Now that the U.S. has signed a stimulus plan, we will see our collective mindset begin to shift. In the coming days, our ongoing debate over political and economic dogma will be joined on center stage as voices from every direction lobby and compete for what they see as their share of the spending. In this regard, I have the utmost compassion for President Obama. We are not a patient people, and few will heed his message that the road ahead will be tough, and that the recovery will take time. The push and pull on him will be enormous.
And now, with Washington juggling as fast as it can, we need to step back for a moment and align our expectations with what is possible. Though the amounts seem enormous, nobody yet knows if pouring billions and trillions into the economy will actually revive us. But, from where I stand, it doesn't seem like this will provide three million jobs, restore home prices, revitalize Detroit, jumpstart businesses, or fix the economy.
To be sure, we need our government to take action. Action that will be effective. Action that will last. Action that will help shape our economy to sustain itself. But, while wishing I had better news, I believe it's time for each of us to hunker down, save as much as we can, and be careful not to overspend.
As we already know, our banks overextended far too much money to people without adequate credit. Bankers, builders, real estate agents and loan brokers, all convinced themselves and each other that real estate prices would magically keep rising forever, and that borrowers would use those future profits to repay their loans. Caught up in the exuberance of fast cash, they became so overconfident that even after repeated warnings, they couldn't stop. Until finally, the “funny money” had gone as far as it could, the credit bubble popped, the door slammed shut, and the entire system collapsed.
And that was the end of an era. Unqualified borrowers. Insufficient collateral. Low-interest, no-interest, interest-only, and no-money-down loans. Falsified credit apps. Over-inflated home prices. An artificial economy with nothing beneath to support it. In the back of our minds, plenty of us feared this might happen, but bad news is something we tend to close our ears to.
Rolling forward to 2009, already nearly eleven trillion in debt, we as a nation will be borrowing far more to invest in roads, school buildings, faster Internet, energy efficient buildings, and computerized medical records. During this era, one must wonder if we'll again ignore the warnings, or if we'll instead acknowledge the tough questions. How will we generate the kind of cash that will be needed to pay for all of this? Will we have more toll roads? Fees to attend our schools? Charges to access our medical histories? Excise taxes on green buildings? Will we sell these assets? Otherwise, where will the money come from? How will our economy sustain itself? And, what will we do if and when the money runs dry?
So, even before the ink is dry on the stimulus plan, we have to ask ourselves whether we are headed full steam, right at the same cliff the bankers just drove off of? Are we overborrowing into the trillions without the collateral needed to back it up. And, while the banks had a cash-ready government standing behind it, who will bail out Washington if our plans fail?
And then there's the rubber meets the road questions. With our companies still in shell-shock, will they invest knowing the government can't keep up the “stimulus spending” for long? Will they try to get by with as few workers as possible? Will they hire inexperienced people? Will the costs to train and supervise, and the risks involved, make it cost prohibitive? What about all the taxes, insurance, permits, licenses, regulatory reporting? How much profit will be left in these projects after competitive bidding takes its toll? And, how many jobs will the spending really provide, will they be permanent or temporary, and how long will they last?
And finally, we must ask ourselves whether we this is something we would personally borrow and invest in? Would we first want answers to all of these questions? Would we sit on the sidelines until we knew how money was going to be made? Until we knew the contingency plans? Whether we'll be able to bailout the bailout plan if needed? Will the only option be to raise taxes on anyone left standing? Or will we look to go further in debt to other countries?
Simply put, we will need to address these questions sooner or later. For, in every sense of the word, our nation is still “a“business”. One that needs to take in more than it spends. One that must be cared for by each and every one of us with the same thoughtfulness that we would give a company in which we had invested all of our own money. For it is “our” money on the table here. And to protect it, we must all anticipate the unexpected, so that we ourselves don't topple over the cliff when it arrives at the door.
In closing, I wonder what the impact will be on our future generations. Not only will we be saddling them with enormous debt. We'll also be setting an example for the “me generation” to be less responsible and ever-more dependent on the government to fix things when they don't go the way they'd like them to.
With that, I hope I'm wrong and I pray for smooth sailing. But, just in case, take things slowly and hold on tight.
David LeVine is regarded as a pioneer in web-based computing and recognized as a visionary leader. After selling his most recent company, he has been exploring and writing on topics that include personal and organizational transformation, social and economic balance, and other questions that impact our world.
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Copyright © 2009 Integrated Living and David LeVine, Belmont, CA