U.S. Economy: Years of Hardship Ahead

Even with the bailout package, the U.S. economy is in for years of recession and stagnation. Pro or con?

Pro: Pepare to Suffer

The U.S. economy is now almost certainly in the early stages of a long and deep recession. No, not a Great Depression. Economic policymaking has come a long way since the 1930s, and we now know how to avoid the worst mistakes. Nevertheless, we’re facing something akin to the severe recession of the early 1980s, when unemployment crossed 10%, rather than the relatively short, shallow recessions of the early 1990s and 2000s.

The root cause of the recession is the $4 trillion decline in the value of U.S. homes, which may well total $8 trillion before prices hit bottom. Econometric evidence suggests that for every $1 decline in housing prices, homeowners cut back spending by about 6 cents. Using this formula, a $6 trillion drop in prices translates into a $360 billion annual decline in consumption—just under three percentage points of gross domestic product.

Earlier this decade, the same economic logic pushed the economy into a recession in the aftermath of the stock-market crash. The wealth impact then was on the same order of magnitude of what we’re seeing today with housing, but homes are much more widely owned than stock is and the average homeowner spends a higher share of income than wealthy stockholders do. In the end, the "wealth effect" from the housing bubble will likely end up twice as large as the 2001 stock bubble.

And, as is all too obvious looking back, we escaped the worst fallout from the stock market collapse precisely because the housing bubble stepped in to fill the void. In the current circumstances, no obvious replacement bubble waits on the horizon.

Thomas Hobbes said that life was "nasty, brutish, and short." Get ready for nasty, brutish, and long.

Con: Trust Bernanke’s Judgment

A common refrain these days is that the U.S. economy is going down the route of Japan, doomed to a decade of stagnation. The short answer for those asking the question: not if Ben Bernanke and Hank Paulson have any say.

The U.S. faces both short-term and long-term challenges. In the short term, a functioning economy needs functioning capital markets. After more than a year of increasingly severe credit-market crises, the U.S. economy is almost certainly entering a full-blown recession. However, recessions don’t last forever, especially when there is aggressive countervailing policy action. After addressing the crisis with piecemeal measures, Bernanke and Paulson have adopted a proactive $1 trillion-plus program of support to the banking industry, the short-term lending market, and the mortgage market.

As a close student of both the Great Depression and the "lost decade" in Japan, Bernanke knows that an extended period of stagnation requires both a major shock and a failure of policymakers to act decisively. It took Japan a decade to adopt the aggressive asset-buying policy that the Fed started this spring.

By the middle of next year, the U.S. economy should start crawling its way out of the recession, and a new set of challenges will loom. U.S. consumer spending has grown faster than income for much of the past two decades, and much of this spending has leaked overseas in the form of imports. In the decade ahead, there will be a rebalancing of the U.S. economy with slower consumption growth, but also fewer imports. The economy also will face the challenge of slower growth in the labor force as the outsize Baby Boom generation retirees. This does not mean stagnation, just slower growth, as in other low-population-growth countries.

Turning Japanese? I really don’t think so.

Opinions and conclusions expressed in the BusinessWeek Debate Room do not necessarily reflect the views of BusinessWeek, BusinessWeek.com, or The McGraw-Hill Companies.

Reader Comments

Ed

If Bush had not made the tax cuts or invaded Iraq, if U.S. military spending was a little less than the rest of the world's combined, if regulations put in place because of the 1930s depression had being kept, how much more resilient would the U.S. be to get out of this mess?

The point is that this is not a surprise; it comes from years of fantasyland economics. The U.S. cannot borrow for decades from the rest of the world and just hope that it all works out.

Frank Metcalfe

It seems to me that the current crisis will take a long time to resolve. Behind it is the massive negative balance of payments that has driven U.S. debt to unimaginable highs and is backed by increasingly uncertain commercial paper. The biggest risk as I see it, is the real possibility of a loss of confidence in the U.S. dollar as a reserve currency basis for a large number of countries. Both China and the Gulf States have gone along with funding the negative balance of payments by buying U.S. Treasury notes along with a number of other countries. If this recycle of funds is cut off by such a loss of confidence it will be a much worse situation than the Great Depression inasmuch as the likely outcome will be hyperinflation similar to the situation in Russia in the mid-1990s. When I was there the Russia-to-U.S. dollar was up to 3,500:1 from previously parity. The consequence of this inflation was almost totally destruction of the Russian economy, which after more than a decade of effort to restore the economy is still somewhat in recovery mode. Exploitation of their vast natural resources has been the main engine of that recovery.

Admittedly, the Russian situation was different, but it has the same underlying causes--namely running the economy inefficiently with government backing of most industry. Government band-aids in the U.S. will result in similar inefficiencies.

However, the U.S. does not still have the backstop that largely rescued the Russian economy. Currently, U.S. resources are largely depleted and those that remain are generally being efficiently exploited. Significant expansion of U.S. commodity production is clearly not practicable, and I see little else on the horizon that could provide a quick turnaround. There would, in fact, be a significant shortfall of basis commodities in the U.S. since imports would slow if payment in a reliable currency could not be efficiently organized. When I was in Russia, the reliable currency was in fact the U.S. dollar. Whose currency would replace it in the U.S. in the hyperinflation scenario? Maybe the Russian Rouble? or the Chines yuan? More likely a new U.S. Super dollar = $10,000 in current terms. Don't think it can't happen in the U.S. After all, it did happen in a number sophisticated countries like Germany and Russia, who likewise ignored the signs of their impending doom.

Midwest

At the core of this economic collapse is overspending by consumers and an enabling system in the form of credit cards issuers and, with greater toxicity, a freewheeling and out of control mortgage industry.

Make no mistake, the blame is widespread. This is not specifically the government's fault, and it does not lie with a given political party. The blame lies with all of us.

Consumers chose to overspend (myself among them), we chose to cash out and do stupid things with our phantom equity, we chose to get a third car, and numerous financial institutions were there all along goading us into increasingly foolish purchases.

The economy will be in a lull for longer than the free traders and free marketeers believe, but it will not be a decade of stagnation like Japan's.

If this economic mess is to improve, consumers must slow down and live within their means. Pay off credit card debt and forgo the vacations and the third big screen. It is time to cowboy up and realize that without fiscal responsibility beginning in the home, there is little hope that the enablers will learn their own lesson, too. It is a symbiotic relationship tantamount to a fatal attraction. Both sides must take a breather, or both might end up killing each other.

I expect 6 to 12 months of recession followed by 2 years of consumers' getting their arms around their debt before it gets around their throats.

I only hope that the enablers don't dangle more credit crack in the face of all the addicts who need to be in rehab. If they do, we're in big trouble. Again.

Ga

The Iraq invasion was necessary for the U.S. to stabilize the region. Iraq is swimming in oil, and any problems in that region will affect oil supplies, which in turn would affect growth in the U.S. and other countries.

The U.S. is going through a period of correction, and there are a lot of lessons for everyone to learn. All is not lost, and U.S. economic fundamentals have been as strong as ever.

It's a matter of 8 to 12 months for the U.S. economy to get out of the current mess and maybe another 6 to 8 months for things to stabilize.

It has fallen to a low. Maybe it will fall a little more, but after that it will rise.

George

"The economy also will face the challenge of slower growth in the labor force as the outsize Baby Boom generation retires."

Solution? Can anyone spell "immigration"?

"Turning Japanese? I really don’t think so."

Read Mark Kirkorian's Case Against Immigration: Illegal and Legal and implement the policies he suggests. Also read the work by George Borjas of Harvard and implement his policy suggestions. We will turn Japanese.

dw

I think the biggest cause of our current problems is that wages in the U.S. have been falling for so long. At some point there had to be a day--or year(s)--of reckoning. That time is here. That is the main cause of falling housing prices, House prices had gotten so far out of round with wages, that when credit dried up, house prices began their inevitable collapse. The falling wages are also behind the falloff in demand for goods. And energy. And most of the pressure on wages came from Wall Street, which now is getting a bailout from those who earn wages.

Dante

Crisis? What crisis? I'm still living comfortably. Buying what I want when I want. Eating out half the week, driving wherever I wish. Take overseas vacations. How? I didn't do stupid things. And I certainly don't need to blame anyone and everyone for personal stupidity like all here.

Realista

In a recession, there are not enough jobs. More "immigration" will drive wages down further and extend the recession. Not the time to legalize illegals or expand H1 visa programs

George

"In a recession, there are not enough jobs. More 'immigration' will drive wages down further and extend the recession. Not the time to legalize illegals or expand H1 visa programs."

Don't expand immigration. More jobs will move abroad and drive down wages even further. Perhaps that is what you want.

David

I believe we have finally run the course of the post-WWII competitive advantage. After WWII, there was no other production capacity in the world except the U.S. This joined with a world that needed and wanted to be rebuilt , and it caused a bubble that has lasted until now. Other countries are coming on line competitively, and this is a new thing for Americans used to 9-5. Other countries tie nationalism with economic growth and this makes all feel good when their country does good. We, as Americans, are to divisive to accomplish the same sentiment. Right now, I believe this will change, eventually. The constant borrowing is a sign that we as a nation were trying to maintain our status as the only economic superpower. We are now in a dogfight with the rest of the world like a local retailer would be with other local retailers who are selling the same stuff. We need more than economic bailouts (although they were needed to keep the ship afloat)--we need a realization that it is now America Inc., and we, like other businesses, need to keep looking over the horizon to determine what the next better mousetrap will be. We need leadership of a kind Lincoln and Roosevelt provided during times of American crisis. "Is there not one righteous man?"

brian

We've been in a recession for two years now. The government. and Wall Street just didn't want to admit it. Fear would have made investors tighten up. Instead, they have lied to the American people, giving them hope that this economic trend was going to be short-lived. I have seen more retirees go back to work, and more continue to work because of insecurity and lost retirement funds. This, as well as jobs leaving the country has taken millions of jobs off the table for new recruits. Greed and unlawful acts by certain companies have wasted away the retirees' savings, and trust from so many would-be investors. I myself will never invest in the stock market again, because some people are just glorified liars and thieves. I can manage my money a hell of a lot better than they can. Why would our government give $85 billion to a company that has already proven they do not know how to manage it. Give it to the people and make them pay it on their homes. It would have made its way back to the banks anyway; that would have protected every American's future. Instead we give all that money to one company to mismanage it again. Sorry, I will continue to keep my earnings to myself. Good luck to all of you who put your trust in someone's hands you haven't even met. CEOs, CFOs, etc. are just like politicians--they tell you what you want to hear, they cook their books, and they rely on your stupidity to invest.

rg

The root cause of the problem: dependency on other countries.

Think about your personal situation--you are consuming more than you are earning. But how do you do that? Credit! What is going to happen? Down the road, either you earn more and pay off the load you created earlier, or go bankrupt. This problem certainly got created because of deregulation. We are consuming through the credit system at the cost of what? We must pay attention so that every worker must earn enough always and the earnings must increase in future, if you want to sustain the credit system. But the situation is in reverse.

Now, we have more than a trillion dollar deficit, and it is going to be more deficits if we do not control our lifestyles or do not export more than we import.

There is another option: Produce more internally and support the country for long run sustainability.

Another solution is controlling our budget. Without printing more money, can we save and pay off slowly? Probably yes. Budget money should always be utilized for the growth of the country, such as education, but not to support any project that doesn't give back.

What can lawmakers can do? They are controlling our future. Do they understand what is going on now? Most of them do not.

chris

The credit crisis will stabilize, and when it does the dollar is going to crap. No country in their right mind is going to have their reserve currency solely in the U.S. dollar, no country is going to participate in unregulated hedge, CDO, derivative or other, and no country is going to want corporate debt if it means exposure to unregulated derivative (above), etc.

This is going to be a restructuring of the global economy. Already China does more trade with India than the U.S. China could very easily let its currency appreciate and convert its current manufacturing to domestic and regional.

Will it be bad?It's already very bad. I have been proven wrong, but my bets are on countries with surplus trade, surplus resources, and surplus cash reserves. They have the money to restructure their economy to a new form of global trade network. Of these China, Japan, Korea, Singapore, Russia, and the Middle East will all survive the crash. But some will have to wait for a rise in oil/commodities and Korea is going to have to pay for unification.

The debtor nations in the U.S. and EU in particular are stuck. Allowing unregulated markets to grow bigger than regulated markets and crash the system, while maintaining multiple foreign wars, while maintaining multiple recipients of huge foreign aid, while maintaining huge structural budget and off-budget deficits has a choice. It could continue its current trajectory of bailouts or it could regulate these derivatives, it could balance its budget and invest its money in infrastructure or piss away its money on war, it could tolerate growing unemployment, or it could close the country to legal and illegal immigration while reforming schools so U.S. citizens are groomed for those doctorate level positions. We could live with a smaller and less exploitative financial system while reindustrializing America for domestic consumption or structure reform to reformulate the existing financial system.

One path will restore confidence in the United States, and the other will lead to its collapse as we saw in the Hooverville outbreaks.

This is serious. People are losing homes, jobs, pensions, 401Ks, and savings. Remember, it's times like these that are ripe for a John Wilkes Booth, Manson, or a Hitler to appear. Why? Because an injustice has been committed, and that injustice is going to create the justification for backlash.

IHateToPointItOut

I hate to point it out to you, but the U.S. economy comprises a big part of what is called the "virtual economy." The "virtual" part produces nothing in reality but "feeling-good" sentiments. It is like opium. The party will end sooner or later.

Max

I don't know if it's important, but I have noticed the Dow, Nasdaq, and S&P 500 have grown by seven times in the last 20 years, from roughly 2,000 to 14,000. But from the 20 years before, it had grown only two times from 1,000 to 2,000. And it lately grew seven times on the shaky subprime foundation. I presume it is possible the Dow will hit a bottom at 6,000.

mike

While a lot of people in the U.S. are busy attaching blame for the ongoing financial crisis, people are losing sight that the real culprit is leveraging by both financial institutions and average consumers. No family, or countries, for that matter, can indefinitely rely on borrowed money for a good life. Americans have done that for more than two decades by now. The systemic crisis will not be resolved until the process of deliveraging has run its course. Whether that deliveraging will last a decade or a few short years is subject to the will and resolve of the American people and their leaders. Forget about blames for past or current leadership or policies--it's the American lifestyle that has to change.

georges

The criminals get a reward now...with golden parachutes.

diligentdave

I find comment "Economic policymaking has come a long way since the 1930s, and we now know how to avoid the worst mistakes" to be both naive and likely very wrong.

As a small business owner for most of the last three decades, no one is more of an optimist than I am. However, after having sold nearly nothing in the past two weeks, I found things have gotten extremely ugly extremely fast.

We greatly underestimate the cascading effects of this major, major, major economic contraction.

The Humpty-Dumpty verses come readily to mind, regarding the "king's men," be they Republican, Democrat, or Independent. "They can't put him back together again."

Trust is the main issue. And money or liquidity can't buy that. Lenders don't believe that most can pay them back. So they won't lend. Everyone is becoming leery of everyone else.

If the bailout and buying into banks doesn't work, our government, with its own massive debt load (which makes it far worse off than the federal government in the 1930s), will be unable to do much, if anything, without our enemies (China, Russia, and Middle East "sovereign funds") willing to help us.

Already, Russia is compromising our military situation, looking at sending missiles again to Cuba, helping Venezuela get N-bombs, and co-opting Iceland, with their banks being "under water" and the little nation bankrupt. An air base we abandoned there in 2006 will soon be Russian.

And Civil War the likes of which may make that of the 1860s pale in comparison--with all of the divisiveness near the surface between liberals and conservatives--seems to be so near and ready to explode at the earliest trigger point.

steve

We have to put money into the hands of people who need to spend it on goods and services.

We need to go back to producing more of what we consume.

We need to use tariffs to eliminate our trade deficit.

We need to close many overseas military bases to save money.

Lou

Get a derivatives trading market (similar to futures) functioning that includes contract default options so that the risk is public, the price is public, the trades are public, and the entire system is transparent.

It's the only way a depression can be averted. The economy cannot continue to sustain repeated surprises from hedges, derivatives, CDOs, and other unsecured credit without freezing up from distrust.

The system needs more than money and recapitalization. It needs transparency.

Also, no one is pointing out that some areas of the country are suffering more than others.

All the press is going to the hardest hit overvalued cities with strong financial, insurance, and real estate.

Baxter

"The economy also will face the challenge of slower growth in the labor force as the outsize Baby Boom generation retirees. This does not mean stagnation, just slower growth, as in other low-population-growth countries."

I'm puzzled by this comment. A conservative estimate is that it takes 150,000 jobs per month just to satisfy current population growth. The author asserts that "more bodies = more jobs"?

There is no factual basis for this assertion in a contracting economy.

It also leads to the rather curious way in which our unemployment figures are comprehended by the general public. They seem to be unaware that a loss of 100K jobs in a given month does not include the 150K that are now unable to find work because of population growth.

This translates into 250K unemployed persons.

At this moment of crisis we should be looking to take care of our own. Taking a dwindling number of resources -except for those executive bonuses--we must have standards and spreading them over a larger pie makes zero sense. It will also reign in the unsavory behavior used by Corporate America in screening employees (mild health issues, credit scores, age, as in not hiring people over the age of 35).

A one year moratorium on all immigration is needed.

mike

The common mistake in evaluating where we go from here is to try to match it to any previous set of circumstances. Without a doubt, it is different this time. No prior period economic setback has happened in the environment of such a robust worldwide expansion. Just six months ago, commodity prices were surging to record levels as demand exceeded supply of relatively inelastic products.

Now, we have a major setback. US economic activity has slowed sharply in the past six weeks as the crisis reached levels that scared consumer and business leaders into a halt while the future becomes clearer. Drawing from anecdotal reports, my guess is that that we have experienced a 15% reduction in consumption and investment in this period. Assuming the credit crisis is repaired over the next four weeks, we will likely have an average 5% decline in GDP.

The big question is how fast economic activity can resume a growth track. With the developing world now maintaining some of its own momentum and reducing the reliance on the developed economies, this will hasten the recovery.

In this case, despite the severity of the economic shock, the duration and severity of the slowdown will not be extreme. Comparisons to the Great Depression, fortunately, will be proved erroneous. It is different this time.

Jim C

In your article, you make the claim that, "Econometric evidence suggests that for every $1 decline in housing prices, homeowners cut back spending by about 6 cents." What research could possible stand up for anyone to make such a ridiculous association? Especially considering the myriad of other things going on in the economy anytime housing prices have declined. My house has lost $25,000 in value in the last eight months, but I haven't withheld $1,500 in spending as a result of that. If I did, it would be because gas and food are so damn expensive.

The most reliable statistics would be those that track how many of the predictions and opinions of knowledgeable people/experts have been wrong.

ekim

Since history is being made it's interesting to see how, should I say, stagnant, the responses are in respect to progressive thinking. All things evolve, and while it's best to know history in order to proceed on the next best course of action, to think that things will return to "normal" is lacking in foresight. History has shown that governments collapse, currencies collapse--ah, let's see, wasn't it Kansas that sang, "nothing lasts forever but the earth and sky"? If the planet/civilization is to prevent any type of Malthusian scenario being played out, I heartily suggest that some minds become open to the next evolutionary step up for mankind. With technology/robotics becoming more commonplace the need for human labor becomes more obsolete every day. How long into the future before computers replace the need for government? After all, once the program is written "Hal" will be able to compute variables and make decisions that will far outpace those of humans. When will the tech gurus become one and make one cell phone that does all, one HD/Holographic surround sound system, the need for DVD/CDs eliminated, etc. Suggested reading might be Kurtzweilers--the singularity is near. Fascinating stuff. But if you all want to stay stuck in thought processes and not adapt new mindsets, well hate to be a doom/gloomer, but it just might mean we have to down, way down before we can go up again--Brave New World.

sam

The bad news is that we will need to re-industrialize to move forward. The good news is that everything we rebuild will be current generation. Since we can't buy so many goods from China, perhaps we should buy some of their plants for cents on the dollar.

JR

I think that things definitely bubbled and only now are we starting to come back to reality. We had too much exaggerated growth brought on by high credit lines and even higher housing prices that were pitched to financially uneducated people as being safe and affordable. There is no doubt that Capitalism works, but it needs regulation that is constantly kept up to date. We have found out the hard way that if you give corporations an inch, they will stretch it a mile. We have learned that companies are out to get our money with any scheme possible. We also learned that you can only live off of credit so long. For some people, it may be a long time before they get their debt under control. For others, this will only be a bump in the road. However, if regulation becomes lax or outdated, I wouldn't be surprised if we see problems like this every five to ten years. Of course, it will happen in other sectors that are not being closely regulated. The government can't keep letting the wolves of Corporate America loose on its sheep; the same sheep that empower the government to shepherd over them.

Jim L

I am certainly not an expert, but if looks like a recession, and it feels like a recession, and it walks and talks like a recession, then by golly it must be a recession. Do either of these so-called experts know how long this recession will last? I don't think they do. Everything is a guess with the experts. They try to look at history for an answer, but this recession is far different from past ones because today we live in a world economy where influences from outside the U.S. can affect what happens in this country.

I do feel the housing industry has to stabilize first. But how and when that happens, who knows? In the meantime, the average American must reduce unnecessary spending and be more frugal; plus companies will have to gear down for a slow Christmas. I see Best Buy said they will hire about 6,000 to 7,000 fewer part time people this holiday season in order to reduce payroll in anticipation of a slower normal holiday period.

This will not be a green light season for retailers, more like the yellow caution light, warning those if you overspend this year, it will be a red light financial life for your future.

mike

Ask again in six months. It's going to be a lot worse.

Overseas

I believe that future is unpredictable, just as almost no one foresaw the financial crisis happening all over the world now. But the point is that we should learn from the lesson.The quicker we learn from the financial crisis,the sooner we can get out of it.

Jack

Major problems confronting the USA:

Wars in Iraq and Afghanistan (no end in sight)
National debt (huge)
Balance of payments deficit (big)
Public debt (huge)
Declining value of the dollar (ongoing)
Housing bubble (not fully deflated yet)
Loss of manufacturing (will never return)
Loss of confidence in private and public sectors (growing)
Unemployment (growing)
Immigration (no solution in sight)
Fear of a recession (growing)
Polarized electorate (static)
Lack of confidence in government (growing)
Infrastructure (deteriorating)
Energy independence (no solution in sight)
Global warming (no solution in sight)

Sean

Yes, the U.S. had to invade Iraq to "stabilize the region." What idiot could still believe that? The region was stable before the U.S. invaded. Many countries were pushing for the sanctions to be lifted, and Saddam Hussein was itching to produce and export as much oil as he possibly could. He had contracts with France, China, and Russia to bring in heavy equipment to start expanding production.

At the time of the invasion, oil was $20 a barrel or so. Hussein's certain expansion of production after the sanctions were lifted would have pushed oil prices down to $15 a barrel or lower.

The reason the Administration pushed so hard that the invasion had to occur right away--"we can't wait even another week because there could be a nuclear attack!"--was simply a recognition that the oil majors (Chevron, Exxon-Mobil, Shell, BP, etc.), Saudi Arabia, and Kuwait would be devastated by $15 and lower oil.

Only a moron would look at what happened with the invasion taking Iraqi production completely offline for years and driving prices from $20 a barrel to a high of $147 a barrel as "stabilizing" the region to ensure "reasonably priced oil."

One reason policy makers can do things like this to further specific policy interests like higher oil prices to benefit certain strategic "partners" like Saudi Arabia and Kuwait and big oil is people are so stupid that they can see something like oil go from $20 a barrel to $147 and say, "Obviously this was a plan to keep oil prices from rising."

Hussein wasn't going to withhold Iraqi oil production anymore than he was going to try to shift the Iraqi economy to producing toys and clothes instead of oil for export.

These people only get away with outrageous things because the average American can't even use a calculator.

hardmanb

Even after the effects of the "recession," there will be a long-term rebalancing of the economy and American consumers. Just as my parents lifelong economic views were anchored in memories of the Great Depression, so many young people, young families, formerly affluent middle-classers, and terrified elderly will change their long-term economic views and practices.

Homes will trend to smaller. There will be a lessening of financing lifestyles with credit. There will be more awareness of thrifty consumerism, and many millions will have learned to become savers. The painful effects of this recession/rebalancing will have long-term, if not lifelong, effects on the consumers and the economy.

BIGWEEDS

Folks,
I believe that a lot of what is going on right now is a planned hammering of the stock markets and financials in order to help the chosen one win the presidential election. I have a feeling that once the election is over, that change is a coming no matter who wins. If McCain pulls it off, I believe that I will be in better shape that if the chosen one is chosen.
Regards.

Bill

The U.S. is in for economic hard times that will not end soon. The government has no business being in business. What the government can do to help the situation is stop spending money we don't have. Stop giving money to other countries. We have become the world's sugar daddy.

Steve

Government intervention in the housing and auto industries will only make things worst.

Look at what government intervention in our education and health care systems have already done: Prices increase every year, because the government increases the demand for both services.

After the recent housing crash we suddenly realized that the government has been doing the same thing in the housing markets for years through the stealth operations of Fannie and Freddie.

Ever-rising health, education, and housing prices keep many people from ever being able to afford any of these.

Now we appear headed in the same direcction with the auto industry.

The pain of a severe recession is better than the long-term pain of never being able to afford a house, education, health care, or auto.

But America's politicians and people can't stand any pain. And the politicians want to be "compassionate" and of course want to be re-elected.

Bailing out the housing, autos, education, and health industries creates a lot of have-nots who will never be able to afford to buy a house, car, education, or health care.

The American people and their leaders are just too obtuse or are just not honest enough to admit that all the handouts harm as many people as they help.

Jim

Hey, no one mentioned this--at least I don't think: How about all these companies that are giving jobs to China and Taiwan, how about close that up and bring it back here, so we can work.

Also, Americans have to stop spending so much goddamn money. We are killing this country and half of us don't even know it. Stop spending money on huge TVs, iPods, cell phones, and huge trucks that guzzle gas. You are not helping.

George W. Bush. Everyone blames him, and yes, he should be blamed for a part of this. He [spent] all that Clinton worked so hard for, on a stupid, pointless, unwinnable war. Now he will take his millions, move out to Europe somewhere, and leave us to suffer.

Paul Burke

We need, now, a government like the Third Reich--with its sound economic policies, to save, restart, and prosper
the American economy.

Join the Debate

 

Participate More!

Please send us your ideas for new Debate Room topics. If you're an academic, association officer, or other industry expert and would like to write a Debate Room essay, send us a query. Questions? See the

BW Mall - Sponsored Links

Buy a link now!