How Not to Make the Recession, or Depression, Worse
Here are some signs of the times as a dreary 2008 comes to a close and a 2009 cloaked in anxiety and uncertainty sets to begin:
All this points to what could be some very difficult times ahead even in a market (here comes that line again, sorry) that doesnt see the serious swings, up or down, that other markets experience. We suggest that elected leaders in Congress, already under a great deal of stress with regard to the economy, piece together some kind of strategy for minimizing the damage from this severe downturn.
As weve said many times before, this means a focus not on gimmicks or quick fixes or knee-jerk responses, but on well-thought-out strategic initiatives that will put resources, bailout funds, or whatever we might call them to the best use.
And one of the best places to start is not with the auto industry although we concede that a well-orchestrated plan of support designed to change the way the Big 3 does business and not promote business as usual is needed but rather with direct infusions to states and communities.
Unlike businesses, these entities cannot run deficits, and when revenues decline, as they have across the board, then painful cuts have to made, reductions that could potentially make the recession, or depression, of 2009 that much worse.
As a point of reference, recall the budget cuts announced recently by Gov. Deval Patrick. They totaled $1 billion or so, and included cuts across the board to colleges and universities, public-safety agencies, health care providers, parks, libraries, museums, day centers, nonprofit agencies that serve the poor, the blind, and those with HIV you name it.
These cuts add up. Community colleges will have to lay off staff, cut programs, raise fees, or all of the above, possibly, if not probably, reducing access to education. Meanwhile, health care providers will be forced to reduce staffs (several already have in fact), and some programs, such as those provided at Providence Behavioral Hospital in Holyoke, are imperiled. (In recent years, due to falling reimbursements, Providence has become almost dependent on emergency allocations from the Commonwealth.)
And the Bay State is not unique in these actions, not by a long shot. New Yorks Gov. David Paterson recently announced more than $5 billion in cuts, and California faces a $17 billion shortfall.
There are movements being considered to send aid directly to cities, towns, states, and households that are all in a state of crisis on par with the Big 3, and we hope these calls are heeded. While a bailout of the automakers is needed to prevent a collapse of one or more of those companies, thus facilitating full-scale depression, support to cities, towns, and states is also needed.
If its not forthcoming, well all probably get more practice saying depression, and well certainly need that economic survival guide.