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The House and Senate have reportedly resolved their differences over the stimulus bill, which brings us to the interesting question: Which do you prefer, deflation or hyper-inflation? Yesterday the stock market expressed its displeasure with the whole thing, sending the averages down about 4%.
My friend Ron Overmyer, the editorial cartoonist of the long running Hollywood Dog cartoon strip, has summed up our current economic situation pretty well in his latest one-frame 'color' commentary. I characterize his cartoon as pick your poison because we got ourselves into this mess by papering over problems of the past, not solving them, and here we are doing it again.
So it's deflation or hyper inflation. The trade deficit is down, mostly on lower oil prices and consumerism taking a holiday. On the other hand we are setting ever greater record budget deficits with each passing second.
It is clear we cannot just sit here and do nothing, although Washington is sometimes at its best in that mode. But there is no clear answer that the various alternatives under consideration will have any positive effect except to light the inflation fuse which is likely to explode a few years down the road.
Our greatest economic geniuses cannot agree on a solution to the economic firestorm that is sweeping the globe now and so far they appear to be shooting blanks. I am starting to think that only the passage of time, along with increasing the savings rate and domestic productivity will put us on the path to economic well being.
What we are observing now reminds me of another cartoon. Dr. Seuss, who created the Cat in the Hat, infamously trying to get rid of a small pink bath tub ring, making the problem worse with each attempt at a solution until everything was pink . . . like Ron's blob's.
Of course the Cat was able to finally eliminate the problem -- it just took a great explosion. The smooth-talking cat had plenty in common with our elected officials and Wall Street investment banks and rating agencies.
Hollywood Dog and the very pointed wit of Overmeyer sometimes goes to extremes in expressing a point of view and may even slip into for "adults only" mode at times, but there are treasures to be found as well, and I hope readers find meaning in today's statement.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money.
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Reader Comments (Page 1 of 1)
2-11-2009 @ 7:19PM
william lindblad said...
Yes, I wonder too!
The time to act was in December 2007 and that time is well passed. The snowball continues downhill gaining momentum with each passing day. It is either understanding is not within our elected officials or they are simply trying to avoid being held to gross negligence. Barney Frank, at today's hearings described this as a wave hitting a boat and - since there were so many survivors with different stories that what happened, became lost.
The famous Mr. Murphy of the laws said about the same thing. "Too many facts confuse the issue".
Yes, it is all moot. What is proposed and what has been enacted is all well intended, but so are intentions on the road to hell. There too many opinions and differences and without a uniform policy, nothing will be to much avail. Our new Treasury Sec. Geithner made some very sound and astute observations. While he sounds like one of the few that knows what is going on and, perhaps even what is needed, he also needs a plan. One that everyone can see and read, not just talk as this is too evasive.
We shall have to just wait and see. Personally, I think that we going to have a long, hot, dry summer, the conditions in Australia being the harbinger. If this comes to pass inflation will be here much sooner.
On one Sat. in April 1881 the middle class of the U.S. was proposed in a speech on the floor of Congress. The reasons behind having one and it's economic benefit were contained within. Current conditions may destroy what has taken over 125 years to create.
Nothing is sacred nor secure when it comes to money. Pensions and social security, along with all other lesser social programs are at risk.
This is a crisis, and as I have posted from two years ago to present - it will lead to the "D" word that our leaders fear.
2-12-2009 @ 7:26AM
Dan Barnett said...
Sheldon,
The problem is who gets hurt in the cleanup explosion from "The Cat in the Hat". I do see similarities with the 1930s then, as now, we may not know what works, but we sure as h*** know what doesn't work.
And Mr. Lindblad is right. I've followed his posts for a while now & he has often written about the coming crisis. Fortunately a few of his predictions have yet to come to pass.
2-20-2009 @ 2:26PM
c. schmidt said...
http://www.newsy.com/videos/u_s_changed_save_or_spend/
i think it is interesting to look how different people are dealing with the crisis. This link has interviews from a couple people that talk about how they are saving money and reiterating the question; to save or to spend