President Obama has been telling us all how bad the economy is in order to sell his stimulus plan. Which I would argue is not a stimulus plan, but a reward to those Democratic Party special interests which helped get President Obama get elected.
What we really need is a leader with the wisdom and character to tell the truth. That is the economy will recover with or without our government’s help. The problem is that we are a nation of debtors, and we have a government who represents this all too well.
We as a nation threw a wild party paid for with debt. Imagine if you will that you keep throwing a wild party every Friday night paid for with your credit cards, and wake up every Monday morning with a hangover. Only now you wake up on Monday moring to find out that not only do you have a hangover, but also your credit cards are maxed out and your boss is about to fire you. Our government has proposed as a solution to this problem that they will pick up the tab for the next party.
In reality there isn’t a one size fits all solution. If you keep waking up with a bad hangover, the solution is to drink less. So throw a party every Friday night, but serve 2 or 3 beers per person instead of a whole case. If you don’t have the self control to stop drinking after 2 or 3 beers then maybe you should consider joining Alcoholics Anonymous.
What I’m saying is that the underlying problem is that millions of Americans don’t know how to use credit responsibly. That is the primary cause of the problem. The secondary cause is that lenders forgot to apply rational standards to decide who they loan money to, and how much they loan to them. Or it may be that our government compelled them to abandon those standards. The only solution to this problem is for the American people to learn how to use credit responsibly or not at all. Nobody in the government is talking about this.
Once we realize this, we are on the first step to permanently improving the American economy. We’ll still have the economic cycle. What will change is that the bust part of the boom bust cycle won’t be as bad.
There are millions of responsible Americans who can pay their bills and are waiting for signs of economic recovery to get on with their lives. I for one am fortunate enough to have my the money in my IRA sitting in cash. My wife and I have the down payment sitting in savings to buy our first house. However if I think that the economy is going to get worse before it gets better, I’m going to wat to start switching my IRA back to stocks and hold off on buying a house. Because if the economy gets worse, the market is going down even farther, and there are better deals to come.