Robert G. Yetman, Jr.

A “Don’t Worry, Be Happy” Solution to the Economic Crisis?

Without exception, everyone I know is still working.  Not only are they still working, they still have the same jobs they’ve had since before the Great Repression of 2008 (and 2009?).  All of those same people are still living where they were living before, as well, which I suppose makes sense, given that they still have their jobs.  The stores certainly seem full; I was at my local neighborhood mall last week, and it was packed.  The night before, I went to a nationally-known, mid-level chain restaurant, and had to wait 30 minutes to get a table.

We are in the worst economic downturn since the Great Depression, are we not?  If so…then what’s with all the consumers I’m seeing out and about these days?  Look, is this financial Armageddon, or isn’t it?

I have a theory, and I welcome your opinion on this.  I believe that while we are most definitely in the midst of a financial downturn caused by a very real, multi-facted overheating in the real estate market, I also believe that a pessimistic psychology has taken hold over much of the American populace, and that the result is a malaise made worse precisely because of that pessimism.  For what it’s worth, I’m not alone in that opinion.  Others around me have wondered about the same thing, and even those not around me…people like noted pollster and statistician Nate Silver…have gone on record recently saying that behavioral economics have entered into this to such a degree that people with means are turning their noses up at wonderful opportunities for few other reasons besides, well, they’re just feeling kinda bad right now…and the end result of that behavior? It’s just making things worse, prolonging the bad times, and turning this into a giant, painful, self-fulfilling prophecy.

It’s ironic that one of the chief driving forces of the stock market is this thing called “consumer confidence,” because for all of the scientific data used to measure the financial health of the economy, the stock market seems very swayed by an index that relies on the opinions of 5,000 households regarding the perceived state of the economy.  Let me ask you something: If you didn’t watch television or read a newspaper, and everyone you know was working, how would you answer a question on the health of the national economy?  Would you say it was in good shape?  Maybe.  What about the state of your personal economy?  Probably the same.  The problem is, we now live in a world inundated by 24-7 media, media that includes more outlets than ever before for the expression of hyperbole and opinion-as-news, in addition to the basic information we normally expect.  These new platforms for mass expression can be a double-edged sword.

I have to admit that I’m beginning to wonder about the role that psychological and emotional pessimism is playing in the continued bad numbers reflected in various financial markets.  I also wonder to what extent the Obama administration has successfully exploited that fear and pessimism in order to engineer passage of monumental government spending disguised as “badly needed” economic stimulus.

What if everyone just saw good value stocks for what they are and began buying?  What if more people allowed themselves to recognize that house prices in many areas are an incredible bargain (in terms of both the purchase price as well as the cost of the loan) and started buying again?  What if we all decided to wake up tomorrow and see the glass as half full, rather than half empty?

Do I think that exiting this pronounced economic quagmire is as easy as simply deciding to do so?  No, and I’m not saying that…but given that it is spending that will ultimately extricate us from this, and given as well that the national employment rate is still well over 90%, can it really be true that no one has any money to buy anything?  The general consensus is now, no, people do have money to buy things (as evidenced by my recent excursions into the local marketplace)…they’re just not doing it…at least in widespread numbers.

Unquestionably, misery exists among us, but in the end, I do think that sometimes the line between real and perceived misery can start to get a little blurry, especially once the prices of valuable goodies (stocks and houses, for example) fall to historical lows and still aren’t moving.  What’s more, I think it is fair to wonder how much perceived misery is actually causing real misery, and if we shouldn’t try to address that in some form or fashion.

Does any of this make sense...or do you think I'm way off base here?  Please register your comments below.

Robert G. Yetman, Jr.  Editor-At-Large www.ChristianMoney.com

Tags: recession,+depression,+stimulus,+bailout,+robert+yetman,+christian+financial+advice,+james+l.+paris

So Where Is The Real Stimulus?

How despicable is it that this stimulus plan is so infested with the usual government pork?  Why is any of this obscenity tolerated by our elected officials…or by us?

Most of us have heard about some of the unfortunate, singular examples of waste in this stimulus bill, but let’s mention a few: almost half a billion dollars for the National Endowment for the Arts, over half a billion more for digital TV boxes, $20 billion for food stamps, and another $87 billion for Medicare; the list goes on and on.  There is some small hope that the final version of this travesty may contain some modest (very modest) streamlining, but you get the picture.

Can I ask a question now?

Where is the stimulus here?

There’s no real stimulus here.  First of all, throwing money at government programs to prop them up a little longer may be a great example of government spending, but it is by no means an example of economic stimulus.  This isn’t to say that some of what’s referenced above may not help many people, but helping people through generic government spending is not the same thing as substantial, organic reinvigoration of the economy.  Note to legislators, as well as to misguided citizens: Governments don’t stimulate economies; they contract them.  Stimulus comes only from the private sector.

You want real stimulus?  Cut taxes across the board, and also give people unfettered access to their retirement plans so that they can buy houses.  Cutting personal taxes lets people keep more of their own money to spend, and cutting corporate taxes (the U.S. has the highest corporate tax rate in the developed world) allows companies to keep more of their own money, which gives them the ability to be more productive and, in turn, hire employees.  Cuts in capital gains rates will spur more folks to invest, which of course helps businesses.

Giving people tax-free and penalty-free access to their retirement plans in order to buy real estate is one of the best ideas I’ve heard since the very beginning of this housing mess.  This was the Jim Paris plan, you may remember, announced back in September 2008 at www.savetheeconomy.us.  Allowing individuals to use retirement funds, basically without restriction, to buy both primary residences as well as investment property would create the badly-needed infusion of money…real money (aka private sector money)…into the part of the economy that’s largely the foundation of all of our present economic difficulties.

Sadly, at a time when we need big government the least, too many Americans just voted, en masse, for its greatest champions, and so here we are.  No real stimulus; just real spending…as in, a real lot of it.  What a shame.

Robert G. Yetman, Jr.  Editor-At-Large  www.ChristianMoney.com