Snowballing economic pain hitting home
What had been a
political exercise in using intentional pain against innocent citizens to score
party-points has now fully devolved into an economic conundrum as we turn the
Great Recession into something more closely approximating a second Great
Depression.
Don’t forget that a
recession is what happens when your neighbor loses his job; a depression is what
happens when you lose yours.
With 400,000 unpaid
direct furloughs in the greater Washington, Maryland, Virginia economic region,
the federal shutdown's impact is hugely magnified, as private sector contractors
associated with these positions, as well as support functionaries, fall like
dominos.
Department of Defense
contracts remain unfunded; the Departments of Agriculture and Health and Human
Services, and the Food and Drug Administration workers sit idle; and Veteran
Administration Hospitals turn away patients. As the associated salmonella
outbreak enlarges, consumers have become paranoid.
The people are now
clutching their money as consumers, withholding payment of bills, and deferring
capital purchases, even ones that are necessities. Consumer debt is spiking as
compared with cash purchases, and the average American has but $200 credit card
“open to buy” limit available as economic buffer.
I know this as a
professional retail manager currently touring Maryland and Virginia locations
for a power retailer in the big box business. I speak to hundreds of sales pros
and customers in a single day. My personal polling is in “real time.”
On a larger scale,
businesses do not trust the unmanageable and bloated federal government to
equitably solve our long term economic woes, and this also kills recovery, let
alone needed growth.
As former Office of
Management and Budget Administrator Sally Katzen opined in The Washington Post
on Sunday:
“No business would
tolerate the uncertainty and needless costs imposed by a shutdown. And though
federal employees probably will,
eventually, be paid for their lost work, millions of dollars were wasted in
planning for this shutdown and will be incurred for starting back up. Questions
remain about what happens to work in process, time and schedule commitments and
orderly planning.”
Just as this is no
way to run a business, it is no way to run a government.”
First a
“sequestration” was invented to harmfully chop out spending – as opposed to
managing it – and now a series of self-imposed legislative and financial
deadlines loom in a form that has decimated consumer confidence. Lawmakers in
both branches of government, all jockeying for advantage, could learn a lot from
the first law of medicine, “First do no harm.”
Tragically, the
people who represent us have missed the point of the Hippocratic Oath above, and
are inseminating the population with Obamacare in a simultaneous
effort.
And, as we mistakenly
combine healthcare reform with budget deals, the worst is yet to
come.
Wait until the banks
feel enough pain – because of defaults to obligations – to begin to make the
cost of borrowing more expensive for consumers, and see the terrible impact on
consumer spending that will certainly cause. The service sector, most heavily
comprising our economy, will wag the dog to a bloody pulp.
The people are angry,
the people are hurting, and the people living paycheck-to-paycheck are at the
edge. This will continue to ripple upwards. Good news is that despite national
polling distractions, I hear both parties getting a deserved piece of the joint
blame, and know this will result in voting out incumbents on both sides in 2014,
and I suspect we will gut leadership in Congress. This, of course is the best
form of “term limits.”
It is heartening for
me to frequently now hear, “I’m not a [Democrat/Republican] any more, I’m an
independent voter.
‘Bout time we began
to think!
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