a loan some years ago (I didn't take it, though). Now, again, the bottom is falling out.
A bailout may be the only solution right now, and at that it's a lousy one. Better to do nothing, let some companies go belly up, let some people starve, and the system will find its own equilibrium. But no one will ever think of making such a suggestion, at least not in a political arena with voters and taxpayers listening.
The very idea of propping up the mortgage industry with taxpayer money stinks to the core. Even the staunchest supporters said so. If some of the backers sounded funny while making statements about the bailout, it was because they were holding their noses. A bailout merely addresses the symptoms instead of the causes of the meltdown. It's scary in that the government -- which had no small hand in creating the crisis -- is now attempting to solve the problem. As a general rule, anything run by a government or by folks who think like government types think is going to be inefficent, bloated, and will compound the problem rather than simplify or solve it.
And even if it works as advertised, the bailout will merely buy time. Everything will still crash. It may be delayed and the landing might be a little softer, but a crash is a crash. What difference does it make whether you're thrown from the 50th floor or the 100th, except maybe the size of the mess?
Where I sit, I'm probably in the best position to withstand the crash. Although things are slower in the intermodal cargo business, people still need to move things by truck, rail, and ship. I don't expect my job to evaporate any time soon. I have a small account at a local credit union, which I opened after checking a few other options, including Washington Mutual. I do not own a home nor have I any intent to buy one anytime soon. My only dependent is of the four-footed variety, and a sack of dog food is still cheap. In fact it smells pretty good, a thought I may revisit if things get really ugly on the home front.
But this financial crunch still makes me nervous. Now, if I had a lot at stake -- as most people do -- I would be giving "nervous" a whole new dimension.
Many of the issues that were once key are irrelevant now. Forget about universal health care; it's not going to happen any time soon. As far as your favorite entitlement program, you can do the same with that. Social Security may become a moot point. Even any talk about "staying the course" in Iraq becomes irresponsible blather. We can't afford any of this right now.
Back in '92, Bill Clinton steamed into the White House on the strength of his personal mantra, "It's the economy, stupid." But that was 1992, when we were in a mere recession. That's nothing compared to now; this has become a very scary time for anyone who has money, needs money, or ... did I leave anybody out?
As John McCain and Barack Obama face off for the big prize next month, the biggest -- scratch that, the only -- issue is the economy. Especially dissecting it to find out exactly when and how the wheels came off, and to find out where those wheels went.
How bad is the economy right now?
-- It's so bad that gazillionaire Warren Buffet referred to the mortgage meltdown as an "economic Pearl Harbor." Other pundits are using the word "Armageddon" to describe the mess.
-- It's so bad that two rock-solid banks -- Washington Mutual and Charlotte-based Wachovia either a) went into the tank or b) were quickly bought up to stave off failure.
-- It's so bad Congress debated a $700 billion package to bail out the mortgage industry. The first attempt was voted down in the House under a morass of partisan debate Tuesday, and the Senate is picking up the scraps right now. But after the House rejected the bill, even rock-solid conservative commentators -- the kind that would ordinarily scream socialism at the thought of the government taking over part of the financial industry -- were instead taking about the sky falling. I'm talking about Bill O'Reilly here, for goodness sakes.
The picture doesn't get any prettier with age.
The causes of this meltdown have been explored ad nauseum. The upshot, though, is that crashes of this magnitude always seem to follow easy-money times. It's a self-adjustment. The 1920s were another season of the fast buck, janitors were looking at the stock market, the good times were rolling. Then the bottom fell out.
I saw this phenomenon close-up during the early 1980s gold fever. I worked part time for a silver and gold broker, and a lot of ordinary folks were scraping their money together to buy Krugerrands (if y'all remember those things). The gold market topped out at around $850 per troy ounce, then did an unbelievable swan dive to the $300-something range, practically overnight. This taught me something: When you see taxi drivers looking at a certain investment, expect it to crash. (Back then, I used the term "taxi drivers" as my metaphor for average Joes, and this was nearly 20 years before I became one of those taxi drivers. How prophetic is that?)
Here, a lot of ordinary folks were buying homes, getting low easy financing. So easy, in fact, that even I managed to qualify for a loan some years ago (I didn't take it, though). Now, again, the bottom is falling out.
A bailout may be the only solution right now, and at that it's a lousy one. Better to do nothing, let some companies go belly up, let some people starve, and the system will find its own equilibrium. But no one will ever think of making such a suggestion, at least not in a political arena with voters and taxpayers listening.
The very idea of propping up the mortgage industry with taxpayer money stinks to the core. Even the staunchest supporters said so. If some of the backers sounded funny while making statements about the bailout, it was because they were holding their noses. A bailout merely addresses the symptoms instead of the causes of the meltdown. It's scary in that the government -- which had no small hand in creating the crisis -- is now attempting to solve the problem. As a general rule, anything run by a government or by folks who think like government types think is going to be inefficent, bloated, and will compound the problem rather than simplify or solve it.
And even if it works as advertised, the bailout will merely buy time. Everything will still crash. It may be delayed and the landing might be a little softer, but a crash is a crash. What difference does it make whether you're thrown from the 50th floor or the 100th, except maybe the size of the mess?
Where I sit, I'm probably in the best position to withstand the crash. Although things are slower in the intermodal cargo business, people still need to move things by truck, rail, and ship. I don't expect my job to evaporate any time soon. I have a small account at a local credit union, which I opened after checking a few other options, including Washington Mutual. I do not own a home nor have I any intent to buy one anytime soon. My only dependent is of the four-footed variety, and a sack of dog food is still cheap. In fact it smells pretty good, a thought I may revisit if things get really ugly on the home front.
But this financial crunch still makes me nervous. Now, if I had a lot at stake -- as most people do -- I would be giving "nervous" a whole new dimension.
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