The Key to an Economic Recovery - Major Structural Changes in the U.S. Economy

The only long term cure for our economic downturn is a major structural change in the economy.

I can just hear the laughter by the economists in the President Obama administration. “What are you talking about? The economy is already recovering,” they say.
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Just look at the stock market. Euphoria is all over Wall Street. The Dow Jones Industrial Average has risen to well over 10,000.

Goldman Sachs and J.P. Morgan are reporting record earnings. IBM’s earnings exceeded those expected by Wall Street pundits. The earnings of many other companies have been better than expected. 

Many corporate professionals in our country are paying close attention to a potential economic recovery. 

Many feel insecure in their jobs and would love to see a strong recovery bring stability to their work  place.

Others are like me just a few years ago. They want to retire but can’t afford to. The stock market crash last year and the decline in home values have reduced the money they expected to have available for retirement.

Others are moms and dads who want to work from home. They want to spend more time with their children.

For all these people, I think it is important to understand what is happening in our economy. It’s important to have a Plan B, a job backup plan, in case the economy continues to falter. For me, it was a work from home online business that allowed me to retire from corporate America after 25 years as a Chief Financial Officer.

My job backup plan was to obtain the best internet marketing training. I was able to find online training at a very reasonable cost and continue working in my regular job until I was ready to make the move.

You may not want to go that route. The important thing is to have a Plan B. I feel that we are a long way from recovery. When it comes, it will be a very slow process.

The  recession (19 months as of June, 2009) was the longest economic downturn since the Great Depression (43 months).

Unemployment numbers and industrial production are at the worst levels since 1945. Retail sales and housing starts, although slightly improved in the last few months, are worst than any time since the Depression.

Our ailing economy cannot be cured by more stimulus. Stimulus is exactly what caused our present problems.

So what is the cure? What are the structural changes in the economy that are needed to achieve a valid, long term recovery? Well, it’s not pretty.

Unfortunately, the cure for our economy is bankruptcies, foreclosures, defaults, workouts, and deflation. Because of the massive spending on economic stimulus and bailout plans, we will most likely deal with hyperinflation at some point.

These structural changes in our economy won’t happen quickly. Corporations don’t want to go under. Individuals and families don’t want to lose their homes.

However, the longer the federal government tries to prop up these failing corporations and families, the longer this cure and the structural changes in the economy will take.

The federal government and individuals have accumulated more debt by far than at any time in our history. It will take a long time for this debt to unwind.

It took decades to build up this massive debt. It is naïve to think that a few months of pain and stimulus spending is all that it takes to cure our problems.

The federal government believes that stimulus and bailouts are the answers to our financial problems.  They are Wrong. 

It’s frightening when the second most powerful person in the country, Vice President Joe Biden, makes the very “wise” statement, “We have to spend money to keep from going broke.”

You need to consider that “sage” advice as you try to meet your personal financial obligations each month.

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