A bind

It is true that the short-term solution to a recession may be some sort of stimulus package. To this effect, I am glad that the Obama team has articulated a plan for this. What I’m more concerned about, however, is long-term investments. Not in the incoming administration’s desire to make them, but its ability to. Facing, as we are, a huge national debt, I don’t know if we have the capital on hand to make the necessary investments. And there are a lot of them. Obama talks about education, but we also need penal reform, social services reform, transportation reform, and that’s not to mention energy, which is a cover-all. Usually this wouldn’t be a problem; this is what government bonds are for, but no one is buying government bonds. MA has recently put off a huge bond sale, and I think a lot of states are doing the same. Whether it’s federal money or federal mandates to redirect local money to specified projects, we don’t have enough. I suppose we could borrow from other countries, but considering the state of our internal mortgage and loan infrastructure, and the global recession, there isn’t going to be much money on hand.

Ultimately we need an international solution for an international problem. Car manufacturing is just the first of many important international industries that are going to be hit or even fail completely. Governments need to come together and present a unified front to the crisis, in terms of short-term stimulus spending and long-term goals for reconstitution of the global economy. We need to lift trade barriers and embargoes, encourage domestic production of important goods, and discourage outsourcing. We need to address the human rights issues that allow such practices to be profitable, and provide incentives for businesses to do their work at home. In the long term, this is the only way to create a stable economy.