I don’t know about you, but if I hear the word “economy” one more time, I may scream. As is true of many Millennials, I have no mortgage or investments of which to speak, and the details of the current crisis make my head spin and my stomach hurt. But whether I understand it or not, the reality is, in the long run, this crisis may affect me (as a young person) more than most. So I asked Millennial Michael Davidson to guest blog and talk about what this issue means for our generation, and how we can all be a part of fixing it to ensure economic stability for all our futures.
Michael P. Davidson is CEO of Gen Next [1], an organization that shapes and drives public and action toward overcoming challenges and solving problems for the next generation in the areas of economic growth, education, and international security. Michael was also an expert panelist for the Youth Entitlement Summit [2], a coalition of young leaders who develop findings and principles on how to eliminate the projected shortfalls in Social Security, Medicare and Medicaid in ways that are fair to all generations.
Who Wants to Be a Trillionaire... of debt?
By Michael P. Davidson
In 2008, I was fortunate to be a panelist at the Youth Entitlement Summit, where panelists heard testimony from a diverse set of high profile experts on budget, entitlement (health care and social security), and tax policies. All pretty esoteric stuff that actually affects every person in the most real ways. Former U.S. Comptroller General David Walker, former Director of the Congressional Budget Office Alice Rivlin, and others impressed on us and the public via C-Span the weight of what is commonly known as the entitlement crisis, but it should really be known as a generational crisis.
Reporting on the mess in which we find ourselves, Dallas Federal Reserve President David Fisher says that in order for us to achieve fiscal solvency we would have to cut all discretionary spending (think: education, security, infrastructure, etc.) by 97 percent permanently. Or to look at it another way, every high school student will have to see a tax increase every year of their life.
Obviously the issue is more than “fiscal insolvency,” something you find on a balance sheet; the issue is directly tied to prosperity and quality of life. On this course health care becomes more expensive and poor quality for all. Most people would lose needed government service. The tax burden on the next generation would make the Soviet Union blush. Government is granted an excuse to expand ever further. As President-elect Obama calls for a transformative infrastructure and stimulus plan—the boldness of which I applaud—this generational crisis will be waiting for him and us on the other end, while we pay the bills. Neither a conservative nor or a liberal will find the consequences of inaction attractive, acceptable, or even tolerable. The pain to the next generation will be unlike any generational transfer ever seen.
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This is not just another recession. We are reeling from two entwined problems, “Bad Money” and “The Bottleneck” of ecological pressures. The financial/economic crisis represents the market and Mother Nature forcing us to devise a sustainable economy. Unfortunately, government, Democrats and Republicans alike, is attempting to put Humpty Dumpty back together again.
Bad Money is the title of a book by pundit Kevin Phillips. Money is bad, he writes, when a nation allows the development of “a debt-gorged and negligent financial sector.” Phillips notes that in 1950 finance was 6% of the economy; today it is 20%. He adds that the federal government made a momentous policy decision -- whose bitter fruits we are harvesting -- three decades ago to favor finance and allow manufacturing to decline.
Americans are realizing that the financial sector’s iconic leaders are either a gaggle of Mr. Magoos -- the chosen defense of Alan Greenspan, Ben Bernanke, Hank Paulson and Robert Rubin -- or enablers of the mother of all financial bubbles. With wages stagnant and unemployment growing, the solution of Paulson and Bernanke is to pour money into the financial sector to revive the economy. For instance, Bloomberg News estimates that the federal government thus far has committed over $7.4 trillion to “rescue” financial institutions. However, they possess untold trillions of dollars of nearly worthless holdings. Their desperate hope is that housing values will magically -- without wages increasing -- rebound or stabilize. The reality is that our gargantuan financial sector is no more viable or well run than the Big Three automakers.
Read more at Our Humpty-Dumpty Economy on SustainableArizona.org: http://www.sustainablearizona.com/index.php?option=com_content&task=blog... [4]
I think nobody wants to stick with a lot of debts. This is a headache and can ruin credits. If you need payday loans, you’ve got reputable sites like PersonalMoneyStore.com to go. If you need credit counseling or debt consolidation, there are reliable companies out there that can help, and even websites that can help you restore a good credit report on your own. However, there are a lot of scams out there, new and old, to watch out for in 2009. The credit crunch is causing people to pose as credit counselors and prey on people trying to get out of debt. Many have fallen victim to con artists, frauds and scammers. It’s important that you know how to protect yourself from this ruthless doing. For example, if anyone asks you to pay debt-relief service fees upfront, without doing any work for you first, run! Also if someone is offering you payday loans, but you haven’t been approved yet, and they ask you to pay a fee, it is most likely a con. If you get offered a “job” saying you can work from home, but you must first pay for instructions or contact lists, don’t buy it. I recommend you read this article I found that talks about overpayment scams, and to learn more about how payday loans [5] can help instead of hurt.