Not in my Backyard

The global economy stinks.

This is hardly news. Between the European debt crisis, the US debt-ceiling crisis (which triggered an historic downgrade of US credit), and a market that resembles a particularly sadistic roller coaster rather than a nice, steady mountain-climb, things continue to look bleak for an economy that has allegedly been in recovery.

Here’s the real problem, though: no one wants to fix it.

Well, that’s not really true. Everyone wants it fixed; it’s just that no one has the will to fix it. That’s because righting this particular ship requires some risk, and describing the market currently as risk-averse is sort of like saying politicians in Washington seem to be having some difficulty coming to consensus.

You see, someone is going to have to invest in these risky ventures to fix them. The Europeans are not going to see their debt vanish unless someone, well, pays it. Such a plan was floated with the idea of Euro bonds, which would have made it cheaper for at-risk European countries to pay their bills.

However, German Chancellor Angela Merkel and French President Nicolas Sarkozy emerged from a closed-door meeting in which they discussed how to fix the European economy and announced they were not in favor of Euro bonds. Why not? They would raise the rate at which Germany would be able to borrow.

Asked to take one for the team, Germany declined.

A similar problem exists in the housing market. Tuesday’s report that new housing starts are down again was met with the sobering analysis that it isn’t going to get better until unemployment improves considerably. For that to happen, companies are going to have to start hiring in significant numbers again. It’s nice that the July jobs report was up 117,000, but, to date, the economy has only recovered 1.9 million of the 8.7 million jobs it shed during the recession.

Meanwhile, US companies are sitting on almost a trillion dollars in reserve cash, worried the economy could turn again. Investing some of that money in job creation would put money in the hands of consumers, spur spending, and boost confidence — all of which would cause the economy to stabilize.

But there isn’t one corporation interested in gambling its cash reserves on the job creation needed to spark spending and a turnaround in housing.

It’s understandable why Germany, France, and corporations are reluctant to put their financial butts in the wind. If something goes wrong, they’re screwed. They have obligations to their citizens and stakeholders to protect their respective financial interests.

The question, though, is: if the people in a position to actually help aren’t going to, who is?

There is no political will — in either Congress or the electorate — for the US government to engage in any more stimulus spending. Consumers do not feel confident enough to buy houses. Just over nine percent of Americans are out of work. Where is the cash to fix this problem supposed to come from?

This is what I call the not-in-my-backyard attitude. Everyone wants their trash hauled away, but no one wants to live near the dump. When the global economy asked for a volunteer to step forward and inject some cash to get things going again, everyone except the average person took a giant step back.

This is akin to attempting to split an atom with a hammer and chisel.

Thus far, the markets, while volatile, have not shown the kind of decline that would trigger a double-dip recession, but everyone from casual observers to obsessive day traders is looking for some sign things are going to recover.

As long as the answer is, “Not in my backyard,” they’ll have to keep looking.


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