Confidence is everything in life. It’s true. People are attracted to things that show confidence, and one thing that isn’t showing confidence right now is the American economy. Consumer confidence is down and therefore the economy is down. That’s ultimately how it works here.
Yes yes, the housing crisis caused all this but it was just one thing that led to far more. Basically, a lot of people couldn’t afford their payments and their credit cards and lost their homes. This affected all those investment companies and banks because they couldn’t get their money. The Dow absolutely sinks and people begin to lose confidence in the economy.
People stop shopping. Companies begin to lose money. Companies lay off employees and sell off parts. People stop shopping.
It’s a wicked cycle that will keep repeating itself until we enter a depression. Isn’t that a scary word? Depression.
Government steps in and sets aside $700 billion to give to those financial institutions. They use it to buy out weaker financial institutions and in the case of AIG go on a little retreat to Arizona.
They should be using it to lend to people so people can get some money to buy some homes… but… people aren’t confident enough to do that right now.
Banks like Bank of America and JPMorgan and Chase say they’re helping people get out of their mortgages and keep their homes and such things, but that’s not going to solve everything.
If I just was lucky enough to get out of a ‘toxic’ mortgage I’m not going to spend my money… I’m going to save it and use it wisely.
Thing is, the economy won’t get moving again until that happens.
And that won’t happen until people lose the fear and gain confidence.
We pulled out of the Great Depression with a mixture of World War II and the New Deal and it’ll be a similar path to get back to where we were this time as well.
First, we need to invest in America’s infrastructure. Second, we’ll take part in a new war, but this war will not involve shooting. It’ll be the war on global warming.
A combination of infrastructure building and green jobs is the way out of this mess. Once this happens consumer confidence will slowly build until people begin to shop and purchase things regularly and businesses will once again begin to grow.
It’s much easier said than done, but it’s what will have to be done for the economy to recover.
I’m sure the market would be able to fix itself as well, but it would take far too long for companies like GM to file for bankruptcy and reorganize and start everything up again.
I don’t believe the American people should wait that long.
