WHO’S TO BLAME FOR THE ECONOMY?

Several months ago, I started asserting that the economy is in increasingly bad shape. I even suggested that the downturn might last for as long as several years before it turns around. I was absolutely ostracized.

Here we are, a few months later, and the economy has sucked up several major banks, investment companies, Fanny Mae, Freddie Mac, and Countrywide. Bush on Monday finally pulled his head out of the sand and admitted that the economy is having problems, but stressed that it is still “strong.” Both Presidential candidates acknowledged that the economy needs fixing. Yet, the spin seems to continue: “If you want to have good times, you need to expect down times.” Horse…..manure.

What’s worse is that some major banks are gobbling up smaller financial firms that are in trouble. Bank of America has gobbled up so much that it, itself, must now be on much less stable ground. This sounds very precarious to me. I don’t want to be the harbinger of bad news, but this all sounds like “pre-depression” stuff to me. And, there’s no easy fix, either.

What is the real problem here?

Energy and big oil and the stubborn unwillingness of Congress to deal with it are fundamentally to blame. In fact, if you will study the events leading up to the “Big Depression,” you’ll find that you had a few big banks controlling the finances of the country; they were in the mortgage business and they were in the stock business. Congress split them up as part of solving the issues. You also had a few big oil companies, Standard Oil for one, controlling oil, natural gas…even coal. Does this sound familiar?

Congress went on vacation in the midst of the highest gas prices in history. Pelosi refused pleas from both sides of the House to attack the issue before going on vacation and left the House members standing on their thumbs as she literally headed for the airport. Now that they’re back in session, are they addressing the issue? Hell no. It’s election time, remember? No Congressional member is going to make any waves about anything, especially big oil; they need those campaign donations to keep on coming!

With energy prices up, people quit spending. Layoffs started and unemployment kicked off. The cost of goods delivered by truck escalated, tightening the family belts ever further. Risky loans went immediately into default and the good loans are now following. Gas prices have not gone down to any appreciable degree and, as long as the oil industry remains monopolistic and unpunished, they are certain to go up again, sooner rather than later. By all accounts, new oil sources will not come on line for at least seven to ten years, and everyone also agrees that alternative energy sources will have no impact for at least that long, either.

With oil being the initiating bandit, are we not looking at seven to ten more years of this financial quagmire?

Consumer spending is down and credit card debt is up. The declining availability of credit to the consumer is undoubtedly a contributing factor to the slow up in spending. But, could it also be that Americans are finally realizing that their continued quest for more, bigger and better has led them into a financial abyss. This could portend a funadamental change in the way the American economy works...a change that could cause the unemployment rates to push up into the double digits by the end of 2009.

Or, is the oil industry really to blame? They may have started it, but Washington has clearly refused to do anything about it except to give it lip service and to turn to us, as taxpayers, to pay for it…. So we get the “double whammy.” It inevitable that we are going to have to increase taxes at some point in order to pay for all of these “bailouts.” That, my friend, will most certainly only prolong the bad economic news.

Think about that when you step into the voting booth to cast your ballot for any incumbent.