Borrowing Trouble

In a statement issued two weeks ago, the Federal Reserve Board of Governors told us that the U.S. economy had taken a turn for the worse. As if we didn’t know.

Then two days ago a whole bunch of elected officials in Washington decided to funnel $ 700 billion of “bailout” money to the geniuses on “Wall Street” whose shenanigans brought on our economic tailspin in the first place. The reasoning given for this idiotic move was that “credit” had to be restored thereby enabling those “Wall Street” sharks to make loans again to flat-broke and jobless consumers who would, naturally, start buying again. Buying power comes from borrowing, they’d have you believe.

So now we’re back where we started. One of the inane comments overheard and recorded this past week came from an individual who had recently lost his job. Being among the unemployed wasn’t a serious concern at that moment, that individual said, because he still had some credit cards.

Don’t Americans realize yet that “credit” is what brought on this travail? Borrowing money without the means of repayment invites disaster, our folks warned us, but not many have heeded that advice. Bankruptcies and foreclosures as a result are at an all time high and forecasters, like the “Fed”, see a “turn for the worse”, but instead of treating the root cause of the economic downturn, our elected, and unelected, leaders are looking for a quick-fix by treating the symptoms rather than the cause.

“Wall Street’s” position, according to a story in Business Times, is that “Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight US jobs depends on housing directly or indirectly – from construction workers to bank loan officers to big brokers on Wall Street”.

See? As far as they’re concerned, everything flows from “Wall Street” in the form of credit, and then back to “Wall Street” in order to support the credit system.

But the “bailout” plan won’t give our economy a jump-start. Jobs are what this country needs, not “credit”. Jobs are the lifeblood of a nation, not money-lending and not “housing”. Without jobs and weekly paychecks, neither the housing industry nor the money-lending industry could survive. Recent events are attesting to that, and the point was driven home last week when government data showed an economy losing ground fast. Sales of new homes plunged to their slowest pace in 17 years; claims for unemployment benefits were the highest in seven years; and orders for durable goods declined almost 5 percent last month. Only jobs can reverse this downward spiral.

One of these days, someone in Washington will see the light and acknowledge, or recall, the fact that a merchant fleet is essential to the economic well-being of a nation … especially a maritime nation like ours. But we no longer have a merchant fleet. That was deep-sixed when our officials closed our shipyards and eliminated millions and millions of employment opportunities. Now they’re telling us that they can restore buying power by creating “credit” (again) for the unemployed!