Normally, you start a jigsaw puzzle with the edge pieces. However, that’s really hard on this one because the fallout of the dysfunctional banking system that resulted in many of our economic issues is in the process of bringing down a foreign nation: Greece.
Mr. Buffett is really good at these puzzles, so let’s let him have a go first. Oh look, he’s put together a housing recovery in 2011 (I think that’s assuming we actually get through all the foreclosures) and a slow recovery. He thinks that something has got to be done to punish the financial whiz kids who got us into this mess, and that our current system of paying for health care is a colossal drain on our economy. This is one of the two richest guys in the world and as nearly as I can tell he didn’t need to defraud anybody to get there, so just maybe we ought to listen to him.
Of course there are other parts of the puzzle that bring into question whether there is really a recovery, even a slow one. We’ve got millions of people who are unemployed, millions more who are “underemployed”, stagnant wages, and just enough inflation to mean the savings rate is going down. Those low interest rates — which were supposed to make businesses borrow money from banks who won’t lend it and renters buy houses they can’t afford (but that are actually tempting people with higher mortgage rates and underwater homes to walk away and buy something nicer and cheaper at a lower rate) — mean that there’s not much point in saving money. That hooks in with lousy consumer sentiment, the continuing (and at least partly bank-caused) bubble and subsequent crash of housing prices, and a trillion with a T dollars in lost economic growth. That’s a million million dollars. $1,000,000,000,000.
See? These puzzles are a lot easier when people work together!
Over by the bankers, brokers, and other financial whiz kids there’s these rumors of “reform” and “consumer financial protections.” Careful, though. If you don’t put that together just right, it’s worse than nothing.
Oh yeah, and in this corner over by underemployment, we unfortunately have government budget deficits. It doesn’t take a financial whiz kid to know that when income is stagnant, unemployment is up, underemployment is high, and not enough jobs are being created, that means tax revenues aren’t what they should be either. That in turn means bigger deficits, even without any sort of spending on economic stimulus. Senator McCain wants to cut that deficit just exactly the way Reagan did, which I suppose means he proposes higher deficits.
The nice people at Forbes think all those government workers need a pay cut. Now riddle me this, Batman: while I understand their sentiment, exactly how is cutting the pay of the guy who delivers my mail or the lady who processes my passport application going to help? That’s just going to exacerbate the “stagnant wages” problem. I feel certain that they can’t really mean cutting pay for high wage workers like our Congressmen and key people in the Executive branch; such a proposal would never make it out of committee. Besides, until campaigns become solely publicly funded, I think you can argue that all those people are underpaid. After all, every one of them spent more to get elected than they will ever make at the job itself!
Of course, state governments don’t have the option of deficit spending. That’s why Nevada is moving most employees to a 4 day workweek. The only way this works, of course, is to make all those offices like the DMV open only 4 days a week. Right, because nobody needs to get a drivers license or car registration on a Saturday, right? That way they aren’t spending money to light, heat, air condition, and clean those buildings all weekend. And I suppose it’s probably good for the environment that all those state workers will be sitting at home instead of getting on the freeway. Maybe they will spend some money on their extended weekends — assuming they aren’t deathly afraid of job cuts.
There’s still pieces missing. I’ll check the box and under the sofa. In the meantime, it’s a pretty ugly picture.
In Closing: How much scientific research is thwarted by harassment that borders on textbook definition terrorism?; the Chile quake actually tilted the Earth on its axis, such that the day is 1.26 milliseconds longer (funny how Pat Robertson isn’t dredging up some made up reason why Chile has a pact! with! Satan! that explains why they had an even bigger quake than Haiti); no **** ***** cuss free week at this **** **** blog!; man accused of selling outdated videogame systems to help a terrorist group; origin of the peace symbol; ok, ok, something on health insurance reform; happy daddies; and your overdue dose of Japanfilter, Cat Costumes. Oddly enough the cat doesn’t look unhappy, and the human has no obvious wounds.