Wednesday, July 20, 2011

An Economic Worse-Case Scenario

The other day, a man asked me where I thought the economy was heading. I'd made the mistake of mentioning that I work in finance (it's easier than launching into the long list of what I really do). This man, this stranger, began speaking to me as I sat on one of my writing mornings, despite the earbuds in my ears, the moving pen. He said he was surprised to see someone writing by hand in a journal. "A diary", he called it. So, this bit of small talk led suddenly to the economy. My answer for him? I told him I'm more frightened now than I was six months ago.

I can easily envision a future where things get worse for most Americans, where wealth is harder to attain for most people. Jobs don't come back. At least until workers are so desperate for income that they're willing to accept pay at nearly the same depressed levels as Mexico or Vietnam. Prices for staples continue to rise, squeezing out spending for discretionary items. Government slashes so-called entitlement programs, all sorts of public assistance. State and local governments are in trouble. Basic services disappear. I can envision towns that can't fix roads, that can't ensure public safety. Lawlessness and decay. The middle class disappears, with some ascending to the rich classes and the others falling behind. The housing situation only gets worse. The suburbs drain of life. I can see things getting difficult. (There's a story somewhere in this worse-case scenario.)

The reason for his scenario is politics. All of this nonsensical grandstanding. No one has the will to take a position unless it is opposition to the other side. Real work needs to be done. But any attempt to speed up a flagging recovery has devolved into a fight over the deficit and the debt ceiling. This argument has only made things worse. Everything things that they benefit from holding some righteous position, forgetting that the real work of politics is the crafting of compromise. If we wanted the most radical to govern we would let everything be decided by popular vote.

This man put the whole stalled recovery down to the Administration's energy policy. He was in energy. While he might benefit, it's not like opening up development--drilling--would lower fuel prices or make companies feel like spending money or hiring. And it isn't likely to make the consumer feel like suddenly spending money. He went on to use the words "environmentalists" and "socialism." It was time for me to leave.

The truth is that I'm frightened. I feel like squirrelling away every penny. I don't know that things are likely to turn negative again, but I think that it's more likely today. And in my mind I'm picturing dusty streets, dead grass and hollow, empty buildings.

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