Many are looking at our current financial crisis and asking if we are not already in or are heading into a depression, and the so-called experts all have an answer. The problem is, they don’t agree. It’s easy to find some of the financial or political pundits who will tell us that, for all practical purposes, our country has already slipped into a depression; and for the average person it’s difficult to understand just what that means. If we look only to the factors by which we measure the economy, we’re not even in a recession, but our rational mind tells us differently.
Certainly we are not today in a depression. We're not seeing soup lines, but lines to buy $4 gas or iPhones. However, in my 40 year career of homebuilding I have never seen anything like the financial uncertainty we find ourselves in. No one can say where our economy will be this time next year, but most would agree that the future is not particularly rosy. Our government is not being honest with us; they don’t think we can deal with the truth. What they describe as a bailout of almost a trillion dollars is far from true. It is within the realm of possibility that the money needed to salvage the failing banks and financial institutions could be double or even triple that amount. As I write this, other special interests---auto makers, credit card companies, and banks with problem student loans—are holding out their hands to lawmakers asking for their loans to be added to the bailout package. It’s as if Santa Clause has made an unexpected trip south.
And the problem is more serious than just the collapse of the housing market and the ensuing decline in home values. It affects the financial markets in ways hardly anyone is discussing. For several years homeowners tapped into their increasing equity as if it were a savings account; and it wasn’t. It was a loan that had to be repaid at some time. Now, with many owners caught in no-equity or negative-equity situations, and with banks changing or even cancelling equity lines of credit, that source of extra cash has virtually disappeared. Other sectors of the economy have already begun to feel the results of this lack of spending power.
While I’m not an alarmist, I believe we’re facing the potential collapse of our entire economy, for few of our leaders have the courage to lead and to admit the depth of the problem. However, I remain convinced that we do have the resources to return our economy to a position of stability, and, though it may be a painful recovery, we can and will survive. This problem has been a long time in the making, created by both political parties, both sharing equally in the blame. It will take a long time to resolve, and the solutions will not be found in political rhetoric and partisan bickering. The president and congress must become the leaders we elected them to be. In the meantime we have to maintain pressure on them to do their jobs. They represent us. It’s time for them to remember why they were sent to Washington.
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