Despite the yammering of the blame gamers and talking heads, not everyone in this credit catastrophe got there by living above their means or taking out loans they couldn’t afford. Six months ago, many of the businesses and homeowners who are now sinking like a rock were creditworthy. Now, with Fortune 500 companies going down for the third time, they are taking Main Street, Wall Street and Electric Avenue with them.
The banking crisis is worsening as the economy continues to sink. It's not just that bank balance sheets are still stuffed with "toxic" assets probably worth far less than what they're listed for -- subprime loans mixed up with all sorts of other things. It's because more and more individuals and businesses that had been credit-worthy six months ago can't make their payments. (Robert Reich, “The Banking Crisis”, Robert Reich’s Blog)
This crisis is not an isolated event. It has spread to all sectors of the economy, from banking, investing, retail, manufacturing and the service sector. Autoworkers lose their jobs, can’t pay their mortgages or buy “extras”. Retail workers get pink slips because their companies depend on autoworkers and construction workers for customers.
The trickle down, domino effect soon sends toxic shockwaves to other sectors of the economy—grocery stores, clothing stores, specialty shops and mortgage companies. With unemployment extensions running out, and many state unemployment funds tapped, many unemployed Americans are wondering how in the world they are going to survive.
President Barack Obama and his team are working on an economic stimulus package to jumpstart the economy, but this economy is so bad that it will take a transplant to get it working again. We are talking about a total renovation and reconfiguration of the national economy, a redirection of mass and gross proportions.
As Reich and others have long noted, it’s going to take a Roosevelt type works and repair program to get this economy working again. More than that, we have to come up to speed and modernize our transportation industry as well.
To decrease our dependence on the volatile oil industry, we must move into alternative fuel sources—biofuel, solar, wind, and hydroelectric power. This transition will require a massive retraining of our workforce and a retooling of our factories, energy grids and transportation networks. However, as in the computer industry, what happens when we don’t have enough trained professionals in the hard sciences and engineering?
Are we back to the same old H1-B visa trap of hiring massive numbers of skilled foreign scientists, technicians and computer engineers because we allegedly don’t have enough home grown ones? Are we in the process of creating massive numbers of jobs for trained white males and bypassing women and minorities?