The financial crisis facing our country is said to be the worst economic situation since the Great Depression. Primarily rooted in bad debt owned by the mortgage industry, increasing fuel and food prices aren’t helping the situation.
People making only minimum wage can budget all they want, but if prices continue to rise there is no way they can survive without acquiring debt.
According to the Wells Fargo consumer price index, the cost of groceries increased 4.9 percent from July to August along the Wasatch Front, compared with only .7 percent nationally. The index also reports that gas prices in Utah were the third highest in the nation in mid-August, prompting Gov. Jon Huntsman Jr. to order the state to monitor the situation and make sure Utah consumers weren’t being gouged. During the past six months, food prices have jumped 10.2 percent locally, driven mostly by a 11.2 percent hike in Utah fuel costs during that period.
While the government works on a solution for fluctuating prices, there are independent voices offering opinions on the economy’s ups and downs.
Ron Paul said that in the housing market, builders who have overbuilt and have too many houses to sell seek to recoup as much of their money as possible, even if it means lowering prices drastically. Doing so brings the economy back into balance, equalizing supply and demand. This economic adjustment means that there are some winners8212;in this case, those who can again find affordable housing without the need for creative mortgage products, and some losers8212;builders and other sectors connected to real estate suffer setbacks.
The government doesn’t like this, however, and undertakes measures to keep prices artificially inflated. The bailout of Fannie and Freddie, the purchase of AIG and the Treasury’s failed multi-hundred billion dollar plan all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay. This throws the economy out of balance.
A Forbes.com article by Matt Woolsey published Sept. 23 supports the notion that a multi-billion dollar bailout proposal can be given back to the people. The nation’s bridges need $180 billion in repairs, rail infrastructure needs $185 billion in maintenance, or $150 billion would provide every American with private health insurance.
As for AIG and every other company that operates on bad debt, we should liquidate them. Sell off their good parts and let the private sector bargain hunters cut them up and clean them up. By using trillions of dollars of taxpayer money to purchase illusory short-term security, the federal government is actually ensuring even greater instability in the financial system in the long term. This definitely won’t help gas and grocery prices in Utah or anywhere else in the nation stabilize anytime soon.
Liz Carlston