Recession...Really???

In a capitalist society (or semi-capitalist in the case of US), the strength of the economy is largely based on consumer confidence. If the consumers of the nation think the economy is on its way up, then they tend to spend more. Conversely, when the consumers of the nation think the economy is on the way to the crapper, consumers will cut spending.

It was recently announced that the United States has been in a recession since December of 2007. Immediately following this news, the stock markets took a big hit.

While I don't doubt the existence of an economic down turn, I think the impact of that downturn is a whole lot greater than it really needed to be. Every time there is some bad news, everybody talks about it like it is the next great depression. This in turn causes more bad news which causes consumer confidence to go south, which causes causes more bad news. It is a big vicious cycle.

I don't have the answer. Obviously we can't keep the media from reporting on the current state of affairs. However, I would think that some "brilliant" economist could come up with some answer.

This brings me to my next point. Somewhat related but mostly not related at all. The crappy economy has hit California's State Budget. Now, politicians want to raise taxes to cover the revenue shortfalls. Are they mad??? You don't raise taxes during a recessionary period. That will cause taxpayers to have less disposable income and cause them to spend less. This will, in turn, cause more tax shortfalls and worsen the recession. In the immortal words of Will Farrel, "I feel like I am taking crazy pills." I realize that cutting state programs is not the most popular idea. However, it has to be done. First and easiest is to comply with Federal requirements for welfare. This will force many people off of the welfare roles.

It is possible to balance the budget without raising taxes (and definitely without more borrowing). It will just take some liberals to realize that you can't solve every person's problems by throwing money at it. Sometimes, you have to let them fall on their face before they realize that the concrete is hard.

There are many ideas. The politicians just need to treat California more like a business. If revenues decrease, you cut spending. You don't go to your customers and force them to pay more than they are able. This will just cause them to spend less. Then you are just going to end up where you started.