Wednesday, May 16, 2012

Time to Reinvent the Wheel

Consumer Spending Model for Growth Simply Doesn't Work

We've all heard for years that consumer spending accounts for about 2/3 of GDP, and although it has traditionally been a solid driver of the economy, the time for change is indeed upon us.  I look at it this way. Picture you, the American consumer as a sponge, and let's make water debt. Now, as a consumer, your ability to absorb debt cannot last indefinitely. At some point the sponge needs to be squeezed and the water needs to be removed. Squeezing the sponge regularly to keep it dry and clean is like paying your bills on time.  You remove the burden of debt  from your life just as you would  moisture from the sponge. Those who fail to squeeze their sponge regularly carry around a lot of extra water (debt), get waterlogged, begin to deteriorate, and eventually lose their ability to absorb. At this point, the consumer can usually declare bankruptcy and get  issued a new credit card with which he can start accruing more debt right away, which he will eventually be unable to absorb again. Thus the cycle of creating more debt is ensured, as long as the "wheel" of consumer spending continues to turn.  

Well folks, I hate to be the bearer of bad news, but the ''wheel" is broken and it needs reinventing. Not that I'm advocating we don't go shopping; we all need food, water, and shelter to live, but it's the conspicuous over consumption of products and services that we really don't need that is driving us deeper into the abyss of debt.  And there seems to be no end in sight. So, here's the challenge. How do we move away from a consumer based society when that's all we've ever known?

A tall order to be sure. I haven't got the answer, I wish I did. And apparently, none of the geniuses at any of those Washington "think tanks" have either. Nobody from Harvard or Yale has been able to do much about it as well. So, if any of you reading have got any ideas on how to fix things, I'd sure like to hear from you. In the meantime, squeeze your sponge regularly. You never know when the next tidal wave is coming.  

Tuesday, May 15, 2012

A Two Horse Race with No Winner

Now that we know it will be Romney vs. Obama for the future of mankind, we can all rest assured that regardless of the outcome , there will be no winner. The American people certainly will not win, that is nothing new. We're used to getting the short end of the stick. Being conditioned to accept mediocrity and malfeasance from our elected officials has led us to where we are currently, and although the occupy Wall St. movement may be a good start, I fear that it will be too little too late to make much of a difference. I hope I am wrong.

But the predicament we are in goes far deeper than the traditional conundrum of having to choose the lesser of two evils. You see, no matter who sits in The White House, our fundamental problems will continue to haunt us until someone has the courage to step up and break the mold. For all of his good intentions, Obama has not been able to do it. Blame it on the Republicans if you will, but whatever the reason, he just hasn't gotten it done. And if you think Romney is up to the task, you're going to feel like you're in a dream from Nightmare on Elm St. if he gets in. So where does that leave us?

Pretty much holding the bag again, being forced to endure the lousy decisions and policies that have dogged us year-in and year-out for decades. Because the two-party system allows only a choice between candidate A and candidate B, it's always a crap shoot. Even if your candidate does get elected, there's no guarantee that he/she will be able to deliver on the campaign promises they have made. Competing agendas from the right and the left bring power to bear with an unsavory medley of lobbyists, politicians, and  money. And until this stops, there will continue to be no winners.  Unless lobbyists and their influence peddling coffers are removed from the equation, we simply will not be able to move forward as a nation or a society. 

So there it is folks, read it and weep. Obama's got his money behind him and Romney's got his. When all is said and done, whoever wins will still be beholden to the interests that put him there.