One man or one political party won’t be able to handle the economic crisis. The current situation is comparable to a state of war. Democrats and Republicans must join hands: Black people, Latinos, White people, Asians; all must come together. All sectors of the nation economy must contribute to the rescue and recovery.
[Black Star News Editorial]
President-elect Barack Obama faces daunting economic challenges: many analysts believe that the nation cannot avoid a depression.
Indeed, a major market player who is also brilliant in economics and finance this week told me that things will get worse and that there will be massive unemployment beyond what we’ve already seen, with increased hunger, and eventually more crime in urban areas such as New York City. “The last big one lasted eight years,” this major market player told me, referring to the Great Depression of 1929.
This is a scary thought if he’s right: It means that Obama, as president, will spend all of his first term simply trying to hose down financial fires. It would diminish prospects for a second term. At the end, Obama’s success will depend on to what extent that he’s capable of rallying national bi-partisan support for an economic recovery program.
So far, as president-elect Obama has said all the right things: He has issued a call to arms for national economic recovery. He’s said his government will be transparent and all information and decisions will be available on www.change.gov; and, most importantly, he’s said that the only way for America to succeed is if everyone contributes and works towards the solution. In his own words, the process “will require not just new policies, but a new spirit of service and sacrifice, where each of us resolves to pitch in and work harder and look after not only ourselves, but each other.”
The challenges can’t be underestimated:
There has been a precipitous decline of share prices on Wall Street; investors generally have no confidence in the market now; more troubling, credit has dried up as banks are reluctant to lend money to businesses; and, many companies can’t no longer meet payroll or order merchandize. That’s why the economy has shed jobs for 10 consecutive months now, with record 240,000 jobs lost in the month of October alone. This year, thus far, the nation has lost more than 1.2 million jobs.
The principle story for the last week has been the fate of the big three automobile companies; General Motors, Ford and Chrysler. They are all teetering on the brink–without emergency infusion of billions of dollars, these companies will go out of business.
These companies can’t be allowed to fall since they directly or indirectly, through parts suppliers, employ millions of workers. Major job losses in the industry –and this is only one of many industries facing similar challenges– will set off a chain reaction and lead to millions of more home foreclosures, more hunger, and more crime on the streets.
Already, 10 million Americans are unemployed and filings for benefits have reached a record; millions of people face the prospect of seeing their benefits cut off before the end of the year. Additionally, millions of Americans have seen their savings, including retirement money, evaporate in thin air.
One man or one political party won’t be able to handle the economic crisis. The current situation is comparable to a state of war. Democrats and Republicans must join hands: Black people, Latinos, White people, Asians; all must come together.
All sectors of the nation economy must contribute to the rescue and recovery. Here are some suggestions:
[] On Wall Street, chief executives and other senior management must collectively meet and unilaterally declare that they will significantly scale down and cap their compensation –salaries and bonuses. The highest paid executive should not make more than $2 million, including bonuses.
[] Wealthy Americans must follow the example of Warren Buffet who invested $5 billion of his own money in Goldman Sachs, to shore up investor confidence. Perhaps Buffet should promote the creation of a new bank seeded by his other wealthy friends; the bank would be used to capitalize new or existing companies that will create jobs in new “green” industries.
[] Banks that have received cash infusion from the government’s $700 billion program must be compelled to lend money to entrepreneurs otherwise they must face penalties. Such penalties may include the return of the cash to the government. If these measures do not work, the government must consider cash infusions only to banks that allow government to take a controlling operational interest in the company.
[] The automobile companies cannot be given billions of dollars so that they can continue paying their top executives millions of dollars and continue producing automobiles that are not fuel efficient and that don’t sell well. Since all these three companies are actually not competitive, efficient, or productive, the government must make a radical demand:
In order to receive billions in cash infusion, the three major companies, GM, Ford and Chrysler, must agree to merge: The unions must also be a part of this sacrifice and agree to contract buyouts. Then, within a timeframe, the reconstituted auto company must start producing the new “green” automobiles. Government can help stimulate demand for the new cars by offering vouchers or cash to homeowners for the purchase of these cars–the money must be disbursed in such a manner that it can only be used to purchase the new “green cars.” This strategy can be used to stimulate demand in other new “green” industries. The president-elect already has said that he plans to pump $150 billion into “green” industries and create 5 million jobs. With the demand stimulation mechanism outlined above, millions of more jobs can be created.
[] So much entrepreneurial energy remains dormant in the so-called inner cities. These are the urban areas populated primary by African Americans and Latinos and where income levels are generally the lowest, schools and hospitals most decrepit, unemployment rates generally several folds higher than the national average, and crimes rates, not surprisingly, highest.
Obama, as president, must ask for the governors of every state in conjunction with the mayors of key urban centers, to submit “inner city economic recovery plans.” This would bring millions of Americans into the national economy for the first time and get young men and women also involved in the new “green economy” producing goods for the domestic as well as the export markets.
[] In the meantime, billions of dollars will be needed for the public schools and new agreements with teachers’ unions throughout the country: The unions must realize that educating our children is much more important than job tenure, especially for teachers who either cannot teach, or do not want to teach.
[] Creating new jobs in the new “green industries” with government working hand in hand with private industry, will also enable millions of Americans to gain health insurance for the first time since all the new “green” jobs will include health benefits.
These are the type of measures that will be required for the United States to repair it’s national economy and become competitive internationally again.
