Today, I have a story for you that goes a little ways back into my past. It starts a little something like this...
The day I turned 16 years old, my dad woke me with his customary awaken-zack-chant, "Z-Bob Zachary Junior, it's tiiiiiime to get up." Given my expectations for the day, he was surprised to find I actually heeded this call the very first time he bellowed if forth. I walked out of my bedroom wearing jeans and my favorite Dallas Cowboys t-shirt and followed my Dad out to the driveway wear a newly purchased, 8 year old, 1991, White, four-door, Honda Accord sat waiting for me. To say the least, I was excited.
After taking the requisite first-car photos, we took a drive down to the DPS to get my license. On the way back, my Dad informed me that I should probably look into getting a job so I could pay off the loan I'd taken from him to buy the car. Say what??? To my knowledge, I hadn't purchased the car. I am never one to complain about a gift, but apparently my only gift was the no interest financing. But the impetus was placed squarely on my shoulders to pay the loan off, so as we neared my house I pulled quickly off the road and into the parking lot of our neighborhood Pizza Hut where I promptly secured my first job as a Customer Service Representative.
A few months and several paychecks down the road, the car started having problems and I took it to a mechanic who looked it over and after several hours was able to tell me a story about a major crash, the car being rebuilt, and how cheap fixes led to my using kitchen potholders to unscrew the brake lights every time I parked the car.
After the crash, rather than actually fix the electrical system of the car, the previous owner had simply installed a larger circuit breaker so that the electrical pulses that were tripping the previous circuits could be managed. And several months after that, as other circuit breakers began to trip, the previous owner continued to put ever larger circuit breakers into the car's electrical system so that, by the time I owned the car, electricity was just flowing full force all the time and was destroying the car’s electrical system. Awesome. Thanks dude.
So, why bring this story up? Oddly enough, it's because of the current financial crisis that the US faces.
The stock market is in the throes of a correction or bear market or whatever your preferred terminology might be. The point is it's down. And has been down since October of last year. Looking at trends, you might notice that it goes down and then jumps right back up, only to go down again and then jump right back up.
So how does this apply to my first car? Well, just like my first car, the stock market has some problems right now. In the late 90's the market experienced a giant tech bubble that when popped, did not fully deflate. Thanks to quick action from the Fed, interest rates were reduced to historical lows and the bubble was transferred from tech stocks to housing, keeping the stock market from fully deflating. This is similar to the very first time that the previous owner stuck a too-large circuit breaker into the electrical system of my car.
It took some time, but eventually, because all that the Fed had done was give the economy a bigger circuit breaker, the flow of bad electricity (massive amounts of debt) began eating away at the system again. And we are now in a situation where the Fed and the US government are searching for bigger and bigger circuit breakers to keep the stock market and the economy going. Interest rates are trending lower at a rate faster than ever before. George Bush is offering us all the tax breaks we can handle and oh, by the way here’s 600 dollars each to jump start the economy. Never mind that Bush is simply paying us today with dollars we’ll have to pay back in the future. After all, what could be more American than that?
The problem is that all the measures the Fed and the US Government take are just extending the inevitable. There are major problems with the US economy, with the dollar, with the way the financial system works, with the national debt. And until we actually face these problems and stop putting in ever larger circuit breakers, all we do is increase the damage.
When I got the report back from the mechanic that I’d be dropping 500 bucks to fix the car, I wasn’t happy. But I also didn’t stand there and ask if he had any larger circuit breakers.
As US tax citizens and taxpayers, it’s about time we did the same. We may not be responsible for the mess we are in, but it’s time to stand up and say “Here’s my payment. Fix things up and for goodness sake, don’t put in a bigger circuit breaker.”
Chatboard (0)