What's Up (or Down) With the Economy

In watching and reading the economic analysts, it seems there is some confusion as to the direction of the American economy. There is the "soft landing" scenario, and then there's the dreaded "R" word, meaning recession. (I've even heard the more dreaded "D" word, and I'll let you guess what that means.) Just based upon some of the things I've heard, felt myself, or witnessed in others, I'd say we're in for a stormy ride in the not too distant future.

Technology is changing the lives of many people, some for the better, and some for the worse. That's always been the case though. For example, the print media are struggling in a world of 27/7 cable news, sports, weather and business, as well as Web news, that is only a click away. Drastic cuts are underway in the employment level of the print media, but presumably, new opportunities are developing in cable TV and internet businesses. The question is: Have we gone too fast? Middle aged and older workers are often at a serious disadvantage in computer related jobs.

The staggering loss of good paying manufacturing and related jobs is very alarming. People who made decent wages and had health care, paid vacations, and sick days are being left to fend for themselves, and the sight is not always a pretty one. Again, middle aged and older workers are especially vulnerable and are often in a serious predicament. Many now have no health care, at a time in their lives when medical care is very important. Some are losing their homes and the assets they worked their entire adult lives to accumulate. Many are working harder and earning far less. Where will it end?

Some of the job losses are certainly related to technology, but some are also related to trade agreements that moved too far too fast. Many business people couldn't wait to get into the overseas markets. Now, even some of these folks have found that getting your wishes fulfilled can be a dangeroous thing. I think many felt that it would be a way to get around American labor, and that it would, and it certainly HAS, in my opinion, undercut wages and benefits in this country. Of course, some of these business people are now whining about having to compete against countries that have some form of national health care. Hmm, I wonder what their positions were on American national health care before this "world economy" stuff? I have a sneaking suspicion that most were against it, but I would welcome their support now.

If you have two water tanks connected by a valve, with one 95% full, and the other 15% full, and you turn that valve on, the water is going to flow from the nearly full tank into the other tank until both tanks have equal amounts. Maybe that's not a great analogy, but it sure is close to what is happening in some cases with American labor vs. labor in developing countries. Americans don't feel secure anymore. The people who came through The Great Depression, World War II and up to fairly recent times, see their children and grand children having benefits, considered pretty much "standard" for American workers, reduced or taken away completely.

Then we have energy prices. Oil and gasoline have essentially doubled. Don't be fooled by the drop in prices of the past few months; just like the South, "Oil prices will rise again!" Last Fall and Winter, natural gas and home heating oil prices hit levels unheard of in history. With lower or stagnant wages, what did many Americans do? Well, many tried unwittingly to bridge the income gap by throwing down the plastic. Debt levels have soared! On top of that, many people refinanced their homes and took money out in the midst of lower interest rates and inflated prices (and inflated property appraisals). Now home prices are falling, even plummeting in some parts of the country. Further still, Congress saw fit to pass tougher bankruptcy laws for consumers who are overextended. It seems there is virtually nowhere for average people to turn anymore.

Then we have the government's own statistics, echoed by none other than Alan Greenspan and Ben Bernanke, that show the tremendous concentration of wealth in America, and thus a huge "income gap" between rich and poor, and all those in between. Further, from what I understand, the recently released Census report showed that the wealthiest Americans own the vast percentage of all stocks and bonds. Gee, no wonder the folks I see on a daily basis don't talk aboout their dividend checks all the time. Of course, they don't hope for hurricanes in the Gulf of Mexico, nor for a crisis with Iran so that energy prices, and thus their holdings, make them richer at the expense of their fellow Americans or others in the world.

With stocks, bonds, and futures concentrated in the hands of the very wealtiest people, a large percentage of energy profits and the profits in many other companies ("unprecedented" profits, was a term I've heard used by some analysts) are going into the bank accounts of those very wealthy people. Further, when you hear analysts say, "Investors are worried about wage inflation and health care costs for businesses," that's just another way of the wealthy saying, "We're worried that workers are actually going to get some of those big profits." Further still, a Census official who was on C-Span recently told how incomes have risen since the late 1980s, with the upper income folks seeing rises of between 50% and 75%, while middle income people have seen only about 4 1/2%, and lower income Americans a mere 3%!!!

So, what does all of this mean? Obviously, many Americans are pinched, and many other Americans are beyond pinched. If this economy turns down, and some analysts are now fearful that it is indeed turning down more than the Fed intended, are we headed for a collapse of sorts? If millions of Americans don't start sharing in the wealth of this country, they won't have the money to buy the goods and services of the wealthy Americans and their companies. America has witnessed big income disparities before, like in the 1920s, and guess what followed that!