So . . . it’s been a year and a half since all of us were scrambling to protect our savings accounts from a possible collapse of the banking system. In our panic we first redistributed everything over $100k to separate institutions, then we considered stuffing the mattresses when we heard the FDIC might not have the reserves to cover our insured assets. Geithner, Paulson and company stepped-in and took extraordinary measures to fight the raging inferno, as new viral emergencies of increasing magnitude relentlessly surfaced on a daily basis. The fire was mostly extinguished with TARP, and then the government went on a spending spree to begin to repair the extensive damage which had gone airborne and spread to the rest of the world. And so here we are 18 months later, unemployed, economy beginning to recover, with the luxury of playing Monday morning quarterback to the firefighting team. And our collective conclusion? Our government did a crappy job. What a great country. It took us a while, but we’re now a serious threat to France’s dominance in the short-term memory problem competition.
Let’s review the corrective actions taken so far. We bailed out the “too big to fail” institutions with TARP money ($700 billion). Some of these loans made us money (Goldman, Bank of America), some made us road pizza (AIG, most likely GM, Citi and Chrysler), but none led to consumer lending by the banks or any new jobs (so far). And just one year after the nuclear ashes settled, Wall Street gave out all-time record bonuses in the middle of the worst economic collapse since the Great Depression (glad to see things have changed). Next, there’s the Public-Private Investment Program ($500+ billion) to buy, and ostensibly overpay for, toxic assets from banks. But the centerpiece is the American Recovery and Reinvestment Act ($780+ billion) which funds everything from college tax credits, energy and unemployment benefits to healthcare, education and construction projects. Remember when a billion dollars was a lot of money?
Apparently this plan has not released any endorphins for the American public. Maybe that’s because of the lack of jobs. Perhaps it’s because the Republicans pollute everything that comes out of the White House in order to position themselves for the next election (self-serving politicians and their demonization of the opposing party is a subject for another day). So I ask you, what would YOU have done to address the financial Armageddon? Give out cash? Give big tax credits to corporations so that they can hire and manufacture in the U.S. for the same cost as outsourcing to China? Sell more of our worst NBA teams to Russian billionaires? I know what I would have done.
I would have declared a new Manhattan Project to develop alternative energy. And I would have put a trillion dollars into it. That’s right — A TRILLION. Why? Because it is a time-honored fact that when there’s a lot of money at stake, technological developments miraculously occur in record time. It’s the Gordon Gecko “greed is good” phenomenon. Suddenly, corporations pour huge money and resources into developing solutions in order to capture the big prize. In 1961 when when Jack Kennedy announced we were going to the moon, 400,000 jobs were created in one year, and the resulting technology explosion led to everything from computers and MRI machines to satellite systems and smoke detectors. It would be impossible to calculate the incredible value of the benefits gained from that initiative. Next to Viagra and Google stock, it may have been the greatest investment of all time.
Why energy? Because it would generate a ton of jobs, facilitate worker retraining, make the U.S. the sole supplier of an essential commodity to every country ($$$$), and improve the environment. But most importantly (and this alone should be sufficient reason to pursue this course), we would be energy independent. The value of oil would go to zero, and every Arab country would be marginalized. They would be abandoned by China, Russia, and us, and would no longer enjoy the longstanding tacit sovereign support for their terrorist activities. Problem solved. Party over. Without a world war.
There is no question that this is achievable. My brother is fond of saying, “if the world ran out of oil tomorrow, how long do you think we’d be sitting in the dark?” When you create that level of urgency, things happen very quickly. Seems like a better investment to me than giving billions to car manufacturers who have proven, over and over, they can’t (or won’t) compete with other countries. How nice would it be to turn-on CNBC in the morning and not care about the fluctuating price of oil and how it will affect us? That would be something to celebrate. And this time, the party would be ours.