CRANKY GENIUS

It’s tragic really. Millions of lost jobs. Foreclosed houses at record levels resulting in plummeting home values. Our auto industry on the verge of implosion along with 7 million related jobs. IRA and 401k values shrinking and forcing employees to work longer to retire. State and local governments teetering on bankruptcy. It’s bleak and there’s a lot of pain.

But as with any pain, there are valuable lessons for all of us and hopefully we are wise enough to learn. As our economy resets, here are eighteen good consequences that will come as a result.

A Spanking For Wall Street

Those Wall Street jokers who gambled with our life savings so they could earn huge commissions and bonuses are locusts leaving famine in their wake. If you think this is hyperbole, then take another look at the collapse of global economies. Entire countries have been put at risk. The pink slips that swept though Wall Street could not have come soon enough. Hopefully, the greed of the recent past will continue to haunt those responsible.

The Revelation that Big Banks Need Big Regulations

Too big to fail? Hardly. It’s more like too big to let fail. Now we know that banks need to be regulated in proportion to their impact on the economy. And this is true for any business entity as well, like the automotive industry. Mega-corporations need to be heavily regulated or broken up.

Unfriendly Oil Rich Countries Are Suffering

Russia, Iran and Venezuela all aspire to hold the world over a petro-barrel. And now that demand for oil is down, their bullying tactics as declining as well. As of this writing, Russia’s stock market is down 75%, inflation in Iran is 26% and Venezuela is reducing foreign assets by 38% to help shore up domestic spending

Americans Are Re-thinking The Consumerism Life Style

We’ve seen America wake up and realize that peer pressure should not drive purchasing decisions. Spending to impress others is as hollow as the empty calories of a blood sugar spiking soft drink. And what label you are wearing won’t shield you from the elements any better.

Home Values Are Back Where They Should Be

Before the bubble burst, housing prices were increasing at a rate that outstripping income growth. We should have seen it coming based on that one fact alone. Housing prices were overinflated far beyond normal market forces and now they are back in line.

Corporations Will Improve Productivity And Become Thriftier

When companies conduct layoffs, they also refocus on their core strengths to shore up their return on investment and drop projects that don’t add value to the company. Waste-cutters are sharpening their pruning shears and when they are done, the company will be better prepared to weather the storm.

The Perfect Chance To Put Global Warming In A Laboratory

People are driving less. Airlines are cutting routes. Families are cutting energy use. This is the perfect time to drum up empirical evidence for climate change. Cause and effect is the perfect way to win over those fence sitting doubters who need more evidence to get behind the cause to reduce carbon emissions.

Governments Must Be Smarter With Lower Tax Revenues

As corporations refocus, so must governments. It’s time to reevaluate every program and put the basic services like schools, police, firefighters, hospitals and elder care on the front burner. Put non-violent offenders in halfway houses. Encourage events like farmers markets to invigorate the local economy.

Reduced Trade Deficits Result In Stronger Dollar

Since you are buying fewer gadgets made in Asia, we’re importing less and the dollar is getting stronger and foreign countries are buying US Treasury Bills. This coupled with the rest of the world’s newfound love of America’s democratic process and the election Barrack Obama demonstrates the renewed attraction of the US currency.

“Money Good” Stocks Are Being Dumped To Cover Margin Calls

When all the other stocks were crashing, investors were forced to liquidate “money good” stocks like gold mines and oil futures. This pushed money good stocks to records lows, and gave cash ready investors a chance to make a small fortune. Oil was already artificially high more because of rampant speculation and less because of consumption.

Now We Know If It Sounds Too Good To Be True, A Regulation Is Needed

Every time there is rampant growth in fortune, someone is getting hurt. Enron, Dot Com, housing boom, the S&L explosion, Bernie Madoff and the list goes on. The Fed and the FCC must realize that where’s there’s smoke is where firemen will soon be. And the sooner the harsh glare of regulatory action is brought to bear on getting rich schemes, the earlier the fraud is detected.

“Free Market” Has Been Exposed As A Fraud

Other than regulations for preventing fraud, a free market is free from regulation while encouraging competition, prices controlled by supply and demand, and free exchange without coercion. What the US has mega-corporations merging everything from media enterprises and supermarkets to banks and software companies, imposing oppressive restrictions on the rest of us. The federal government has every reason to encourage a market controlled by a few mega-corporations; those at the levers of public policy have just a few corporate entities to deal with when tinkering with the US economy.

“Trickle Down” Is Not The Answer, “Bubble Up” Is

Will Rogers said during the Great Depression that “money was all appropriated for the top in hopes that it would trickle down to the needy. He was kidding. Jobs created for WWII put an end to the Great Depression. When President Reagan made supply side economics official public policy, American businesses got some much needed breathing room. But precedence was set and trickle down became the answer to every economic woe. Policies that result in real job creation will kick-start our economic engine. And eliminating taxes for everyone earning $100,000 or less would kick it into high gear.

Big Government Spending Can Finally Boost Green Jobs

We’ve been talking about investing in alternate forms of energy for decades, but the economics never supported this desire. Now that the government is about to spend hundreds of billions, there is finally an economic force up to the task. Immediately we’ll see solar, wind-farms, and geothermal getting the financial basis to make it a competing energy provider. Hopefully not far behind is a revival of nuclear and an investment in fusion power.

Home Cooking On The Rise, Home Gardening Not Far Behind

Unfortunately for the restaurant industry, Americans are eating out less and cooking more at home. This will have the unintended consequence of making us healthier and more able to support local small farms. The lost art of home gardening for food is on the rise and the result will be a greater respect for our environment.

Falling Stock Prices Has Created The Mother Of All Buying Opportunities

If you have liquid assets, follow Warren Buffet back into the stock market. You could do a lot worse, and probably are.

Savings Going Up

As credit remains tight individual Americans and large businesses are learning the value of saving for a rainy day. Our reliance on credit to get us through the day has proven to be an inherent weakness in how to conduct business. Savings have always proven to be the way to weather a recessionary storm. Recessions typically last from between 8 to 18 months. Having at least 6 months savings to cover operational expenses is what every economic tutor advises his or her student.

The US Economy Will Once Again Prove To Be Resilient

Enough said.