Lisa Simpson
Aug 13,2009
In: Finance

The Rot at the Bottom is Gnawing into the Economy

financial-crisis

Many are not aware that it is rot at the bottom that is gnawing into the very foundations of the economy that is causing this recession – the worst in decades. Drastic measures are required to bring back the economy to some sort of sanity.

The media has been screaming about unemployment and the recession – and understandably so. But the long term effects on families and the economy in general are “disastrous beyond belief” as commented in a report by Center for Labor Market Studies.

A recent happening in the Congress has not however got its due share of importance albeit it is of great significance. A bill was introduced by Rep Rosa DeLauro (Democrat) aiming to set up a national infrastructure bank that would make use of both public and private funds to operate projects important to the regions as well as the nation as a whole. These urgently needed projects would generate employment on a generous scale.

The recent short-sightedness of American leaders has prevented thoughts on the long term damage being done thanks to the recession and unemployment wave. America is fast sliding into second grade status – failing in important sectors like education, employment, industry and repair of infrastructure.

The bill of DeLauro has got support from unexpected quarters – the USA Chamber of Commerce, Service Employees International among others. One of the co-sponsors of the bill is Keith Ellison (Democrat) from Minnesota. In 2007 a bridge had collapsed in his native town hurtling vehicles into River Mississippi and killing many.

The new bank would be empowered to grant loans, provide loan guarantees and issue bonds for financing jumbo projects. The target is to use generous amounts of public capital as a lever to launch these projects as well as to make wise decisions about the success of the projects.

Some may nurse doubts about the affordability of the government to jump into such important projects. It will be worthwhile to note that Felix Rohatyn, the financial giant who steered New York City through the disastrous financial crisis of the 70’s is giving his full support for the creation of this infrastructure bank.

There is an intimate connection between rebuilding the falling infrastructure of the county and the need to create employment. According to Center for Labor Market Studies “no immediate recovery of jobs” can be expected even with tapering off of recession. Thus the place to start for job creating leading to national regaining of health is repairing of the infrastructure.