From Trickle down to meltdown


As I listen to the debate on how to get the economy fired up I seldom hear the root cause of this debacle. Most of the politicians see the housing market as the main cause of our current economic woes, but I think that the housing market collapse was a result of the most devastating cause for the economic meltdown.

The Energy Market and the SUV.

It is obvious to me that the upward costs of our energy consumption plus the country’s infatuation with the SUV was and is the main cause of our entire economic disaster. In the 80’s we were introduced to the concept of trickle down economics. It was based on the concept that if we can create and sustain an environment of lower taxation and consistent job growth that the American People would in turn buy more goods and services. GHWB then the VP called it voodoo economics but his boss was successful in proving his case. The economy started to grow and the effects were better than anyone expected. The Military started to rebuild itself from the physical and emotional disaster of the Vietnam Conflict. New Weapons and more military personnel brought with it an obvious trickle down effect. More people making money meant higher demand goods and services. People buying homes and automobiles which in turn meant more people collecting paychecks. More people able to invest in our Corporations and small businesses. More people going out to eat and more people celebrating. The economy was on a roll.

After Reagan left office and GHWB took over he made a vow to the American People, “Read my lips, no new taxes.” but the act of accepting new taxes and the split of the conservative vote between RP and GHWB left Americans wanting to send a message by electing a D.C. outsider, Clinton. His liberalism hit home to many voters because of the fast paced economic growth and the many new taxpayers coming into the system.

People were happy and they were spending and investing. Unfortunately for the liberals, the sex scandals and the corruption that was constantly being exposed caused the many voters, who expected a more respectable leadership, to split the country and we ended up with a split Congress which ultimately caused one of the closest presidential elections in our Nation’s history. With the Supreme Court deciding the outcome and causing an even larger rift between the two majority parties. It also saw the growth of the so called, Independent voters who were sitting on the fence waiting for someone to come along and wanted another outsider worthy of their vote, to come along. Enter GWB

George W. Bush was elected because he had showed a willingness to listen to the Independent Voters and take a tough stand against more government intrusion into our lives. Then came 9/11 and the county’s strong desire to punish those responsible. The war against Afghanistan lifted GWB’s administration to an all time high. But the bad intelligence and Bush’s decisions leading up to the war in Iraq put the Country on a course of economic disaster. The money being spent on our War on Terror plus the instability in the energy markets deflated the morale of many Americans and our allies. Then you throw in the rise of energy costs which nearly tripled in the last term of GWB’s administration and OPEC’s rise in costs and cuts in productivity you get the Perfect Storm.

The right-wing constantly blamed the fall of the housing market for our current problems and the left-wing bought into it. So now we get both parties blaming irresponsible mortgage holders for not living up to their obligations with the lower middle class and the poor became the scapegoats. 

But just think about it. You have a system that encouraged people to buy homes that normally they couldn’t afford by lowering interest rates and lowering financial requirements. The system worked and millions of lower middle class and borderline poor consumers became homeowners and they were, for the most part, paying their mortgages and living a modest lifestyle. They used their new credit clout to buy new appliances, new clothes, and, (this is one of the main cause of their demise) Bought big, gas guzzling, SUV’s.

 Paying $1.50 to $2.00 a gallon to fuel these behemoths was a manageable expense. Most people were maxed out on their credit cards, living paycheck to paycheck. Then comes the unending wars and the energy market’s (controlled mainly by our enemies) manipulation of fuel costs tripling these people’s cost of energy. This one thing is what brought down the house of cards.

Trickle down economics turned into Trickle up meltdown. The money once used to pay their obligations was sucked into the energy provider’s coffers. They had to keep the SUV’s because no one wanted to buy them. Many of these people were trapped, by what the car dealerships call, upside down equity. They owed more than what they could get trying to sell the gas guzzlers. Their so-called disposable income went into the tanks of these SUV’s and then we have some of the coldest winters and the hottest summers causing more and more people to choose between paying their loans and freezing or cooking to death in their homes.(some actually did)

So, instead of paying their bills they had to pay triple the costs of energy and fuel. They had to go to work but the jobs they had were gone. Mainly because people stopped buying goods and services to pay the higher cost of energy. They faced economical Armageddon. They lost their income, lost their homes, had their SUV’s repossessed, cut up their credit cards, wore old clothes, bought hamburger and pasta, stopped going to movies and sporting events, the trickle-up meltdown was their future and the blame for not living up to their obligations. It wasn’t the mortgage industry. It wasn’t the Banks or Wall Street. It was $4.00 a gallon for gas, the higher costs of  heating and cooling that brought us to our current situation. I am sure there are a few people around the world who understand this “opinion” of the economical meltdown and relish in the thought that they have accomplished what the terrorist couldn’t. They brought us to the abyss and are continually throwing us in, millions at a time and they have us blaming each other.

No one can think of buying a home in an uncertain economy. Jobs once thought of as unending have ended. They can’t justify buying a new car, new appliances, using credit cards, going on vacation, going to sporting events, theater tickets, buying new clothes, daycare and senior care, dental visits, taking pets to the vet, going out to eat, going to a nightclub. All these businesses are laying off people who in turn start the cycle over again and again. Once again the lower middle class and the poor are being saddled with the blame for something they had no control over and the resentment is growing because nobody seems to understand that they were the ones in need of a bailout.

But hey, What do I know?

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