The Economic Stimulus Package is like fertilizing weeds. They were going to grow anyway,you just made it happen faster.

This is not a regular run of the mill recession.

We can not ride this out like the dot com bubble, or the S & L scandal, or the various  “boom bust” cycles of the past 30+ years. 

In fact, our economic “ship of state” is sailing in uncharted waters, and it feels like the boat is taking on water and listing to the left.

Recent popped bubbles, and their resultant recessions, have been  rescued by lowered interest , easy money, and a consumer shopping  frenzy fueled by credit cards and home equity loans.

This rescue spending , which translates into 70% of our economy, is gone. It has disappeared, along with 50% + value in our 401K’s, and the precipitous fall in the equity of our homes.

The American public has been frightened into  sobriety.

The ongoing loss of jobs( real unemployment approaching 14%)  and the  near collapse of our banking system has changed our spending and saving habits.

The staggering liberal economic spending agenda aimed at an attempted fix, has left most sober minded Americans, unnerved by the $ trillions being spent as a cure.

Our leaders have reportedly told us that this is the worst economic downturn  since the Great Depression.

As I explained to you several times in the past, the  Depression did not begin with the stock market crash in October 1929.

In November of 1929, unemployment was approximately 7 1/2 %, extended to 8 1/2 – 9% by  January 1930. but was settled back to 6 % by June 1930.

The attempt at stimulating the economy in the Summer of 1930. followed by passage of the Smoot Hawley Act and the resultant protectionism, resulted in increased unemployment, ultimately settling above 20% for much of the next 3-4 years.

Some comparative numbers parallelling  1930 and today.

In 1930                                                         Today

World output  – 15%                             World output  -15%

Stocks                – 15 %                               Stocks             -30%

 World Trade     – 14%                             World Trade   -22%

The protectionism of the 1930’s set off a world wide ripple of protectionist laws, intended to protect local populations. The resulting shrinkage of trade fueled the Depression.

Today, protectionism is being fueled by consumer choices, and international trade is one again shrinking . Third world manufacturere are being forced to adjust to new spending patterns by Western consumers.

The operative word is “purchase by need not by greed”.

The Next Problem, Later

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