During my lifetime, there have been more than a few occasions where I’ve felt the impulse to act to fix something. Typically, my wife recognizes this devious, uniquely intense, gleam in my eye as she observes me moving about rather deliberately, locating the tools I’ll require to address the task at hand. (She usually rolls her eyes and makes a barely audible, primal grunting sound indicating, oh boy… Here we go again). My family has learned over the years that when I act on these impulses, the consequences of my efforts are rarely sufficient to produce the desired results (especially if it involves electricity or plumbing). My family characterizes these episodes in my life as impufficient. Let me explain.
Martin Feldstein, Harvard’s George F. Baker Professor of Economics (and President Emeritus of the National Bureau of Economic Research), authored an article in the Washington Post on January 29th 2009 entitled “An $800 Billion Dollar Mistake.” As I read Dr. Feldstein’s piece, I couldn’t help visualizing the good Professor mimicking the reaction my wife displays when I act on impulse to fix something around the house. According to Feldstein, we need to take more time with this effort to create an economic stimulus plan. Feldstein’s argument is that we are succumbing to the impulse to fix the economy without incorporating the essential resources required to do so. Furthermore, Feldstein concludes that what is presently proposed is not sufficient…impufficient, if you will. It’s a unique moment in the history of our family that a concept that characterizes certain experiential moments in our family unit is unwittingly hijacked by a Harvard Economics Professor and finds its way into the Washington Post.
To make matters even worse, I was sitting on the couch in my living room on Friday evening January 30th channel surfing, when there he was — Martin Feldstein — on The Charlie Rose Show talking about his Washington Post article with the likes of Jack Welch, the former CEO of GE, Senator Chuck Schumer of New York, and journalist David Leonhardt of the New York Times. I was mesmerized. The whole conversation was focused on the issue that the impulse represented in the presently proposed economic stimulus legislation is not sufficient…impufficient. Not only did this fellow have the gall to incorporate our family’s sacred word into the conceptual framework of his written piece for the Post, he was now on national television touting it to anybody and everybody. He was in my living room!
Then – final straw of final straws – I went to my local coffee shop Sunday morning February 1st and settled in with the New York Times. On the front page, I began to read David Sanger’s piece entitled “Reinvention or Recovery.” I almost lost my coffee – there he was – Harvard’s Martin Feldstein, quoted on page one of the Sunday NY Times by Sanger, spinning my family’s impufficient concept again.
Honestly, to my knowledge, we’ve never met Martin Feldstein (who knows who my wife chats with on-line). However, Dr. Feldstein, if you ever read what I’m writing here, perhaps your use of our family’s term impufficient, might be further informed by the following:
Your suggestion that a tax credit of some 20% of the cost of a new automobile would stimulate American families like ours to step up and buy a new car — Well, that’s terribly impufficient of you. Do you realize that buyers must have a down payment (that would be some savings), a stable source of income (that’s a job they reasonably believe they will have throughout the term of the loan), a stellar credit score, a debt-to-income ratio acceptable to the lender and sufficient liquidity in the financial system to accomplish this effectively?
Our family’s bank is not Citigroup, Bank of America, Wells-Fargo/Wachovia or JP Morgan Chase/WAMU. Our 401K is not with Merrill-Lynch. We are not insured by AIG or any of its affiliates. We have a conventional mortgage on our home that is well below the current $417,000 Freddie/Fannie limits at a market rate of interest (not one of those sub-prime or Alt-A mortgages everyone seems to refer to as toxic). We’ve lost 20% + in the value of our home over the past 18 months. Unemployment rates in the tri-county area where we live are the highest in the State of Oregon. This morning’s edition of our local paper (The Bend Bulletin February 1, 2009) said we have almost 2,400 people receiving food stamps in our city. Heck, the populations sign when you drive into town says 24,500. Translation Mr. Feldman: Whatever rescue or bailout that we taxpayers have shelled out the $700 billion for has not evidenced itself where we live. It’s been impufficient.
Mr. Feldman, one of your central points in your “An $800 Billion Dollar Mistake” article is to provide incentives to households and businesses to increase current spending. Mr. Feldman — America is losing jobs. Those who have employment (as we do) are confronting the reality of having less income in 2009 than we did in 2008 (or 2007 for that matter) faced with rising healthcare, grocery and energy costs, coupled with our respective employers’ wage stagflation and slashes to their benefit plans. Your suggestion that our family should be provided with some sort of incentive to spend is impufficient, when you begin to recognize our primary concern is survival. We’re not alone: Our friends and neighbors feel the same way. We’re all quite concerned about the state of our economy, our community and our country. Some folks are downright scared. The trust and confidence of folks has been shaken. The American consumer is tapped out Dr. Feldstein. We can’t go on attempting to spend what we don’t have, particularly in light of the fact that real property values for homeowners like us continue to spiral downward, as well as the crisis of confidence that I’ve referred to.
With all due respect sir, you’re obviously a very bright guy and make some other points in your recent media barrage that deserve consideration. However, I just don’t think you live in the same hemisphere as we do. I understand that the ivory tower of academia has a tendency to pull folks like you away from the reality lived by folks like us. Having said that, my wife and I would like to invite you to come out west and spend a week here with us in Redmond, Oregon USA. We have a spare bedroom and Jacki is a great cook. We’re told by others that we’re nice people. I’m sure you’ll find us the same.
One thing we seem to have lost over the last eighteen months enduring this economic crisis is very simple: We wonder aloud if smart folks like you, who are empowered with influencing the content of the dialogue, intended to provide a solution to this mess – truly understand the reality of our lives. What we’ve seen, read and heard thus far is distinctly impufficient.
We’ll leave the light on for ya.
This article appears in Feb 19-25, 2009.
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No one has a clue as to how to handle this crisis. Obama is doing his best but there is no clear guide line here. I wish it were simple so that we could do a b then c…but we are feeling our way. God help us and help our president. Spending…not us either. We are holding on tight.
Bill, The majority of economists are of their charts. In olden days maps drawn of the world showed the areas that were unexplored with the title “Here be dragons”. WE are in the land of dragons and there are no shining knights to be seen yet. What we need is more people accepting the reality of just how bad this is, how long it will last and how deep it will get.
Most prognosticators today have a six to nine month rolling forecast. Last October they predicted it would turn in Q2 ’09. This week Brenneke said it would be Q4 ’09. I predict that in August it will be Q2 ’10. The reality is that no one knows. We are al guessing.
Maybe we should start planning for the worst.
What is the worst?
25% unemployment by 2012,
80% reduction in housing prices with a bottom in 2014, bread lines in every neighborhood,
nationalized banks,
a national debt of over $20 trillion with no way to repay,
plowing up lawns and vacant lots to grow food,
….
Contingency planning needs to be done. If the government is going to “stress test” the banks, we need to stress test ourselves as well.
Eleven “me, we, or I” in the first paragraph alone. A touch narsistic are we? Bend, however must suit you just fine.