March 16, 2008

Slowing Economy Evokes Recession Fear

What Goes Up
Must Come Down

What goes up, must come down.

We all know this economic truism, but still we shudder when down turns move for balance.

Wholesale prices for U.S. goods and services ticked up 1 percent in January – 7.4 percent for the past year -- according to a new report by the U.S. Labor Department.

Fuel prices – spiked by crude oil that hit a record $111 per barrel as this is written – means gasoline at $3.60 per gallon and no end in sight.

Corn and other grains have soared to record highs in the mad rush to produce ethanol.

Near-collapse of the mortgage lending business -- and rapid decline in home sales -- contributes to consumer unease. Prices nation-wide fell 8.9 percent in the fourth quarter.

There has been such a long period of economic growth that we shudder when the economy hiccups.

Recession

A “recession” is considered to be two, declining, economic quarters. January is only one-sixth of a recession.

The Federal Reserve is pumping money into the banking system hand-over-fist to bolster (save) lenders.

President Bush and Congressional Democrats are sparring over measures to keep the economy on even keel.

Prime the pump -- shower dollars on low-income consumers who will spend it into the economy immediately. However, don’t starve the government, punish investors and spook our foreign trading partners.

Democrat leaders in Congress are striving mightily to pin a “recession” on President Bush without uttering the naughty word.

Senate Majority Leader Harry Reid toys with “down turn” and House Speaker Nancy Pelosi likes “slow down.”

In The Ditch

President Bush acknowledges the economy status more gently – “A tough time,” and “A rough patch.”

But, the R-word is not in his lexicon.

He went on offense when Bear Stearns, a giant Wall Street investment bank, accepted a Federal Reserve loan last week.

In a speech just hours after the bailout, Bush told the Economic Club of New York:

“Government policy is like a person trying to drive a car on a rough patch. If you ever get stuck in a situation like that, you know full well it’s important not to over-correct – because when you do, you end up in the ditch.”

Reading Tea Leaves

While congressional politicians read tea leaves -- and see what they want to see -- the Wall Street Journal reported last Friday that “36 of 51 leading economists think the nation has already slid into a recession.

The big problem is that recessions are not recognized until they are hard upon us. Storm clouds are gathering, but still are off shore.

Bush moved promptly to blow away the storm clouds with a $152 billion in economic stimulus. Tax payers will be “given” tax rebates of $600 for each adult, and $300 for each child – plus tax breaks for businesses.

He also proposes to alleviate housing problems by refinancing hundreds of thousands of shaky home mortgages.

Says the President: “The temptation of Washington is to say that anything short of a massive government intervention in the housing market amounts to inaction.

“I strongly disagree with that sentiment,” he says. “The government cannot fix underlying problems. The market is in the process of correcting itself.”

Poetic Wisdom

While the President and Congress jaw-jaw, tax payers are pondering what to do with the unexpected tax rebate.

Politicians hope everyone will spend and spend -- thus giving the economy mouth-to-mouth resuscitation -- then elect and elect.

If folks really believe we are approaching a recession, the tax rebates will be socked away into savings accounts.

We are haunted by the poet, Robert Burns, who in 1785 wrote an ode:
“To A Mouse Upon Turning Up Her Nest With The Plow.”

But Mousie, thou art no thy lane,

In proving foresight may be vain:

The best laid schemes of mice an’ men

Gang aft agley,

An’ lea’e us nought but grief an’ pain,

For promis’d joy!

 

Still thou are blest, compared wi’ me!

The present only toucheth thee:

But och! I backward cast my e’e,

On prospects drear!

An’ forward, tho’ I canna see,

I guess an’ fear.

PARTING SHOTS

Florida Democrat Party members -- denied delegates to the National Convention because they moved up their precinct election date – are demanding a “re do.”

They have barrels of “hanging-chads” from punch-card ballots of the 2000 election in which Vice-president Al Gore asserts he lost his bid for the presidency by 300 votes in Florida.

This time, Florida Dems promise to use old-fashion paper ballots. Pencils optional.

New York Governor Eliot Spitzer is discovered to have paid a prostitute $4,000 – plus $300 tip – for an evening in a Washington, D.C., hotel.

Understandable error. He thought she was an elected official.

One thing you learn the hard way – is that there is no easy way.

By Lindsey Wilger Williams, retired newspaper publisher and syndicated columnist