As I mentioned in my last post “What a Revolting Mess,” the report given by Dr. Albert
Niemi, Dean, Cox School of Business, Southern Methodist University, to a group of Bank of North Georgia employees and customers, contained several very relevant economic issues. One of the issues he discussed caused me to “flash back” in my memory to a research paper I did in high school nearly 50 years ago dealing with “the effects of erosion.”
I recalled the devastating pictures of eroding land and the formation of deep gullies I found in an encyclopedia and other publications (no Goggle back then!) while preforming my research. Erosion caused by the unsatisfactory farming procedures and techniques used in the 1800’s and early 1900’s.
Then my memory flashed forward to a relatively recent episode on Georgia Public Television that highlighted Georgia’s “Little Grand Canyon,” near Lumpkin, Georgia. Located in Providence Canyon State Park, which consist of over 1,000 acres containing “massive gullies” some as deep as 150 feet. These gullies are said to be the result of “poor farming practices in the 1,800’s. Due to the erosion process which started well over a 100 years ago, Providence Canyon keeps getting “Deeper and Wider.”
The point Dr. Niemi made which cause my “flash back” was “our (residence of the United States) Wealth has eroded by over $7 Trillion since 2007. Seven Trillion Dollars – (With a “T”) – $7,000,000,000,000.
An erosion caused by “poor fiscal and economic policy and practices” by a dysfunctional Congress and federal bureaucrats, and financial institutions motivated by shareholder profit, a need to meet the needs of policy makers and poor or inadequate credit underwriting.
According to Dr. Niemi, “during the period 2000-2007 – the U. S. Housing Industry recorded an average of 1.8 million housing starts in each of those 8 years. In 2010 housing starts dropped to 580,000, a 67.8% decline.” He predicts “a small increase to 650,000 in 2012.”
According to the “Case-Stiller index” the average home price in 2006 was $200,000. At the end of the second quarter 2011 that number had decreased to $119,000. The value of the average home is down by 40% and it is expected such values will continue to drop until late 2012 or early 2013.
Dr. Niemi shared this sad news – “There are approximately 51 million mortgages active in the U. S. today. Of that number 28 million are in good shape; 23 million are in trouble; 14.6 million are “underwater;” 3.7 million are delinquent and there has been 5.2 million foreclosures. He went on to point out “the housing bubble has hit Georgia extremely hard. Not only were we heavily involved in home building, another very significant part of our economy is or was engaged in supplying building materials and services to the home building industry.”
Erosion of wealth, dramatic increases in unemployment, foreclosures, failed banks and business, —absolutely “SCARY!”
Want to know what I consider even “scarier” than that? It is the fact that the same ones who are responsible for all this instability in our economy, all the trama, etc. are the very same ones who we are looking to “to fix this mess!”
While writing this, I had another flash back. I recalled that one of the conservation practices used to slow down and stop erosion was and is “crop rotation.” Do you suppose this recollection might just be a “divine” way of suggesting to me that a “crop rotation” in the form of “term limits” in the U. S. House and Senate might be an answer to slowing down the erosion of our economy? Obviously, this Congress would never entertain such a suggestion, so the answer is the “Ballot Box!”
We have to do something or else our economic canyon will just get “Deeper and Wider!”
Don Cannon – Cannon Down Range.