Sunday, August 03, 2008

Best Non-Political Solution: Suck It Up

Americans are not suffering from weak or negative economic growth. They have suffered a loss of wealth, a very different ailment, from two major factors. The first is high oil prices, the equivalent of a huge tax increase. The second is the housing bust, which has vaporized more than a trillion dollars worth of assets.

When you have a loss of wealth, the best way to cope is to accept it and adapt to a lower standard of living, sooner rather than later. Sending out rebates, eliminating gas taxes, bailing out homeowners and accelerating monetary growth, among the proposed remedies, do exactly the opposite. They spare us the obligation of dealing with reality by making us feel richer so we can keep on as we were before.

But they don't change the stark fact that we are poorer now and will remain that way for some time. And they ultimately backfire by wasting money, igniting inflation or both.

In the long run, we will adapt to the new realities, the economic impact will moderate, and the pain will fade. Till then, our least destructive option is to do something no politician would dare suggest: Suck it up.

~Chicago Tribune columnist Steve Chapman

4 Comments:

At 8/04/2008 4:19 AM, Anonymous Ian Random said...

A coworker agreed with the idea of walking away when you have negative equity in your home. I wonder if he'd walk away if he had negative equity in his car like everyone who buys a new car? Anyway, I pointed out that either you're paying your own mortgage or your landlord's mortgage. Also in an apartment, you don't get all those nice tax deductions.

 
At 8/04/2008 11:59 AM, Blogger bobble said...

"Sending out rebates, eliminating gas taxes, bailing out homeowners and accelerating monetary growth, among the proposed remedies, do exactly the opposite. They spare us the obligation of dealing with reality . . .

amen, bro.

jeez even 'free markets' bush is falling all over himself to bail out anyone and everyone (especially his buddies on wall street) in a desperate attempt to get mcBush elected.

i guess there's no such thing as shame in an election year. and yes, i include the dumocratic congress here.

 
At 8/05/2008 1:01 PM, Blogger DRZinn said...

I know one (former) politician who said almost exactly that.

'member Phil Gramm's "mental recession" comment?

 
At 8/13/2008 8:53 PM, Anonymous Anonymous said...

Stumbled across your blog. . . . It's nice to know there are others in this country who are thinking the same thing I was. . . . thanks for the post.

 

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