Friday, September 9, 2011

The New Normal

Last night President Obama gave his jobs speech on behalf of his American Jobs Act, which is basically a larger version of the American Recovery Act.  Amazingly, the White House is proposing the same basic ideas they have been working on for three years--payroll tax breaks for businesses that hire new employees, more unemployment benefits, and more government spending for "shovel ready jobs."  We are told that creating jobs has to be the primary goal of our government and that no issue is more important.

But behind the scenes, if you look and listen very closely, you can hear a different message coming from the media and the ideologues who support the White House.  This message is more subtle but very pervasive, and I believe that this is going to be the real campaign message of the Obama Administration in 2012.  Put simply, this message is as follows:  The recession is permanent.  Housing is going to stay depressed.  Business is going to stay depressed. Unemployment is going to stay high.  Nothing is going to get better--ever.

We are beginning to hear the words "permanent recession" as part of the media's vocabulary.  Take for instance a Washington Post article published on August 31 and reprinted in several publications since that time.  It tells the story of house painter German Morales whose business has been all but shut down by the housing crisis and the economic troubles plaguing the country.  Post reporter Michael Williamson tells us that Morales registered his painting company in December of 2007.  As the recession deepened, he lost his home to foreclosure but he kept busy during 2008 and 2009 doing whatever work came his way.  "But lately," Williamson writes of Morales, "his job has been defined by what he can't fix, the mess he thinks is well beyond fixing....last month, when stock prices tanked and sales of new homes fell for the third straight month, Morales sat down with his wife and two sons to discuss their finances. 'I'm sorry,' he told them, 'but this is the way it is going to be--job to job, week to week. It's not getting  better.'  He is one of the millions for whom the recession has become permanent, no longer a crisis to endure so much as a reality to accept."

Wow!  What a concept.  The recession is a reality to accept rather than a problem that needs fixing.  Williamson's article details the devastating consequences of the housing meltdown to Morales and his family, but nowhere in his article does he mention the cause of the drop off in new home sales--increasingly tightening regulations which make it virtually impossible for many Americans to qualify to purchase homes.  As guidelines continue to tighten, of course, sales are going to continue to drop off and values are going to continue to plummet.

I see this new approach to the economy in the media and in the comments of people who post on this blog. So many of the comments that I received on Suze Orman and strategic default chastise me for encouraging people to stay in their homes and make the payments if they can afford to do so. Overwhelmingly, readers who comment make the argument that housing will never recover.  The economy will never get better. Homeowners have no choice but to walk away from their homes because housing in America will never again increase in value.

I find it amazing and ironic that the Administration that sold this country on hope and change is now delivering a new message, "The situation is hopeless; nothing is ever going to change.  Get used to it."

Unfortunately, this new message of hopelessness will probably have almost as much appeal as the original hope and change message had.  Hopelessness takes away personal responsibility.  If a mess is so big that it cannot be fixed, than I as an individual have no responsibility to attempt to make anything better in my own little corner of the world. I am a victim of a system that is bigger than I am.  I have been swallowed up and destroyed by forces I cannot control.  I cannot make anything better; therefore, I don't even need to try.

People who embrace the "it's hopeless" approach to the recession are partially right--by embracing hopelessness and fatalism they are sentencing themselves to a lifetime of financial problems.  As people succumb to hopelessness, they lose the will to seek out better options with better outcomes.

The truth is that our economy is being held captive by ridiculous regulations which are binding business, lending, and growth.  If we don't get rid of the root cause of the current housing crisis--absurd regulations and guidelines which have been implemented over the last three years--the housing sector will not improve.  If we sue the banks into bankruptcy, as Maxine Waters seems to favor, lending will dry up completely which means that we will have no capital for growth or expansion.  If we allow the EPA to continue to regulate us until middle class Americans can scarcely afford light bulbs, we are literally turning out the lights on the free- est, most enterprising society which has ever existed.

If Obama were serious about economic recovery and job creation, he would take out a pen and start repealing repressive regulations today, and we would see major improvement before the next election. But, instead, he has assured us that the regulation is here to stay.  And as long as he has business and entrepreneurship bound and gagged in a corner, our economy is not going to rebound.

Personally, I believe that life is about choices and that our outcomes are determined by the choices we make, both individually and corporately.  I was very inspired by Governor Rick Perry's speech when he announced his candidacy for President last month:

It’s time for America to believe again. It’s time to believe that the promise of our future is far greater than even our best days behind us. It’s time to believe again in the potential of private enterprise, set free from the shackles of overbearing federal government. And it’s time to truly restore our standing in the world, and renew our faith in freedom as the best hope for peace in this world that’s beset with strife.
The change we seek will never emanate out of Washington, D.C. It will come from the windswept prairies of Middle America, the farms and factories across this great land, from the hearts and minds of the goodhearted Americans who will accept not a future that is less than our past, patriots – patriots who will not be consigned to a fate of less freedom in exchange for more government. 
We do not have to accept our current circumstances. We will change them. We are Americans. That’s what we do. We roll up our sleeves. We go to work. We fix things.

 What we as Americans choose to believe over the next fourteen months is going to determine our futures, not only for the next four years but for many decades beyond.  I choose to believe that real hope for this country begins when we change the occupants of 1600 Pennsylvania Avenue and bring in a President who will stand for individual freedom and opportunity and limited government.  When we have a man in place who believes whole heartedly in these principles, we can begin to rebuild our economy one business and one job at a time.
For more by Alexandra Swann, visit her website at

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