Comment I left at Polizeros in response to another thoughtful Bob Morris post, where he waxes, via a comment taken from another blog, upon the economic crisis that will be facing an Obama presidency (I would argue a pitiable economic situation, though perhaps an enviable political situation)… with one addition made in red:
“If (I wouldn’t have used ‘if’ a month ago) Obama does win, I don’t pity him for the economic situation. I think it will be very easy for his to offload the responsibilities for the crisis squarely on a Crawford, Texas doorstep.
What I do think will be interesting is how Obama decides to deal with the recession. Will he take what I call a practical good-governance-in-spirit approach, and give us our painful medicine to get this fixed:
1)major infrastructure investment, especially in public construction to absorb the lost commercial and residential real estate jobs; [ADD: Where would the phantom unemployment of undocumented workers go? Without the real estate maintenance, day labor, construction jobs paying in cash, where will they go to survive? Will some return to their homelands? Will they be able to re-educate or find new work? Will the government include these thousands of workers that will not show in their statistics? I highly doubt it. I fear a life of crime may be a serious draw for an ex-day-laborer looking to support his undocumented family in America, rather than return to poverty in his homeland after all the risks taken just to make it to the US]
2) incentives to re-train those who were employed in bubble and now-defunct industries;
3) investigations of the incentive programs / compensation design of broker-originator-lender-investor relationships to fix what clearly was a system that included affordances and encouragement for fraud / lax underwriting / general bubble-blowing (and I used to work in mortgages, so I know a bit about that…);
4) publicly resetting our expectations to understand that 6%+ annual real estate appreciation isn’t coming back without runaway inflation;
5) promoting frugality and less-Earth-abusive living, via reduced consumption and smaller homes;
6) likely increased taxes in a high-unemployment environment and a substantial reduction in the public workforce;
7) and much, much more.
Will he be practical and accept crucifixion by his critics that will already have a beef with him for any number of reasons, as well as those who will suffer from further stagnating retail consumption and a severely shrunken residential construction industry? Not to mention the surge in unemployment that would at least temporarily result before our economy can shift to building useful goods, rather than just ‘goods’. He will take some short term heat and possibly be a one-term sitting duck, and he will face incredible resistance from Congress, but I believe those 7 items, roughly, have to be considered.
Or will he unload all the troubles on GWB’s lap, and promise to fix it and change it, using ploys similar to the recent Stimulus packages to technically take the economy out of recession, or dramatically increase federal payrolls to improve unemployment figures while masking all the pain into greater deficits and higher debt maintenance for future generations, and take credit for the economy’s revival?
Or is there another route he can take? I have always doubted Obama’s ‘change’ message for numerous reasons, but his response to this crisis will be definitive to me. It’s clear what a George H. would do in this situation, and what a George W. would do. Which is Obama more like?”
… and the cow goes moo
