To have a significant economic recession occur during an election year is potentially political suicide.
This column presents a non-partisan, conservative viewpoint about items of interest in our community and our lives. Focus is on items impacting your pocket book, your personal freedoms, and your rights. I hope you will read the column regularly and it occasionally influences your opinions and actions. Now, on to the subject of the week.
Recessions- A Brief History:
The rise and fall of our economy is as natural an occurrence as the rise and fall of the oceans. It seems an economic reality that every ten to fifteen years our economic system has to struggle through a financial correction. It appears we are about to experience another of these unfortunate, difficult periods.
There was an especially difficult recession during Jimmy Carter’s tenure in the mid 1970’s. This event was sparked by our first experience of a gasoline shortage, when people had to line up at those few stations which were open and had gasoline available for sale. Interest rates jumped to over 20%, and as a result, industry immediately slowed to a crawl with lay off’s and business closures becoming common place. A similar but not quite as severe downturn occurred in the early1980’s, and another of short duration in the early 1990’s.
During all of this period the scenario went through the sequence of an expanding, growing economy creating a demand for goods and services which thus caused upward pressure on costs and pricing. In order to restrain this inflationary trend the Federal Reserve would steadily increase interest rates. Finally, the high interest rates would cause a slow down in growth, which would then snowball into a recession. Then the Federal Reserve would lower the interest rates, and expansion and growth would resume.
Recessions were definite, contributing factors in the defeat of Jimmy Carter, and George Bush, Sr.. At the present time, polls are showing that to the general public, the primary factor of concern in this election is the condition of the U.S. economy. If the economy continues on a negative trend into a serious recession, this factor combined with an unpopular war, will assure a Democratic Presidential victory in the fall elections.
Recession- Why this One May Be Different:
If our struggling nation is about to enter a recessionary period, I am fearful that this economic demon may be of a different variety than previous ones….and may be harder to correct. When all of the previous recessions were encountered, we were still an industry based economy. When Greenspan and the Federal Reserve loosened the reigns on the interest rates it impacted a major portion of our economy. Plants bought new equipment, expanded operations, housing surged, and retail blossomed.
Since the last major recession in 1974, the economic structure of our nation has undergone a complete transition. We are no longer an industrial based economy. In the face of new global marketing economic concepts, we have evolved into some sort of hybrid economy based on technology, government, and distribution.
Under the new structure, when the Fed manipulates the interest rates (which has always been the off-on tap for their control over our economy) the change now impacts only a small, relatively insignificant portion of the U.S. economy. Essentially, the home construction market is about all that is impacted. We thus no longer have firm control over our economic fate. We have transferred that privilege to China and the Middle East.
This is the basis of my fear that if the U.S. does now move into a deep recession, we may not have the tools at hand to easily correct the situation. We are entering uncharted waters.
I have enjoyed watching the presidential candidates wildly point their fingers at each other, looking for someone to blame for this economic dilemma. It actually started during the Clinton era, when the new economic "buzz words", ‘ global marketing’, ‘free trade’, and ‘global economy’ were at their height of support….from misdirected politicians in both the Democrat and Republican parties.
Their support spawned NAFTA, GATT, and "most favored trade status for China" during this period. Do your remember when the Chinese traders were invited to sleep over at the White House?
The full impact which resulted from the implementation of these concepts are just now coming to rest. Here in Marianna it led directly to the loss of our Russell Corporation jobs, empty factory buildings on Kelson and at the Airpark, and the end of Lehigh Furniture. If my fears concerning the impact of these changes on our ability to control our economy are true, we may be about to discover an even more serious effect of these bad deals.
I believe that the long term reality of these "global" concepts are an equalizing of the standard of living over the globe. This means that the historically rich and powerful nations will suffer a decline in their lifestyles, while the undeveloped nations will see their massive populations have better lives. We lose…they gain. It will be another fifty years or so before we can see the truth or error of that belief.
In the meantime, we are quickly moving to a condition where the Chinese population is getting off their bicycles and buying cars, while we park our cars, dim our lights, and start pedaling.
Recession- A Glimmer of Hope:
There has been another change in our economic structure that may work to lessen the impact of recessionary cycles. Over the past thirty years we have also been evolving away from a free enterprise, capitalistic economic system and into a government dominated, socialistic-communistic economic system. As a result, a much larger segment of our business structure and labor force relies on getting a check from some government function instead of from the free marketplace.
Although this is the very aspect of our changing society that I constantly battle and berate in this column, it may work as an advantage during a period of downturn. Government tends to be recession proof since it never reduces, lays off, or declines its work force. This has always been the situation in this area, where our local economy has traditionally been insulated from the woes of industry because of our reliance on agriculture, prisons, and assorted government agencies for employment. That condition is more widespread across the nation today. It may make us almost recession proof. I am not sure how bad recessions get in Socialistic and Communistic economies.
However, in much of the previously industrialized Northeast, serious economic problems prevail. In Pennsylvania, Ohio, Michigan, and similar states they are really in a recession which was induced by the changes in our industrial base. They are suffering from high unemployment, no growth, and declining standards of living. Not because of the "housing bubble" and the mortgage crisis, but because of empty steel mills, mines, and auto plants. Thus, when our candidates venture into this depressed land they have to blame each other for the bad trade deals that led to those conditions.
Recession- What Can We Do?
Almost nothing, we are pawns of the system. Be observant, avoid speculation in purchasing and investments until this pending danger has passed. To try to save some of your income in the face of horrendous prices for utilities, gasoline, milk, insurance, and taxes is almost impossible…but if you can eek out a savings to help if things do get worse, it would be a wise step. Do this and perhaps you will be "Getting It Right".
Recessions- A Brief History:
The rise and fall of our economy is as natural an occurrence as the rise and fall of the oceans. It seems an economic reality that every ten to fifteen years our economic system has to struggle through a financial correction. It appears we are about to experience another of these unfortunate, difficult periods.
There was an especially difficult recession during Jimmy Carter’s tenure in the mid 1970’s. This event was sparked by our first experience of a gasoline shortage, when people had to line up at those few stations which were open and had gasoline available for sale. Interest rates jumped to over 20%, and as a result, industry immediately slowed to a crawl with lay off’s and business closures becoming common place. A similar but not quite as severe downturn occurred in the early1980’s, and another of short duration in the early 1990’s.
During all of this period the scenario went through the sequence of an expanding, growing economy creating a demand for goods and services which thus caused upward pressure on costs and pricing. In order to restrain this inflationary trend the Federal Reserve would steadily increase interest rates. Finally, the high interest rates would cause a slow down in growth, which would then snowball into a recession. Then the Federal Reserve would lower the interest rates, and expansion and growth would resume.
Recessions were definite, contributing factors in the defeat of Jimmy Carter, and George Bush, Sr.. At the present time, polls are showing that to the general public, the primary factor of concern in this election is the condition of the U.S. economy. If the economy continues on a negative trend into a serious recession, this factor combined with an unpopular war, will assure a Democratic Presidential victory in the fall elections.
Recession- Why this One May Be Different:
If our struggling nation is about to enter a recessionary period, I am fearful that this economic demon may be of a different variety than previous ones….and may be harder to correct. When all of the previous recessions were encountered, we were still an industry based economy. When Greenspan and the Federal Reserve loosened the reigns on the interest rates it impacted a major portion of our economy. Plants bought new equipment, expanded operations, housing surged, and retail blossomed.
Since the last major recession in 1974, the economic structure of our nation has undergone a complete transition. We are no longer an industrial based economy. In the face of new global marketing economic concepts, we have evolved into some sort of hybrid economy based on technology, government, and distribution.
Under the new structure, when the Fed manipulates the interest rates (which has always been the off-on tap for their control over our economy) the change now impacts only a small, relatively insignificant portion of the U.S. economy. Essentially, the home construction market is about all that is impacted. We thus no longer have firm control over our economic fate. We have transferred that privilege to China and the Middle East.
This is the basis of my fear that if the U.S. does now move into a deep recession, we may not have the tools at hand to easily correct the situation. We are entering uncharted waters.
I have enjoyed watching the presidential candidates wildly point their fingers at each other, looking for someone to blame for this economic dilemma. It actually started during the Clinton era, when the new economic "buzz words", ‘ global marketing’, ‘free trade’, and ‘global economy’ were at their height of support….from misdirected politicians in both the Democrat and Republican parties.
Their support spawned NAFTA, GATT, and "most favored trade status for China" during this period. Do your remember when the Chinese traders were invited to sleep over at the White House?
The full impact which resulted from the implementation of these concepts are just now coming to rest. Here in Marianna it led directly to the loss of our Russell Corporation jobs, empty factory buildings on Kelson and at the Airpark, and the end of Lehigh Furniture. If my fears concerning the impact of these changes on our ability to control our economy are true, we may be about to discover an even more serious effect of these bad deals.
I believe that the long term reality of these "global" concepts are an equalizing of the standard of living over the globe. This means that the historically rich and powerful nations will suffer a decline in their lifestyles, while the undeveloped nations will see their massive populations have better lives. We lose…they gain. It will be another fifty years or so before we can see the truth or error of that belief.
In the meantime, we are quickly moving to a condition where the Chinese population is getting off their bicycles and buying cars, while we park our cars, dim our lights, and start pedaling.
Recession- A Glimmer of Hope:
There has been another change in our economic structure that may work to lessen the impact of recessionary cycles. Over the past thirty years we have also been evolving away from a free enterprise, capitalistic economic system and into a government dominated, socialistic-communistic economic system. As a result, a much larger segment of our business structure and labor force relies on getting a check from some government function instead of from the free marketplace.
Although this is the very aspect of our changing society that I constantly battle and berate in this column, it may work as an advantage during a period of downturn. Government tends to be recession proof since it never reduces, lays off, or declines its work force. This has always been the situation in this area, where our local economy has traditionally been insulated from the woes of industry because of our reliance on agriculture, prisons, and assorted government agencies for employment. That condition is more widespread across the nation today. It may make us almost recession proof. I am not sure how bad recessions get in Socialistic and Communistic economies.
However, in much of the previously industrialized Northeast, serious economic problems prevail. In Pennsylvania, Ohio, Michigan, and similar states they are really in a recession which was induced by the changes in our industrial base. They are suffering from high unemployment, no growth, and declining standards of living. Not because of the "housing bubble" and the mortgage crisis, but because of empty steel mills, mines, and auto plants. Thus, when our candidates venture into this depressed land they have to blame each other for the bad trade deals that led to those conditions.
Recession- What Can We Do?
Almost nothing, we are pawns of the system. Be observant, avoid speculation in purchasing and investments until this pending danger has passed. To try to save some of your income in the face of horrendous prices for utilities, gasoline, milk, insurance, and taxes is almost impossible…but if you can eek out a savings to help if things do get worse, it would be a wise step. Do this and perhaps you will be "Getting It Right".
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