Hi jay - i see most of the US havign 2 years plus of credit and balance sheet repair, both for households, corps, and governments.
Repairs will not be completed before next storm.
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To handle next strom, FED will need to get more ammunition by bringing up short term interest rates to at 3 %, maybe 3.5%, with long rates (ten year) over 5.5 %
Overall federal government spendig will need to reduced, so that 2006 -2007 deficits are under 100-120 billon
Structual changes - pick at least 2 -
1) Reduce defense spending under $350 Billion from present $400 Billion. Reduction/redeployment of US forces and bases overseas.
2)Tort reform, limiting law suits and fixing asbestos issue.
3)Change in health care policy which shifts much of the health insurance burden away from corporations, where it now increases labor costs and inhibits hiring in the US.
4) Tighter border control to reduce terrorism, some internal monitoring of visitors from certain countries.
5) Some efforts at improving the energy situation - mileage standandards for light trucks/SUVs, open up Rocky Mountain areas, Florida Gulf Coast, start planning of more nuke plants. Permit new gasoline refinerys. Start building pipeline to Mackenzie River / Alaska.
With these changes, the next down turn might be bad, but not fatal, since Fed could cut rates, deficit spending could increase, energy , health care, and legal cost would be contained to soem degree, preserving profitability.
Lots of rain, maybe, but sky does not fall in. |
