Putting On Our Thinking Caps

The Editorial in Tuesday’s New York Times said nothing about “bottoming out”, or “ a light at the end of the tunnel”, or “encouraging news about the economy”.

The ominous report began as follows: “Foreclosures: No End in Sight”

“A continuing steep drop in home prices combined with rising unemployment is powering a new wave of foreclosures. Unfortunately, there’s little evidence, so far, that the Obama administration’s anti-foreclosure plan will be able to stop it …

“One of the biggest problems is that the plan focuses almost entirely on lowering monthly payments. But overly onerous payments are only part of the problem. For 15.4 million ‘underwater’ borrowers – those who owe more on their mortgages than the house is worth – a lack of home equity puts them at risk of default, even if their monthly payments have been reduced. They have no cushion to fall back on in the event of a setback, like job loss or illness …

“With joblessness rising, lower monthly payments could quickly become unaffordable for many Americans. In a recent report, researchers at the Federal Reserve Bank of Boston argued that unemployment is driving foreclosures and to make a difference, anti-foreclosure policy should focus on helping unemployed homeowners. The report suggests a temporary program of loans and grants to help them pay their mortgages while they look for another job.

“The government will also have to make far more aggressive efforts to create jobs. The federal stimulus plan will preserve and generate a few million jobs, but that will barely make a dent in the overall economic crisis or the foreclosure disaster.”

Every now and then the Fed gets something right but their numbers are usually off. For starters, to say that “the recession began in December 2007” is somewhat misleading because the “recession” was in full swing by then – and the Fed knows it. The Fed also knows that unemployment is the real bugaboo.

And to state that “nearly six million jobs have been lost” since that date is another, shall we say, miscalculation. Two months ago Louise Uchitelle of The New York Times revealed that the Congressional Budget Office and the Bureau of Labor Statistics released a report showing that more than 24 million Americans are out looking for work, and even if the nation’s employers stopped cutting the more than 600,000 jobs every month and instead began hiring in earnest, it would take several years to generate work for so many people.

Louise wanted us to don our thinking caps. Considering the fact that from the onset of the “recession” – whenever the actual date was – it would have taken a number of months, or years, before numbers would escalate to the figure of 600,000 layoffs per month – even an elementary school student could figure that the “recession” began well before December 2007.

That youngster would probably remind us that the layoff numbers would gradually reduce month by month until there was no one else to layoff – until there were no more jobs left in the whole country. That youngster would also insist that employers couldn’t suddenly just stop cutting jobs unless huge numbers of job opportunities were created – just as suddenly. That young student wasn’t relying on logic. Just some simple arithmetic.

But the youngster’s musings brings us back to what the Fed just said – “The government will also have to make far more aggressive efforts to create jobs.” Stimulus plans are a proven failure, the report said. They “barely make a dent in the overall economic crisis or the foreclosure disaster”.

Experts like to recall the recent recessions – those in the 90s and 80s and 70s, etc., etc. – and how the economy always, eventually, somehow, turned around. And so – maybe late in 2009, or early in 2010, or late in 2010, or early in 2011 or late in 2011 – depending on which of the charlatans is doing the pontificating – this recession, like all the others, will run its course. Of course.

No it won’t. This “recession” is nothing like the recent ones. This “recession” is a depression, and it’s looking more and more like the Great Depression we had in the 30s. It was an event today’s experts didn’t see, because they weren’t around back then. Unlike recent recessions which were caused by ill-advised financial manipulation – and easily corrected – this downturn, like the Great Depression, was brought about, and being sustained by, job losses. To be more accurate, however, U.S. jobs haven’t simply lost, they’ve been transferred overseas. It was an underhanded program begun almost forty years ago by those in the highest places, and their unforgiveable greed guaranteed today’s worldwide economic disaster.

So the Fed is right for a change. The government – those in today’s highest places – are obligated to replace the jobs that were moved overseas by its predecessors, but it can’t simply be a replacement operation. We could not be competitive in any manufacturing effort that pits us against overseas labor – that’s why our greedy leaders transferred our jobs in the first place. We can create unchallenged employment opportunities only if we legally exclude overseas competition.

Our World War II emergency shipbuilding programs come immediately to mind because millions of job opportunities were created by those programs. But warships? Who needs warships? In the first place, any country can build them, and in the second place our “313-ship” navy can’t even stop the skiffs of a few Somalian teenagers. But that’s a hoax of – ooops – or rather, a horse of a different color. We need “boots on the ground”, they’re now telling us, to put a stop to those acts of piracy. [You don’t suppose there’s oil in that part of Africa, do you?]

We need to build merchant ships, not warships. Our patented container ship design would solve the world’s economic problems and avert bloody uprisings, here and abroad. A government-mandated emergency shipbuilding program – like the ones that bailed us out of the Great Depression – would revitalize dozens of U.S. shipyards, provide employment for millions of Americans, and end once and for all our disastrous economic free fall.

[The “experts” are wrong – the Feds are right, kinda – but that young student sure knows the scoop.]