The road back to ...

THE ROAD BACK TO A BOOMING ECONOMY
A commentary on the cause of the present world economic woes
and the basic means of reversing the process.

By Victor Drummond ©
November 2008

Market watchers, Speculators and Investors have been well aware of the declining economy beginning with the hi-tech stock market crash in the year 2000.

Tens of thousands of people -- employed in the computer, communications, television industry’s and soon after the real estate business -- found the market for their products and services declining rapidly. The process started in the hi-tech sector but gradually widened and accelerated with time.

As their markets dried up manufacturing corporations cut back on production.
Lower production quotas required fewer employees and in efforts to remain profitable surplus employees were laid off.

Unemployed people seldom undertake to buy houses, cars, boats, airplanes, etc. and are not given good credit ratings.

The recently unemployed -- that already had a heavily mortgaged house and/or had bought expensive items on credit – found themselves defaulting on payments and losing possession of many things purchased on credit – up to and including their homes.

Financial institutions -- that had a large number of credit customers in payment default –
found themselves in financial distress and could not, or would not, provide credit to anyone.
Some went right out of business.

By the mid-year 2007 it became increasingly apparent the whole financial world was heading in the direction of a full blown depression.

Governments around the world began to talk of providing major employers – in financial distress -- with government assistance.

Financial experts argued that keeping these large corporations in business and curtailing mass layoffs -- by these corporations -- was imperative to the survival of the corporations and to the country’s economy.

It was acknowledged that in order to keep these organizations in operation -- at anything like their current level of employment -- would require tons of money.

The United States government, alone, has earmarked 700 billion dollars to finance an economic stabilization program.

This money, however, has not been applied -- as yet -- due to a pending change of presidents and the lack of a clear plan of action.

American authorities – who currently advise the government on financial matters -- want to know how the big three automotive corporations plan to apply any government money -- they may acquire -- to resolve their financial problems.

So far the authorities haven’t received a reply to that reasonable request.

Why anyone would even consider giving, or lending, billions of dollars to an industry – or even a single corporation -- that has lost its ability to turn a profit is a mystery to me.

There is a good reason why buildings -- where consumer products are fabricated – are called plants. That is because industrial plants parallel the performance of trees that produce editable fruit and grasses that produce editable grains etc.

Products wanted and needed by the worlds people.

Plants -- of both types -- that do not produce a needed or desirable product are generally classed as a weed, or nuisance plant.

Any farmer, or greenhouse operator, will tell you that when a plant -- in nature -- withers and dries up it doesn’t do any good to pour water on its leaves. In order to save the plant a person must water and supply nourishment to the roots.

Likewise it will not do any good to pour millions of taxpayer’s dollars into corporate coffers if no one wants, needs, or can afford the goods they produce.

The solution to this problem is:-

(1) The withering corporation(s) must offer a desired product.

(2) Next the product(s) they produce must be competitive in price, performance, appearance,and reliability.

(3) Governments can then do their part by making sure the common people have the means to buy these products.

The United States Congress has taken a right first move in the direction of improving the buying power of thousands of their ordinary citizens by amending their flawed Alternative Minimum Tax, (AMT), legislation.

In addition to fixing the AMT they are revoking all taxes levied thereby -- on phantom profits – and compensating those already victimized.
Ref:- www.reformAMT.org

Unfortunately for Canadians -- victimized in a similar way by our flawed taxable benefit legislation -- the Canadian government hasn’t recognized – as yet – just how punitive, abusive, unfair, and unjust their tax on money that never existed really is.
Ref:- www.cfet.ca

In every way it is proper, decent, honourable and fair for the Canadian government to follow the example set by the United States government to correct the flawed legislation and compensate those already victimized by it.

Failure to take corrective action places the Canadian Government in the position of being greedy, petty and uncaring of the abuse and distress their insidious phantom income tax has heaped on honest, hard working Canadians.

Another way governments can assist the common people -- to afford luxuries in addition to necessities – is to subsidize rebates on luxury items such as automobiles, boats, airplanes etc. which items may also be a partial necessity, i.e. transportation to and from work shopping etc.

If the billions of dollars set aside -- to fight this economic downturn – are made available to the grass roots population it will be the equivalent of watering the root of the withering industrial plants and people will buy our way back to world economic stability.

Readers who agree with this method -- of fighting the threatening world wide depression -- are invited to send this article to their Member of Parliament via the letter icon below.

Vic Drummond ©