Please note that while I don’t claim to be an economist, I have enough of an understanding of basic economic theory to know that we face some clear dangers if we are not careful.
It is easy to see on the one hand that things in certain sectors seem pretty much unchanged. Some businesses appear to be functioning at or near normal levels, while others, less so. Many folks believe that after a period of time, things will bounce back the way they usually do. This leads to, for most I’d bet, token belt-tightening. “Sure, things are tough,” they say, “but not for me. I’ll cut back a little and wait and see what happens.” Believe me, I hope that this is indeed the case—that we’re simply in a wrinkle that will soon iron itself out.
But on the other hand, what happens if, despite the relative health of those businesses with plenty of work and people that still have money, other forces come together to destroy even that? Then what?
I maintain that a good chunk of the current economic drawdown and cutbacks is nothing more than the natural cycle of the marketplace, with ups and downs being the so-called correcting factors that ultimately keep things in balance. What seems to have made things different in this latest go-around, however, is that it was greatly exacerbated by too much credit issued that in another time would have been denied. People were buying stuff—lots of it, including cars and houses—on credit that they should have never been given, because they could never realistically pay it back. And now, banks and other lending institutions are left holding the proverbial bag.
While nobody decried the good times as they lasted, the market was producing an excess of goods and houses that created a “bubble” that expanded far and above the norm. The natural result was that the economy of nearly the whole world ended up growing to fill it, and, when the end came, well, we’ve seen the results with the further cutting of manufacturing jobs, joined in full force by the former denizens of the overheated construction industry. There is much truth to the old adage, “what goes up, must come down.” I have always believed that—perhaps it’s the cynic in me, but I’ve yet to really see it otherwise. Sadly for those very real people whose lives are affected, this is the normal cycle of life. Thankfully, history further tells us that things must also go up. The big question, then, is how long?
