Evidence of panic is all around us, from the plunging Wall Street stock market to the beaten down dollar to $100 a barrel oil to the soaring price of gold, above $850 an ounce and seemingly poised to run to $1,000. Residential real estate prices are falling, home equity nest eggs disappearing, all kinds of consumer debts going into default from re-fi loans to student and car loans and credit cards.
Mega-banks like Citigroup and Merrill Lynch are writing off multi-billion speculative losses and handing failed CEOs golden parachutes. Corporate loan defaults and bankruptcies are multiplying. A sharp increase in the unemployment rate to 5 percent in December flashed a time-tested signal of recession, threatening expanding job losses as the economy slows.
Economists in Washington have warned politicians of the downturn. That’s why President Bush and Congressional Democratic leaders are agreed on a quick $145 billion “emergency stimulus" program of federal giveaways to anxious consumers.
In our $15 trillion GDP economy, the proposed one percent “stimulus” package is like giving a canapé to a starving man. Our jerry-built hopelessly complex and counterproductive tax system needs radical overhaul. It should encourage thrift, savings, capital formation and investment by individuals and businesses. Capitalism requires capital and freedom to invest it. We should follow Europe’s and Asia’s examples and make the overdue shift to consumption-based taxes on spending.
The U.S. cannot continue to finance unbudgeted foreign wars and reckless domestic consumption deficits by borrowing from the Bank of China, the Bank of Japan and other Asian dollar-holders already stuffed with dubious U.S. paper and unkept American promises. The fallen dollar and soaring gold foretell a coming climax and global panic triggered by America’s profligacy.
In the next administration, “fiscal integrity” will be no mere slogan but the precondition for America’s survival and renewal. The next administration and Congress will have to marshal the best bi-partisan economic advice and the political will to make America’s economy and our dollar sound again.
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Comments
You are a voice crying in the wilderness. One wonders if there is still time to repent?
Judging by what I have seen of both parties recent "debates," there is precious little detectable concern for fiscal integrity. I'd venture there is much more support for "bi-sexualism" than for bi-partisanship.
You are truly cogent and wise to advocate an overhaul of our tax code to promote saving, and to tax consumption. But, democrat Charlie Rangel is going to preside over that task, under the watchful eye of Nancy Pelosi, no matter who gets elected. Heaven help us!
Unfortunately, tax overhaul to salvage the value of the dollar would have had far greater effect had it been done while the U.S. dollar still had any value. As things now stand, our weakened, devalued dollar lies broken and bloodied, below the value of the Canadian dollar!
By the time our great, elected and appointed financial doctors have finished bleeding the ailing US dollar and applying leeches of low interest rates, nothing will ever again give it market value enough to promote people "saving" them. The "canape checks" mailed-out by the govrnment will be yet another proof of the dollar's worthlessness. Nothing deprives aomething of value like giving it away!
So, once our current crop of government bunglers gets finished shoveling dollars out of airplanes like so much confetti, those old, 1923 photos of Weimar Germans carrying a basketful of marks to the baker to buy a loaf of bread won't seem quite so far-fetched, eh?
That's why I'm going to convert to pesos.
Of course, the "panic" coup de grace will come should any hint of an oil shortfall trickle out of official Washington. Hyperinflation will instantly follow. Then, look out below!
Posted by: scriblrr | January 22, 2008 4:59 PM
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