Word from the White House that Chrysler is headed toward bankruptcy; Thursday was the deadline for the car company to provide a restructuring plan. Creditors reportedly turned down an unbelievably generous offer in which they would get the privilege of forgiving almost $7 billion of debt.
So here's the one thing that no one else will say about this story today: We have been in denial. Bankruptcy is good! In fact, the word "bankruptcy" has been absent from our vocabulary for way too long.
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When the economy began to fall apart, most of us knew in our guts that the best way to stop a ship from sinking is to get rid of the deadweight. Let struggling companies declare bankruptcy, reset and start over. The system works.
But the "smart people," including George W. Bush, said no, no, no we can't let companies go bankrupt! Do you know how many jobs that would cost us? This is an emergency, we need to save them!
How's that working out for us now?
Chrysler still declared bankruptcy. Fannie and Freddie are hemorrhaging money. At least six more major banks need government cash and others that want to give the cash back are finding that the government won't take it.
Oh, and all of those jobs we were scared about losing? They're gone anyway.
We need to stop trying to make this hurt less and instead take our lumps. Remember the expression "no pain, no gain?"
But as I read a story in The New York Times Thursday, it became obvious that's not happening. The headline read: "Economy slides at fastest rate since the 1950s." Scary, except that it continued: "Silver lining detected."
And the silver lining? Consumer spending is up.
That is not a silver lining.
What if the headline read "Little Johnny is sick. But the good news is, he also has a fever."
For years we denied that our economy is based on, as the president said Wednesday night, "a pile of sand." We closed our eyes, covered our ears and said "charge it!" Yet even after our house of cards has fallen, we still aren't facing facts. We still cheer on consumer spending as if it's our savior.
We look for silver linings in the job market and hear that 8.5 percent unemployment isn't too bad. Fine, but what about the cities? Washington, D.C.'s unemployment 9.5 percent; Oakland, California: 10.5 percent; Los Angeles County: 11.3 percent and Detroit: 14.9 percent.
We are looking for silver linings in housing, but the numbers are dismal. Phoenix now has the distinction of being the first city where home prices have fallen 50 percent from their peak.
The point is that this is not the time to look for silver linings, it's a time to use some common sense and stop living in denial. Common sense is the reason we are not sending troops to close the border to keep out the swine — sorry — H1N1 virus. What's the point? It's already here, that would be a waste of resources. Man is not going to conquer this virus, we can only try to manage it and hunker down while it burns itself out. The same common sense should be applied to the economy.
The economy has a virus and it needs to run its course. Our weakest companies are infected; some are in critical condition and will die no matter what kind of government antibiotic we try to keep them alive. But instead of letting them fail we're trying all sorts of experimental techniques. And they're all failing. Now we're all in danger.
I have hope — I really do. But this is deeper than most people think it is. Now is not the time to keep listening to the so-called experts who missed this the first time around. It's time to start listening to your gut.
Bailouts and spending can't save us, but common sense can.
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