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|The Summer of Our Discontent
by J. F. Kelly, Jr. 8/10/07
“Communities, like people, have periods of health and times
of sickness—even youth and age, hope and despondency.”
--The Winter of Our Discontent
With apologies to Mr. Steinbeck, this season is shaping up to be the summer of our discontent. An unpopular war drags on. More politicians become immersed in scandals. Sports idols disappoint and fail our kids as role models. Greed seems to predominate in business. Political opinion is polarized. Government seems incapable of solving problems or fulfilling promises. Perhaps worst of all, we are still facing over a year of non-stop election campaigning. Now the housing market is in full retreat and the securities markets are heading south.
Unemployment is at near all-time lows in the United States. Americans have been on a buying binge for years and they have the credit card balances to prove it. Consumer credit is at all-time highs. In spite of a robust economy and plenty of jobs, more than two-thirds of Americans believe either that the economy is in recession or soon will be, according to a Wall Street Journal/NBC News poll. The poll also revealed a lack of confidence in, not only our political leaders and institutions, but in our economic leaders and institutions as well, including the financial industry and large corporations in general.
J.F. Kelly, Jr.
Kelly, Jr. is a retired Navy Captain and bank executive
who writes on current events and military subjects.
He is a resident of Coronado, California. [go to Kelly index]
The collapse of the housing market is having a profound effect on the confidence of many Americans. For most of them, their homes are their greatest asset by far. When home values soar, they feel richer and spend accordingly. Now that values are falling, they feel poorer and curtail their discretionary spending. This is bad news for our consumer-driven economy. Shrinking market values and stagnant sales are even worse news for those stuck with adjustable rate mortgages without caps and other risky mortgage products that enabled them to buy homes they couldn’t afford in the first place. Losing a home is a personal tragedy and can be as well for the community. Some neighborhoods have been devastated by multiple foreclosures and vacant homes.
The Wall Street Journal/NBC News survey revealed a surprising amount of pessimism. Loss of faith in financial institutions is of particular concern. Well-publicized scandals such as Enron have contributed to this as have unconscionably high compensation levels for top corporate executives. This has given business a bad name. Hence, when gas prices rise, the public blames big oil, not increased foreign demand, our own voracious appetite for oil or environmental restrictions on drilling and refining. When energy prices rise, we blame the utilities, not our own insatiable demand for electricity.
There are plenty of jobs but many Americans feel that they are dead-end jobs and that they are having to work harder just to maintain their standard of living. They are concerned over the rising cost of health care and worried over losing their current coverage. Nearly half of those surveyed cited the cost of health care as their greatest economic concern.
As the global economy spreads, Americans increasingly must deal with the consequences of an abundance of cheap foreign labor. Relocating manufacturing plants overseas may increase corporate profits but it can also cripple communities that lose the jobs and the corporate presence that these communities relied upon for civic support. Over one-third of those surveyed said that jobs going overseas was their biggest economic worry.
Over one-fifth of the respondents cited the gap between rich and poor as their greatest economic concern. Americans, as a whole, have seldom expressed resentment over the achievements and fortunes of the wealthy in spite of efforts by liberal politicians and journalists to promote resentment and wealth redistribution. They envied some of the lifestyles of the wealthy, perhaps, but in our society, financial success has generally been admired so long as the playing field was fairly level and those of relatively modest means could enjoy a reasonable share of life’s luxuries. That tends to change, however, when times get tough, mortgages get foreclosed and cars get repossessed.
Much of our darkening mood can be attributed, no doubt, to impatience with the war and its enormous costs in manpower and dollars. That’s understandable. More disturbing is what the poll reveals about a loss of faith in political and financial institutions and leaders to get this country back on the right track. There seldom has been a greater need for transformational leadership. Who will provide it? CRO
2007 J. F. Kelly, Jr.