Feeling Blue is the New Normal

By Karl Reiner

Across the Atlantic, things are no better. Europe’s debt crisis has spread from Ireland and Greece to Portugal, Spain and Italy. The governments of the European Union countries are struggling to keep the debtor states afloat. The once vaunted trend toward greater European integration is grinding to a halt, foundering in a sea of red ink.

In the U.S., the dismal times have made nearly everyone poorer.  If the recession had not punched down the economy beginning in 2007, America’s population would now be about $4 trillion richer, nearly $13,000 per person. Over eight million jobs have disappeared in the recession.  Economists are not sure how many of the lost jobs will be recovered as the tepid recovery slowly moves forward.  A big increase in worker-training programs may be needed to help the structurally unemployed get refitted for the jobs that will become available.         

The conservatives have conveniently forgotten that it took the public policy and banking gamesmanship that led to the massive housing implosion quite a number of years to develop.  As a consequence, housing may have lost its place as a major economic driver.  As the recovery limps along, the housing sector makes up only 2.4% of GDP, less than half of its average in normal times.
 
The political hysterics that surrounded the approval of legislation to increase the federal debt ceiling have seriously undermined confidence in government.  While there is a real need to deal with the medium-term federal budget deficit, the discordant emphasis on cutting budgets in the short-term did not help the economic situation.  It cast a dark cloud because it may impede the recovery and increase the risk of another recession.  The continual political showboating has put a brittle economy on edge. The resulting uncertainty has encouraged violent stock market swings, discouraged business investment and bewildered consumers.  

A large part of the electorate now ignores the fact that the Obama administration did not generate the economic collapse. Unfortunately, we live in a society noted for its emphasis on instant gratification and uninhibited willingness to shift responsibility.  We expect things to be made right in a very short time.

Given the enormity of the worldwide economic slide, managing a recovery program is a difficult task in societies exhibiting political restraint and social cohesion.  In the current shattered American political environment with its emphasis on fear and demonizing, it is nearly impossible.  If there is no agreement on defining problems, there can be no focus on finding solutions.

There is a bright spot, but it is in Iraq.  Eight years after U.S. forces swept in, the last 45,000 troops are preparing to depart by year’s end.  What was supposed to be a quick venture designed to bring about regime change and establish a fledgling democracy has cost the U.S. 4,480 lives and over $1 trillion thus far.