One Year Later: Little Has Changed

Special to the Star-Telegram

The intense concern and panic that swept the nation after Lehman Brothers collapsed last September has apparently subsided. Even our officials have cautiously said that the recession probably ended last month; in a moment of prudent honesty, they added that it might be a long time before employment numbers show improvement.

Many areas are taken into account for such assessments, including improvement in new car sales and positive signs in housing construction. Another sign was surely a resurgent stock market, which has returned $2 trillion of the money lost by people who held equities, either privately or in retirement plans prior to the crash.

But things aren’t always what they seem. In the past week the numbers coming out of Sacramento’s home market were more than disturbing. Foreclosures in that metropolitan area have now topped 42,000. From its peak in the summer of 2005, the average price of a home there has fallen by 53 percent, and the sales rate for homes is headed toward 1967’s figures.

This illustrates why we are fortunate to be in Texas during this economic downturn. In the last couple of months my neighbor across the street put her house on the market — the smallest house in the neighborhood, at 1,480 square feet — and sold it for $188,000 to the second person who looked at it. She pocketed a sizable amount of equity, which is not bad for the few years she was in the property.

Upbeat official pronouncements notwithstanding, however, much of what is happening elsewhere right now is artificial. And some is simply abuse of the very government policies designed to save and re-grow our economy after the events of 2007 – 2009.

None of This Is Natural

A quick review of the last 12 months: Washington stepped in and saved our banking system and our auto companies, put stimulus funding into the economy, and then offered rebates to housing and automobile buyers to spur sales. In turn a loud outcry arose from some sectors of our society. Citizens concerned about the country’s deficit spending– and especially about deepening the nation’s debt should any sort of health care reform be passed – made themselves heard in possibly the angriest and most passionate protests heard since the sixties.

Many Americans quietly share some of the protesters’ voiced concerns about the increasing spending and debt; still, you have to wonder where our country would be had the government stood back and did nothing when the crisis threatened to become overwhelming. The easy answer is that things would have been much worse and could possibly have become financially irreversible in the near to mid-term.

That being said, had these bailouts been more carefully thought out and intelligent rules put in place for the funds’ distribution, it’s also likely that we would already be many miles down the road toward complete recovery.

How’s that? Much of the bailout money that has been distributed is being used against the public — to artificially raise the prices of everyday essentials. And why? Solely so that those who received the funds can show fast profits.

Looking for comments?