We typically don't post articles from other sources verbatim, but given the current economic circumstances we feel Ben Stein's recent commentary on how to ruin the U.S. economy bears repeating. The following is quite alarming and also true.

How to Ruin the U.S. Economy
by Ben Stein

1) Have a fiscal policy that creates immense deficits in good times and bad, burdening America's posterity with staggering burdens of repaying the debt.

2) Eliminate regulation of Wall Street and/or fail to enforce the regulations that already exist, instead trusting Wall Street and other money managers and speculators to manage other people's money with few or no regulations and little oversight.

3) Have an energy policy that disallows producing our own energy and instead requires that we buy energy from abroad, thus making our oil prices highly volatile and creating large balance of payments deficits, lowering the value of the dollar and thus making the problem get progressively worse.

4) Have Congress mandate that banks and other financial entities lend money to persons they know in advance to have poor credit ratings or none at all.

5) Allow investment banks, insurers, and banks to bet their entire net worth and then some on the premise that borrowers known to be improvident will in fact repay those loans.

6) Allow the creation of large betting pools called "hedge funds" that can move markets and control the outcome of trading, thus taking a forum for savings and retirement for families and making it into a rigged casino game that exists primarily to fleece suckers like ordinary working men and women.

7) Have laws that protect corporate officers from being sued for misconduct but at the same time punish lawyers in the private sector who ferret out such misconduct and try to make accountable the people responsible for shareholder and investor losses. If one of those lawyers gets particularly aggressive in protecting stockholders, put him in prison.

8) Appoint as head of the United States Treasury Department a man whose whole life was spent on Wall Street, who became fantastically rich through his peddling of junk bonds at his firm while the firm later sold short those same sorts of bonds.

9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The "subprime" market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.

10) Propose to save the situation by surtaxing the oil industry, which is owned by our fellow Americans, mostly in their retirement plans, thus penalizing Americans for investing in companies that efficiently and legally produce an indispensable product.

11) Insist that the free market requires that banks and insurers with friends of the Secretary of the Treasury be saved but allow other entities not so fortunate to fail, thus creating total uncertainty and terror among financial institutions, and demolishing all of the confidence built up in financial circles since the days of FDR.

12) Then have the Republican candidate say he would keep on the job the Treasury Secretary who facilitated the crisis, failed to protect the nation from the crisis, got the taxpayers to pony up to save his Wall Street buddies, and have the Democratic candidate, as noted, say he would save the day by taxing the stockholders of energy companies.

There, that should do it.

Labels: How to ruin the U.S. Economy, US Economy

The US economy is faced with a magnificent challenge heading into the New Year.

As the struggling dollar, the War in Iraq, the sub-prime crunch, and prices at the pump dominate our airwaves, many Americans tend to forget about the end result of it all. Life is becoming impossible for the average American. Or what I chose to refer to as the fuel of the public enterprise. It has never been so expensive for him to simply maintain a healthy lifestyle and ensure the same for his family.

Costs associated with doing so are growing consistently by almost every conceivable metric. Pick one: airfare, apparel, childcare, college tuition, food, health care, and medication. All are steadily increasing in price and contributing to a rapidly rising cost of living while federal data reveals that income inequality is possibly higher now stateside than it was just before the stock market crash and Great Depression of 1929.

Overall cost of living in the US is reaching paramount heights. This is in turn spreading the paychecks of American consumer thinner than ever before and facilitating an increased reliance on credit to maintain their current lifestyles. Supporting this statement The U.S Department of Commerce, Bureau of Economic Analysis (BEA) announced this year that Americans on average had a negative savings rate for 2006.

The average American now carries four credit cards with access to approximately $19,000 on all cards total. In addition, the Federal Reserve reports that the Median U.S. household income is currently $43,200 and the typical family’s balance is nearly 5% of their total income. As the dollar gets stretched further than ever before, the implications of American consumers using a greater portion of that $19K are enormous. As the percentage rises, so does the possibility of economical turmoil.

Simply put, the American consumer with less dough in his pocket puts a massive strain on every facet of the economy. This obviously includes the stock market. Lack of disposable income and growing consumer debt put negative pressure on virtually every aspect of the public enterprise.

From the retail marketplace (particularly non-essential goods), to the banking/financial sector, the cash-strapped consumer has negative implications all around. This also gives birth to a situation in which the individual American investor can afford to invest less in the equity markets, further hindering stock market growth and overall future investment.

As we move into 2008 with the highest hopes, but yet slightly lower expectations than in years past, one thing is for certain: the cumulative action of the US consumer during '08 will have more influence in the future of our economy than in any year prior.

Labels: Cost of Living, US Economy