The fundamentals of our economy are
NOT strong.
One of the basic fundamentals to the operation of our economy is the availability of credit. It is the lifeblood of small businesses, and small businesses have been the only sector creating jobs so far this year. Jobs that people desperately need as the other sectors outsource their previous jobs to India and Bangledesh, or just eliminate them altogether. Without the availability of credit, that lone oasis of job expansion is doomed.
Availability of credit is crucial to bigger businesses as well.
Without available credit, the automotive sector takes an enormous hit. When people cna't get credit or are loathe to use what credit they can get, car sales plummet as we have seen in the last two quarter's reports from that sector. Now, with
sales down between 18.5% and 24.2%, the Big 3 are going hat-in-hand to Uncle Sam for some walkin' around money, too.
The availability of credit powers the durable goods sector of the economy. It powers the housing market. Utilities use it for short-term energy purchases.
Any financial adviser or credit counselor will tell you that there is good debt and bad debt. Good debt is applied to things that appreciate in value - real estate, business ventures, certain commodities, bond holdings, etc. Bad debt goes the other direction; things that DEpreciate like cars, televisions, appliances, etc. What has happened is that the amount of bad debt owed by people and businesses with inadequate resources to repay has led to a dearth of credit available for qualified people and businesses to make "good" debt purchases. It has reached the point that financial institutions (banks, investment houses, insurance companies - they are all the same under GLBA) are not extending credit
to each other.
This is the crux of the crisis. The companies in the most dire straits - Lehman, AIG, Merril Lynch, Bear Stearns - cannot get the credit to make the loans necessary to re-structure their debts; a necessary and fundamental business practice. So now you have Wall St. titans of 150 year's standing biting the dust.
There aren't any easy answers to the credit shorfall. But unless and until the credit shortage can be fixed anything else is window dressing. Or putting lipstick on a pig, if you will.
Availability of credit is the MOST fundamental element of our economy, and it's severely broken. If a dilletante musician in a punch-clock job can understand that, is it too much to ask that the potential President also gets it?