Last Friday, markets were staggered by really lousy May job numbers – the worst in a year. Only 69,000 new jobs were added for May, the third month in a row of down numbers for this critical economic statistic, and the unemployment rate ticked up to 8.2% boding not well at all for Obama’s re-election bid this coming November.
What’s worse, numbers for March and April were also revised downward. Some economists say that we need to add hundreds of thousands of new jobs each month (the number varies according to who you talk to) just to stay even with population growth, and these dismal figures fall pitifully short.
If Obama was elected in 2008 due to the economic crash of that Fall, perhaps Romney could be elected in 2012 due to yet another economic crash coming this Fall.
Looking over to Europe’s continuing Euro woes, the landscape is nothing but trouble. Greece may be a having a slow-motion ‘run on banks.’ That is, depositors are withdrawing Euro’s in cash, by the hundreds of thousands, to avoid the complete collapse of the Greek economy and the conversion of all Euro’s on deposit in Greek banks back into Drachmas, which depositors fear will be utterly devalued. A total wipeout looms.
Spain is little better. After their real estate boom, there’s been a fire sale of real estate properties there as the Spanish economy dips under the Limbo Stick – how low can you go?!?
The dreaded Double Dip Recession, or worse, a down and dirty 1930’s style world Depression (dare we speak the ‘D’ word by name now?) looms. And the timing, coming as we enter the long Summer of both the Democratic and Republican Conventions, could not be worse.
The “It Can’t Happen Here” crowd is rev’ing up to tell us that Europe’s troubles are, well, Europe’s troubles, and that we should not be alarmists about problems happening across the Atlantic from us, but, in our other direction across the Pacific, China and other Asian economies aren’t exactly setting records these days either. Gone are the days when economic turmoil only affects one geographical area – we live today in a wired, totally interconnected world, and all that connectivity does not just extend to communications.
Our US banks, many of which operate internationally, are exposed to all kinds of trouble if the European economy craters this Summer or Fall. Anybody who does not believe that is kidding themselves. Although we still do not know the true extent of the damage to American banks’ balance sheets from the debacle of 2008-12, we do know that giant financing is often carved up into so many pieces like a big piping hot pizza. Some of those slices of some of this troubled European economy are undoubtedly held by US banks, and the contagion will spread in terms of fear, panic and paranoia, whether based in reality or not, anyway.
What to do to stimulate the US economy and create more jobs? Well, if this weren’t an election year, we might actually have some hope that this burning question might be addressed by our Congress in a grown-up, adult fashion. But, no hope of that during 2012. Of course, the new President, whether he be the old, current President, or Gov. Romney, will get the usual first year Honeymoon period going a ways into 2013, but by then, we could be in seriously hot water again.
Like the frog, sitting in heating water and slowly boiling to death, but not jumping out of the pot, we await our fates – amid campaign slogans and the barrage of TV advertising courtesy of SCOTUS and the Citizens United decision, unleashing the advertising product of mega-money which will soon dominate our airwaves. If you don’t own a Tivo, or whatever video recorders are called these days, it might be a great time to buy one, and learn how to use it before every three minutes on your bigscreen TV from now through November will feature Hit Piece ads of every stripe, until we all want to scream.
Will we repeat the mistakes of 1937 and plunge ourselves back into the really horrid economy of Fall 2008 and into 2009? Will there then be a huge war, like WWII, to come along to lift us out of our economic misery? Or, is this the way it is going to be – into the foreseeable future for the remainder of this decade?
More than ever, now is the time for political parties to look ahead and decide whether they want to stand for something, or just be “Anti-“ the other party. Now is the time for clear thinking and clear leadership. In my humble opinion, we need to take our economic future – “our” meaning the US, and Europe’s, and even Asia’s – more seriously than ever. Is our goal for the Best and the Brightest to just get richer, leaving everybody else even further behind, or is our goal to rescue our newly minted youngest generation of adults who hold diplomas, no jobs, huge loans, and no prospects, before they are lost forever? What are our goals anyway? Very tough Bi-partisan thinking is sorely needed and nearly completely lacking these days.
One idea is to form infrastructure banks to rebuild our crumbling US highways, electrical grids, bridges, and so much more. Investors could invest in a newly built America, many could be put back to work, and with interest rates still at nearly historic lows, there is hardly a better time to tackle such projects. Another would be to put our new graduates to work doing something, anything, rather than simply being left in the lurch with no hope and saddled by incredible debt for the educations that were supposed to assure them of a lifetime of rewarding employment and the income to live out their American Dream. How about converting our Freeways into Toll Roads? Privatizing some governmental functions like the post office?
Ideas are needed; not rhetoric.