Trickle Down Disaster

It started with some subprime home foreclosures. Folks who never should have been in the position to buy homes valued at $250k to $300k and above defaulted on payments that were increasing because of exotic loans created to give them the illusion that they would be able to afford the American dream. Those unfortunate souls began to increase in number and in geographic terms and before you knew it large swath of homes in places like South Florida, California, and Cleveland lay empty.

Those of us who purchased conventionally felt sad for our fellow citizens but went to sleep pretty much content that we were not going to suffer in this creeping recession. But then investors began looking at oil and before we could take a deep breath, the price of home heating oil and gasoline for our automobiles began an incredibly steep increase. As the price went over $3 a gallon, those of us who thought we were in the comfortable middle class began to take stock and cut back.

The once infallible Starbucks began to offer smaller and lower priced coffees and even took an unprecedented four hour shutdown to plot the future. Not to be undone, one time "Super Three" auto manufacturer, Chrysler, announced that the entire company will be closed for two weeks this summer. The trendy upper middle class restaurant chains are beginning to look at their bottom line as well.

In our area of San Bernardino County, the chief rival to Olive Garden, Romano's Macaroni Grill, will close some of its restaurants in an effort to keep things in line. In moments of financial crisis it is usually the bottom feeders (i.e. Target, Wal-Mart, etc.) who come out looking good as shoppers put aside their pride and look for those bargains that just a few years ago they thought they no longer had to worry about.

Trickle Down economics is the concept that the rich should get a break and that they will invest in areas that will bring jobs and benefits to the rest us poor souls. But time after time, this concept never holds. What happens when the problems of the foreclosed class and those living by paycheck to paycheck become multiplied? People return to the basic necessities of life and abandon their former attempts to move up the economic ladder.

Only today, we have learned that Wall Street stalwart, Bears Stearns, will probably be gobbled up by JP Morgan Chase. If this goes through, then many higher priced workers will be out of jobs in the so called rescue of this investment giant. Cities like New York can scant afford to see big time companies become downsized. The real estate market, the entertainment business, the tourism dollars all will start to dry up in an economic spiral that can only result in disaster.

A war in Irag that costs billions, an energy policy that has failed to find solutions to our dependence on foreign oil, and a tax system that favors the fabulously rich, is at the root of an unfair system that is about to suck in the majority of us.