The world and we Americans now realize that the U.S. economy is not an invincible superpower.  We realize that our savings accounts, homes, jobs and all our other assets are at risk.  Until September 2008, we assumed the real estate boom that we experienced over the past decade was endless and would always be a money maker with the mortgage -buy-wait –sell real estate scheme.  For some people everything that contains the word “money ” is the “Wall Street” problem.  This is naïve-- we are in a deeper crisis than we think.  We still believe that the American economy is “strong”.  

The crisis stems from diminishing American positions in the world, increased competition for American goods and services and limited natural recourses.  These trends have been happening for years and for some reason we are awakening to this truth only now.  Many Americans blame the Bush administration for not forecasting the current economic crisis and not quashing it earlier before it got this dire point.  If the administration told us the truth back 2-3 months ago, it would have created a stock market crash even earlier.  I think nobody would have listened anyway.  The fed’s Ben was telling us this all the time.   Did we listen? So, who do we want to blame.  Can we blame Bush for not reacting to all these trends.  What do you think Bush’s ultimate intention with the Iraq invasion was for if not to decrease our dependence on foreign oil and increase demand for manufacturing supplies and contract jobs?

No, we can’t blame Wall Street for behaving the way it always does—making hay when the sun shines.  While the real estate market was at the time “hot” (hard to believe it was just a few years ago!) and the Dow for the first time in history went past the 10,000 mark, investors saw an advantage to giving out as many loans as they could without stringent conditions or sufficient collateral.  Many made money off this strategy.  In fact, in a sense, we all did.  As the market boomed, home sales increased, homeowners made increasing profits off the sales of their homes, first-time buyers had the opportunity to purchase homes they otherwise would not have, and the job market boomed as well.  For a time, the system worked. 

The problem is, nothing good lasts forever.  It would be naïve to think so.  Our economy is, and has always been for the past several decades, built on a house of cards, with the bottom most cards being credit.  Take out the bottom card, and even a giant like AIG, with a $1 trillion in assets, can fall to its knees.  All it took was for the “debtors” to be called upon to show they had sufficient collateral for their revolving lines of multi-billion dollar credit, and they fell, one by one.  Lehman Brothers, AIG, Washington Mutual Bank.

 I think the $700 billion bailout will not end the crisis or prevent another Great Depression.  Keep in mind, that $700B is not an investment in infrastructure or renewable energy.  It is not funding for manufacturing R&D –something that would finally get us the economic breakthrough we need to give us advantage in the international market and to give a more stable economic environment to the US businesses.  No--this is only to stay alive tomorrow. 

 If you want to be “bullish” on the market now, please ask yourself a question: what important factor will the $700B bailout change? Will it increase manufacturing? Is it an investment in infrastructure or renewable energy?  No.  Until we make some systemic investments in innovative programs and state projects we will be in a crisis. We finally have to stop thinking only about the banking system, the Fed interest rate or money market or even real estate issues.  All these are secondary in the economic picture.  The profitability of businesses is the center piece.   The reduction of corporate taxes is a form of government investment and a partial solution to the problem.  Strengthening our position in Iraq is a form of investment in my opinion too.  

It is so critical for us to have an experienced and decisive leader especially now.