A Perfect Storm Stalks American Prosperity

The Nation: Prospect Of An Economic Slowdown A Challenge To Both Parties

(The Nation)  This column was written by the editors of The Nation.

---

The skies are darkening, and ominous new considerations are intruding on the politics of 2008. The softening economy, accumulating foreclosures for homeowners, more multibillion-dollar write-offs by major banks, the swooning dollar and stock market, oil prices approaching $100 a barrel - the list goes on, inviting a trendy cliché: the "perfect storm" stalking American prosperity. The Federal Reserve chair will never predict recession - it would be self-fulfilling if he did. But Ben Bernanke came close when he acknowledged to Congress that things are going to get worse before they get better.

Most Americans are ill prepared for a catastrophic reckoning. Everything else aside, the basic fact of our national condition is indebtedness. That means when jobs disappear and wages slump further, the struggle to keep up with the mortgage or rent will intensify for a broad swath of the population. The pain this time will not be confined to a few laid-off "losers."

Presidential candidates have not had much to say about these gloomy realities, but they soon will. A down economy adds another heavy blow to Republican prospects but also presents a challenge for Democrats. The incumbent party takes a serious hit if an election-year recession develops (ask Jimmy Carter, in 1980, or George H.W. Bush, in 1992). But that bad news might encourage Democrats to be even more cautious than they already are. Voters will want to know of a potential president, first, whether he or she grasps what is upon us and, second, what he or she intends to do about it if elected.

What should the candidates be calling for? The first imperative should be short-term measures to salve the pain of those who have lost homes or are drowning in debt. It is good politics, of course, but also an essential first step toward restoring a healthy and equitable economy -- healthy because it is more equitable. Representative Bradley Miller has introduced a bill that would allow bankruptcy judges to ease homeowners' mortgage terms, but it's running into the usual big-money opposition - from both parties. For the longer term, government can enforce tightened mortgage regulation, which has fallen into disuse (Miller, Barney Frank and many others are co-sponsoring a good start). This kind of assistance is not unlike what government does for major corporations and banking institutions when they get into similar trouble. Meanwhile, financial firms should be disciplined - if not indicted - for the reckless behavior that led to the crisis.

Economic stimulus requires the government to get the money moving again in a stalled private sector, pumping up jobs, wages and benefits with emergency spending - and, yes, temporarily larger federal deficits. Taxing wealth and reviving the right to organize unions will start to redress the gross inequalities. The housing industry is not coming back to life anytime soon, but through public works programs we can repair our crumbling national infrastructure. We can restart public employment programs for displaced industrial workers and harder-to-employ inner-city youth. We can send working people back to school with financial aid aimed at community college students.

The point is, the coming storm, whatever its dimensions, is a great opportunity to begin restoring the role of responsive, effective government. The Republicans clearly don't get it. But it's not clear the Democrats do either, or that they have the nerve to embrace the possibilities. Voters should push them to speak to this moment. And then judge them accordingly.

[standlee5]

Posted by random_radar at 11:04 AM : Nov 20, 2007


Great points, I agree with you.

[noloyalisti]

No one has yet mentioned what wasting a couple trillion dollars on this "war" has done. The "slowdown" was perfectly predictable based on what happened in the 1970''s as a result of all the money wasted on the Vietnam invasion and occupation.

On top of that our "prosperity" has been based on smoke and mirrors and credit since Reagan came in and starting ruining the government.

I hope people wise up, Buy Nothing on Nov 23rd and then start saving money. Stop consuming and we will avoid war and take our country back.

[markangeloo]

The neo cons used controlled low interest rates for

the last 7 years; throwing easy money around to buy

houses,cars,whatever; just so no one would be unhappy

while they were fighting their war. Come on 0% financing.

Who was kidding who. Why save lemmings !!!!!!!!

Bite the bullet. Real interest rates at the moment

should be about nine percent. Why not save me

who has invested in money market funds only to now

see the government & fed still artificially dumbing the

market down.

[enriquecaliente]

The True terrorist are the Bankers and lawyers which dream up ways to $crew the average American and then cry for help once their ideas go up in flames. And we all know in who''s pocket the judges and lawmakers are in.

[random_radar]

Why should the rest of us do anything for "those who have lost homes or are drowning in debt?" If I was frugal and bought a home I could afford and cut my expenses to stay solvent, why do my neighbors get to take my money through taxation to pay off their poor choices?

All these years the responsible citizens have lived on less while the idiots spent beyond their means. Now the government is going to take from the responsible and give to the profligate? That''s not justice, that''s robbery.

Let the "those who have lost homes or are drowning in debt" pay the penalty for their sins and learn responsibility. Bailing them out will only teach them that they can take advantage of the rest of us. They will be laughing all the way to the bank at the hardworking Americans who are responsible.

[DaveGress]

to razzl -
Excellent points all, I couldn''t agree with you more.

[Razzl]

America desperately needs to become an enlightened social democracy like the European Union countries--those bastions of peace, prosperity, and social enlightenment that conservatives in this country still deride as stagnant, gloomy social welfare states, as though the clock were stuck at 1965, which we can all see is not the case. Bush and Cheney have knocked the foreign policy leg off the conservative political tripod; when the recession knocks the economic leg off, the country will be ripe for all the reforms that the coming one-party Democratic party government will be able to institute: national health care, prison and justice system reform, reviving organized labor''s place at the corporate table, and creating a new foreign policy not based on wrong assumptions about American military might. Oh, and the green world of alternative energy and ecological responsibility will flourish in a country that once again puts public responsibility ahead of private greed.

Conservatives and Republicans hate any type of optimism about the future, because the only way to get to a better future is to leave their values behind...

[incog-nito]

To follow up on my previous post, allowing unfettered illegal immigration into this country is intentional. It is just another form of outsourcing, bringing workers here from abroad for the cheap labor, never mind the social costs. The taxpayer will pick up the tab for that anyway, so why should corporations care?

[ianlou]

I can''t help but shake my head when the Retailers start crying about slumping holiday sales, They have never cared where their products were made, only how much they can sell them for, and then they look for someone else to blame when sales sag. I swear, its like watching someone **** up river and then complain about taste of the drinking water.

[brianbwb-2009]

Anyone who survived Detroit''s economic meltdown in the 70s will have a distinct sense of Deja vu. Those who were insulated from the effects are in for a very rude awakening.

In a sense, it will be bitterly humorous to hear those "neocon wannabes" who used to dismiss the unemployed as "welfare mothers" or "lazy", having to explain their own appearance amongst the "new underprivileged class", and their sudden urge to demand the government "help" them.