American Industry: We Are the Cavalry
This is an open letter to America's managers, executives, and investors.
If America is going to come out of this crisis, it's going to be up to us to make it happen. The cavalry is not going to ride in at the end of the movie to save us.
We are the cavalry.
It's critical to understand the situation we are in. We are not in a recession, economic slowdown, demand slump, or any of those other phrases used to describe the normal variations of the business cycle. We are in a full-blown financial and economic collapse brought about by years of public mismanagement.
There is a political narrative being advanced that the current financial crisis was caused by deregulation. In fact, the opposite is true.
Congress actively encouraged the origination and securitization of subprime loans, and it is to no one's surprise that the most regulated entities in the system -- the FDIC-insured banks, the investment banks, and Freddie Mac and Fannie Mae -- ended up holding this worthless paper, going under, and getting bailed out.
Then we were told by the same Congress that created the problem, and then failed to act as it worsened, that the remedy for a massive misallocation of trillions of dollars of wealth is to spend trillions more to bail out the guilty. The public recoiled and responded with protests in 100 cities. Still, the bill passed within two weeks, supported by the presidential nominees of both parties.
Upon taking office, the new president promised to make economic recovery his top priority and announced one more stimulus, the largest yet, that would create or save three to five million jobs by directing funds into shovel-ready projects. Four months later, less than six percent of the funds have been spent, two million more jobs have been lost, and the vice president charged with overseeing this fiscal outlay has only the lame excuse that "everyone guessed wrong."
Still, more fools are asked to suffer gladly.