Just a quick thought on the economic situation. A few days ago, Pat Lang (who usually blogs about military issues) had a post asking people’s opinions on whether the current economic situation was just a typical business cycle downturn, or whether it was a financial Gotterdammerung. His point was that in reading a lot of right-wing sites, the attitude all along has been playing down the seriousness of the current economic situation and recommending doing nothing or slashing taxes at most, while left-wing sites seem to take the tack that this is Great Depression 2.0 unless government does something to save the day.
Me, I disagree a bit with both analyses somewhat. I actually agree with the Democratic side up to a point. I think that this if nothing is done, that this is probably going to be a multi-year protracted recession/depression. Probably the worst one since the Great Depression itself. The difference is that while Democrats look at this as proving that the government has to do something, I see this as a best-case scenario if the government is smart enough not to try “fixing” the problem. You see, admitting that the current economic situation is dire doesn’t imply that there are some magic-wand fixes that will make everything all better.
As Michael Shedlock pointed out in an open letter on his blog to President Obama:
With all due respect Mr. President, it is impossible to spend one’s way out of a problem, when the problem is reckless spending.
With all due respect Mr. President, you and Congress want to force banks to lend when banks (by not lending) are acting responsibly for the first time in a decade. Mr, President can you please tell us who banks are supposed to lend to? Do we need any more Home Depots? Pizza Huts? Strip malls? Nail salons? Auto dealerships? What Mr. President? What? And why should banks be lending when unemployment is rising and lending risks right along with it?
It is human nature to try to hope for easy outs to the consequences of one’s foolish actions. And quite frankly, both sides of the aisle have been leading us to this current situation for at least 10-15 years. I’m sure most drunks would love it if there were some pill you could just take that would instantly get rid of hangovers with no bad side-effects. I’m sure that college students cramming for finals wish there was some magical way that could make it possible to learn in one night what they should’ve been studying hard and paying attention to for a full semester (I’m sure they also wished there were some way they could go without sleep for long durations without it messing them up int he head). And everyone wants to find a magical way that saves them from the consequences of living beyond their means for over a decade (both individually, as well as voting for representatives that have the government living well beyond its means). I think the sooner people realize that just throwing trillions of dollars into all the pet spending priorities they already had isn’t going to solve the problem caused by two decades worth of profligacy.
Sure, if the government does nothing, we’re all screwed for a while. Unfortunately, that’s going to be the case no matter what happens.