Change you can REALLY believe in

President Obama has been speaking today about how 'we can't keep relying the failed policies of the past' in regard to the economy. He is talking about tax cuts as a stimulus as the 'failed policies' as opposed to his 'new', enlightened approach (which is remarkably like FDR's, which was equally discredited). In reality, both the tax cut approach to stimulate consumer spending (as in last's years check's mailed to homes) or the current over-sized proposal, both fail to deal with the problem. The problem is one of a phony economy based on spending more than we earn. Until we adjust down to only spending what we can afford to spend, artificially trying to spend more than we have money for only prolongs the time when the real adjustment has to happen. No matter what, we cannot indefinitely spend more than we have. At some point we have to adjust downward in spending to allow positive savings (as opposed to the NEGATIVE savings rate of 2% the last few years). This is to say that we have to repent of our evil ways.

Repentance is not something we hear much about. In the broadest sense it simply means to renounce our bad behavior and change for the better. We most often think of it as a purely religious term--repenting of our sinful behavior and turning to God for a new way of life--but it applies to the economic mess as well. We have to change our ways. Our greediness, our demand for instant gratification, our refusal to live within our means all must change. Both parties have ignored this, they have just ignored it in different ways. Whether we send tax money back to households to spend a brief time longer, or create new government programs to 'create jobs', either way we still have to change our ways or when the spending ends we still have the same problem. We have just deferred it. The economy will still have to downsize to the amount we can actually pay for, not the size that has significant amounts of bad debt built into it. The portion beyond what we can pay for is the 'phony economy'. That can never be more than temporary.

Government is not the answer. Getting our personal and corporate finances right, to live within our means, is the adjustment that must happen. The question is when. That is the only change that will turn this around for the long run.