Immediate Action Needed

There are no positive words that I can apply to the current machinations of the US Congress, both the House of Representatives and the Senate. This applies to both the Democrats and the Republicans, albeit in my opinion the Republicans are more reprehensible than are the Democrats. I say this because while the Democrats loaded the American Recovery and Reinvestment Act with some partisan programs that were sure to raise the ire of the Republicans, the Republicans have used their objections to these few provisions amounting to maybe some $20 billion out of $900 billion to delay and eventually sink the entire package. And in so doing, they are attempting to damage President Obama's standing among the electorate and gain a political advantage.

Their is a real danger that our economic condition could spiral totally out of control into a prolonged recession, perhaps a depression. (While there is no standard definition of when a recession becomes a depression, SEE: Depression vs. Recession for one reasonable definition.) Many economists believe that it takes a deflationary spiral to make a recession into a depression.

A deflationary spiral comes about when the value of assets fall as well as wages and retail prices. When that happens it is difficult to stop. As values fall for assets that are being used as collateral for loans, the loan becomes unsustainable by the asset and the entire financial structure begins to unravel. This has already happened in the real estate market and is reflected in the stock market and the banking crisis. Therefor it is clear that we are either already in a depression or are very close to being in one, heading for a fall of 10%+ in the GDP.

What has been happening especially during the past 3 months, is that unemployment has been rising at an increased rate. During that period 1,655,000 jobs have been lost. That is, approximately 18,000 jobs lost per day (including Saturdays, Sundays, and Holidays.) Every day that goes by another 18,000 people and their families are finding themselves without a job, losing their health insurance and their ability to pay their rent or mortgage potentially leaving them homeless, bankrupt and hungry and adding to the surplus of unoccupied homes with the subsequent decrease in value.

The above outlines why the need for action is urgent. And the congress is busy playing politics with the future economic sustainability of our nation. Maybe they are out of touch with the hardships being endured by their constituents and the potential danger to our future. Just listen to the Republicans talk about the need to take our time to make sure that we have the right package. You can be sure that if they were living paycheck to paycheck, faced with the imminent possibility of becoming unemployed and having their home foreclosed upon, they would be more eager to compromise and come to a quick resolution instead of playing politics.

Surprise of surprises! While composing this posting Sen. Joseph Lieberman (I-CT) on the floor of the Senate is making the exact point I have made here.