The Dow Jones Industrial average fell 504 points today, the worst performance since the 9/11 attacks which began the last recession in 2001.
Unfortunately the "bubble" that's breaking isn't high tech stocks, it's people's homes. It's people getting thrown out of their homes. It's the people losing the only retirement equity that so many of us have--myself included.
Does this mean we need fundamental change in American society and how our economy is run? You bet.
What is that change? It's not solving one problem. It will mean the country coming around to long-term solutions to four massive problems:
- Mortgage crisis -- Predatory lending and lack of regulation resulted in nearly free money for borrowers, who borrowed against their rising home equity for all kinds of reasons. We can clean up the regulatory mess and punish the thieves, but that won't give people their money back. We'll just have to work and earn our way out--hopefully under a fair set of rules and empowered kick-ass regulators. And long-term an aging baby boomer bulge means less buyers for over-priced homes.
- Energy crisis -- We know about this one. Too little oil and gas on the market, and increasing competition for it from China, India and other emerging economies. Despite all the hot air in our political discourse, we won't be able to bring wind power online fast enough.
This crunch is going to hurt, and it will mean high and higher gas and home heating oil prices. And more coal because we won't conserve until we have to. And more pressure for nuclear power, probably in the form of expanding existing nuclear power plants, since new ones won't get permits.
- Globalization crisis -- What happens to our automobile industry in 20 years? Who's going to work in Detroit if foreign car companies keep siphoning off more and more market share?
And as long as we want $10 tee shirts and $25 dresses and $20 blue jeans we're going to keep shipping our clothes manufacuting jobs to China. And (according to Chinese Retail News) the average Chinese salary is just over $2,000 per year, and less than half that for factory workers.
This crunch will hurt more and more as information between markets becomes more and more transparent.
- Education crisis -- Finally, we pay the price for gutting our public school system. We can see it in the growing disparity between the wealthy and the blue collar classes in our country. That disparity has not been so lopsided since the Depression. (Think about that for a second...) The opportunity to stand on your parent's shoulders and climb up the ladder has been kicked away.
1.2 million kids drop out of high school every year. In a 2006 PISA survey, U.S. students ranked 29th among all nations in standardized science test scores. In math and science scores India and Chinese students scored ahead of the US students. (granted those are selective samples in those other countries, but the raw numbers of students are almost identical.)
The solution to the education sinkhole isn't a think tank solution. It begins with a sweeping change in our attitudes.
Do we need massive, fundamental change in this nation?
How can anyone say anything different?
And how can anyone propose that someone who's "not very good on the economic issues" would be the right person to lead that change in this country?
Today was a terrible day for America and Americans. But hopefully this can become a day of reckoning for us all.
We have 50 days to take the first big step to begin re-engineering America.
Or take the next big step into the darkness.
You and I have to do everything we can.