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Last Updated: Dec 12, 2008 - 4:54:39 PM |
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A recent survey by the American Psychological Association found that America’s financial downturn is taking a physical and emotional toll on people of all walks of life - nearly half of Americans are increasingly stressed about their ability to provide for their family’s basic needs.
The recent layoffs at Whirlpool in Amana probably didn’t help much. Nor, probably, did Marengo’s most recent claim to fame: An appearance in the opening paragraph of a recent lead story on CNN.com. The story, set in the Pit Stop bar, discussed the layoffs at the plant and the impact on local residents.
The presidential candidates talk of knowing that people around the country are angry - each pointing their fingers at their opponents as the deserving recipient of the public’s wrath. If there is anger, however, perhaps it is not so much focused on any one politician - it is likely to be focused on all of them. With, the exception, of course, of the local politicians. After all, they bring home the earmarks that are supposedly so reviled in the campaigns.
Based on the words contained in studies and Internet blogs, it seems there is a fair amount of fear and loathing in America. The fear is what the future may (or in the case of paychecks, may not) bring - the loathing is of the mess itself and those unknown, unseen people who got us into it.
Few would talk about such things in the final days before an election but the reality is that, barring an unforeseen change in the economy, there will be changes in the lifestyle of many in East Iowa. It is a safe bet to expect the roads this winter will be a little more challenging - the money to buy salt and gravel - and pay for the overtime that goes hand in hand with snowfall - will be more difficult to find next year. The possibility of layoffs will certainly increase as the cities and county grapple with new economic realities - a decline in tourism and general tax revenue - and a decline in state revenue assistance across the board. Privately, some of the supervisors acknowledge that things will be tough next year - yet they are hoping for the best.
Wall Street is 1,027 miles from Marengo and Victor, Iowa, but what has happened there has traveled the distance and then some. If you don’t think you have been effected by the troubles in the headlines, think again. The trouble on Wall Street has already reached into our wallets.
By now, an estimated half of all Americans have experienced a decrease in a line of credit. That decrease could come in the form of a lowered home equity loan or a lowered limit on a credit card. If it hasn’t happened to you, it almost certainly has happened to someone you know.
For years economists have been warning that Americans are living beyond their means. With tightened credit, we have suddenly become a cash society, thus solving the problem in one felled swoop. Unfortunately, the speed at which it happened did little to mitigate the pain.
For small businesses, lowered or eliminated lines of credit mean that new inventory may be difficult or impossible to buy as businesses often purchase on short-term credit in the hopes of selling products at a profit before payment is due. For other businesses, such as appliance stores and car dealers, the reduced availability of credit means that more customers will be unable to buy the products they sell. There may be a willingness on the part of the consumer, but there is currently no means. Not everyone can afford to plunk down $1,500 in cash for a refrigerator built at the Amana Whirlpool plant, after all.
Suddenly, the problems work into a viscous circle and the result is a hard hit on American faith and confidence. Confidence is what drives our economy - there is absolutely nothing backing the American dollar except the confidence in our nation and the faith we have that the dollar is actually worth something. Rising prices, layoffs and less than pleasant reminders that we are suddenly worth a lot less than we thought have taken a toll on the psyche of the nation. Adding into the mix is a particularly nasty election season with the accompanying unknown of who will be the person to lead this nation out of the quagmire.
And what is the quagmire? A crisis of faith is a nebulous thing - it is easily swayed but difficult to move. Layoffs create fear and political scandals and multi-billion dollar bailouts to wealthy corporations create loathing. But fear and loathing, like faith, are difficult to place exactly. If you are not among those suffering from a layoff - and most people aren’t - then today is much the same as yesterday which was much the same as last month. The truth is, most Americans aren’t suffering - nor are most banks. The big banks that can garner headlines are certainly being punished for recent excesses but most banks - the local and regional banks are still doing just fine.
"We never got into the sub-prime mess," said Robert Dentel, president of Victor State Bank. "We had opportunities but I could see what was happening two years ago. We've tried to do things the right way."
Doing things the right way is how things tend to be done in rural Iowa. According to Dentel, Victor State Bank is in an extremely strong position and maintains three times the capital that is required by the state of Iowa and the FDIC. His bank has been ranked in the top 20 Subchapter S banks in Iowa for the past six years.
Loathing is most often ambiguously aimed at elected officials - Congress is suffering through near record low opinion levels. That statement alone, however, does not tell the real story. When people speak of the need to “throw the bums out,” they usually aren’t referring to the person they elected - they are referring to those that other people elected.
Congressman Leonard Boswell is the U.S. Representative for Iowa’s Third District. According to a report in USA Today, he brought home nearly half a billion dollars in crop subsidies between 2003 and 2005. People in New York or California likely don’t think much of that but what Boswell has done is exactly what he was elected to do - and that money has proven vital to his district. Recently, Americans from all walks of life have found they have something in common - a certain amount of resentment for the need to pass a $700 billion bailout package, taxpayer money that will go to some of America’s largest banks. Leading up to the vote, Boswell was certainly no cheerleader for the plan but he ended up voting for it, as did most of the nation’s representatives, because doing something, even if somewhat imperfect, was preferable to the consequences of doing nothing at all.
“There’s no question that our economy is experiencing a rough patch,” Congressman Boswell said. “It may take some time, but, of course, it will turn around. I understand people’s frustration over the salaries and compensation packages which some CEO’s on Wall Street make. The little guy gets hurt with huge losses in his retirement plans, and then we witness CEOs receiving huge golden parachutes. This is just what happened with Maytag in Newton—workers got laid off, while Maytag executives saw big compensation packages. Having said this, however, I believe that supporting the economic recovery package was the right thing to do, not so much to help Wall Street, but to insulate Main Street America from the effects of the freeze in the credit markets. To protect the student who is looking for an affordable student loan, the small business who takes short term loans to meet payroll, the worker who receives that pay check, and the senior who has worked hard and now is trying to enjoy their retirement, I voted for this package.”
As the economy has changed, so has the political nature of the nation. It seems partisanship is something that is better afforded by a nation not on the brink of a recession.
“Whoever becomes the next President, and I do think it will be Obama, will have a big challenge in front of him,” Boswell said. “The next President needs to work alongside with Congress to work on these issues, and come up with real solutions. We must do this in a bipartisan way, for the good of the country.”
The good news, of course, is that for every downturn there is, inevitably, an upturn, as Boswell alluded to. The current financial crisis will only serve to create pent up demand, and once a certain level of confidence is restored, Americans and people around the world will resume the spending that drives economies - quite possibly with renewed vigor. Banks make money by loaning money - soon they will be forced to loosen credit, perhaps not to the degree of the past few years but certainly enough to put smiles back on the faces of car dealers and appliance sales people. Eventually, the nation will climb back up riding a new boom in something that no one has yet conceived until the day comes when it all falls apart and people wonder what happened. The process will then begin again. The only unknown - both today and in the future - is how painful that process will be. Here in Iowa, we may, of course, escape the worst. As unemployment rises across the nation, the rate in Iowa declined last month. Also, banks, agriculture and industry in the state are strong.
President Clinton convinced a nation mired in recession that things would get better, and indeed, they did. During a period of stratospheric interest rates and a battered American ego, Ronald Reagan convinced people that it was “Morning in America.” Perhaps that should serve as something for the current candidates to consider. If it was Morning in America in 1980, someone needs to come along to counter the forecast for storms in the afternoon in 2008.
And then that person - the future President of the United States - needs to actually make it happen. Or, at least, make us believe it will happen.
© Copyright 2008 by The East Iowa Herald
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