Reagan called it the "Ripple Down" effect, but I know better. Tax cuts for the wealthy do not create a ripple down effect, they only make the wealthy wealthier. And deregulation only opens the doors to make the crooked rich even richer, and when the bubble bursts, the government uses our tax dollars to bail them out. And why is that? It's because the same people that created the problem now run the financial arm of our government.
But I digress. This isn't what I really want to rant about. I want to bitch about the lack of what I call the "Ripple Out" effect, which is what truly drives the economy and makes it grow. I'm talking about the housing market. Housing drives the rest of the economy. I saw this first-hand when I worked for a real estate developer. First they'd hire huge companies to create the infrastructure, such as roads and sewers. Then the concrete foundations were laid (yet another company), and slowly, bit by bit over several months, houses were built. Think of everything that goes into a house and you can see why I call it the "Ripple Out" effect. Framing, roofing, plumbing, drywall, concrete drives, paint to name a few. Then the insides: carpeting, more paint, counter-tops, fireplaces, garage doors, chimney, refrigerators. Lots of little companies building and building, and each of their employees getting a wage, and spending money in their town, and in the state of California. Then the property taxes the new homeowners and my company would pay to the cities - payment for sewers, maintenance of city streets, firemen, police, schools, and other municipal services. Job creation spreads outward like a fan, or like a row of dominoes, one job creating another.
We bailed out the big banks in hopes they would lend money to prospective builders and homebuyers and start everything running again. But that has not happened. The banks are tight-fisted. They won't give credit to the builders, and their approval rate for new mortgage loans is dropping, not rising.
Meanwhile, the federal government is facing an August 2nd deadline to raise the debt ceiling or else? Well, I am not sure what will happen. Perhaps the feds will go bankrupt. Perhaps the value of the dollar will collapse and China will own us. Perhaps the sky will fall down. I am no expert, so I honestly don't know.
What I do know is this. The "Ripple Down Effect" is a myth. And the "Ripple Out Effect" is soon to follow, unless a new type of business can ripple out job creation throughout the economy the way the housing market has done. The only other solution I can see is what got us into this mess in the first place, and that is insuring the loans banks make so that they will loosen up their hold on the credit market and get things rolling again. Only I guess I'd suggest the government (ie us taxpayers) underwrite the insurance and make sure the entity applying for the loan is a sound risk. Like that would ever happen! Or even should happen for that matter!
Well, that felt good. Just needed to get it off my mind.
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Just thinking how nothing ever remains the same. The only constant thing about living is that everything changes. If what is here now might be gone tomorrow, then desire to keep everything exactly the same is futile. It just isn't going to work. You can't just assume it's always going to be there. People grow, animals die, the day turns to night, all is in flux. Even letters carved in stone will eventually fade by time, wind and water. If I can't keep it, why am I so attached? And if I want to stay attached, that means I have to adapt, to work on my relationships, to keep my body and mind healthy. I can't assume they will just be while I sit on my ass.