America's economy: is it on yellow, orange or red alert?

Soon, if not yet there, our biggest industry in America will not be in agribusiness, communications, manufacturing, or any other productive effort in either low or high technology; nor will it be in education, or any form of a service. Our biggest industry will be fear. And our government, as it has in recent past, will continue to make sure that throughout this great land we have an inexhaustible supply of those two key components necessary for its fabrication: ignorance and deceit.

And fear now is point-specific, directed to just one source: foreign-led terrorism. Nothing else seems to matter but the so-called war on terror.

But it isn’t the fear of terrorism that’s occupying my mind today; or the desire to ridicule that fear-inspired creation known as Homeland Security… perhaps the most illogical, ineffectual, and expensive political scheme ever perpetrated on the American scene. My concern is not with that Babel-like structure or the advisory system brought about by the probabilities of real or mythical terrorist attacks.

My concern is with the current and future status of the US economy, and the fact that we lack any central planning, or political vision, to tell us whether we should be in a state of alert; and if so, whether the code should be yellow, orange… perhaps even red.

Americans are allowing their leaders to herd them through the fear-laden path of foreign-led terrorism while an imminent greater danger to their lives is domestically-rooted: an economy taking giant steps towards bankruptcy. To our misfortune, there is no apolitical federal agency that, similarly to Homeland Security, picks up all the “economic chatter” and translates it into an advisory code. All economic bits and pieces that we get, often politically-tainted data, are just part of a more complex version of a Rubik’s Cube, about as meaningless to the population as the homeland security alerts.

The latest bit to make the news: United Airlines’ inability to meet its pension obligation. Of course, our politicians throughout their tenures have legislated makeshift safeguards into the economy’s machinery for possibilities such as this. Fear not… the Pension Benefit Guaranty Corporation (PBGC), a federal agency, will come to the rescue and take care of the problem, or most of it.

It’s not just the PBGC. If Banks fail, we have the FDIC… and if it’s Credit Unions where we keep our money, it’s the NCUSIF that will allow us to sleep peacefully at night. Our government has seen fit to guarantee anything and everything where there is risk. It has become a State-version of Lloyd’s of London… except that, unlike that organization, it operates without the key element to make things work in the long run: the sound assessment of risk.

Infallible fools that we are we guarantee ourselves everything while burying our heads in the sand, refusing to admit the ultimate economic fact: guarantors are us!

Insurance premiums established in just about any area where guarantees are offered assume an understated level of risk, one that could not begin to cope in an economy where success is measured in terms of spending, not savings. An economy that is sustained by an ever-increasing foreign debt and negative trade balances that serve as millstones, helping sink America to the bottom of the competitiveness lake.

The rationale for the government may have seemed plausible, even unassailable, in the past. After all, America represented a good portion of the world’s economy and the cradle for much of the world’s technological innovation. But that’s no longer the case. Not by a long shot.

Yet, although we are well aware that our nation is part of a complex, intertwined world economy, we act under the economic advice of questionable gurus trained in and offering procedures that no longer work. Econo-physicians, like Greenspun, are treating our leukemia with leeches, letting nature- better defined as “the marketplace”- take its course. Whether it is incompetence or felonious prescriptions that bring such gross malpractice matters little… any diagnosis made is likely to be colored not only by their own personal bias, but the political hand.

It’s more than isolated periods of feverish greed, childishly downgraded and labeled as “market exuberance.” Unfortunately our economic woes won’t be as easily addressed, and resolved, as the “savings and loans” collapse of a quarter of a century ago… or the recent dotcom fiasco. It’s going to be more than just a bubble burst of the tulip-scented real estate market, much more. And we may be unable to borrow our way out, our friendly international lenders saying at unison: enough! What then?

Whether is national security or a viable long term economy, it is important that we be ruled by knowledge, not fear. On the issue of national security we have unquestionably gone overboard… by design of a government that appears to benefit by keeping us in an unreasonable state of fear. As for the other issue, the economy, the government has taken the opposite approach… fear not the future, everything is under control.

Yet… the real future of this nation depends on the present and projected performance of its economy in a world setting. This is the area where we truly need an alert mechanism. Is our economy operating in a way where a yellow, orange… or even a red light should be flashing?