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The economic recovery starts with each of us

Published October 02. 2010 09:00AM

Today, I will start with a summary of my take on the economy, then describe a plan to revitalize our businesses, our communities and the generation that is poised to take over from us. The current recession has been difficult to say the least. Unemployment remains a plague upon the nation. Job creation in the private sector has not provided the opportunities our young people need. Many older workers have moved into premature retirement. The government has hindered the recovery process by passing legislation that cripples small business and brings uncertainty to the marketplace. Corporations large and small are afraid to hire as they do not know what the future holds for them in 2011 and beyond.

The new Dodd Frank Act of 2010 which "reforms the financial industry" will suck another $50 billion out of our financial institutions to pay for regulation that will not prevent another financial meltdown. Legislation did not stop Enron or Lehman Brothers from failing nor did it stop Bernie Madoff and others from embezzling from their customers. This new legislation will not stop ingenious swindlers who will find new ways to defraud the public. Corporate lawyers, bankers and stockbrokers will be creative in producing mechanisms to bypass the new rules to ensure their profitability.

The stimulus has not worked because our nation has changed dramatically over the last 30 years. As our manufacturing was outsourced to other countries, the ability to stimulate the economy through consumer purchases faltered. The new small-business legislation was designed to revitalize businesses through lending and providing tax credits for purchasing new equipment. Small businesses are afraid to borrow money or buy equipment in these uncertain times. I do not expect this stimulus to work any better than the previous one.

On the home front, Americans are holding onto their cash. They are stashing it in bank accounts and CDs that pay under one percent interest in the short-term. Many of us are not buying new clothes nor are we upgrading our televisions or our appliances. We continue to save money because our jobs are uncertain and we do not know where the economy is going. No amount of government stimulus can change the minds of the general public until they are convinced that their jobs are secure and the economic outlook is improving.

There is a glimmer of hope in all of this. The American people are poised to take positive action to reinvigorate our business environment. Each of us can be part of the recovery. Let's start by supporting our local businesses. In Pennsylvania, we have many types of small businesses including locally owned restaurants, hardware stores and garden centers. When you are considering a purchase, please buy from a small business person. With each purchase we make, whether it is a lunch at a diner, a refrigerator, or a car, we are helping our local economy recover. As more of us spend, jobs will be created, businesses will expand and the local economy will improve. As each community rebounds, our national economy will also improve.

We have to recognize that bank interest is not going to protect our savings from inflation. The stock market, which has improved in the last two months, is still a good value. It is time to take some money out of our bank accounts and invest it in highly rated American companies and mutual funds. We need to ensure that our retirement funds, 401(k)s and IRAs are properly balanced between stock, bonds, and commodities such as gold. The stock market has consistently created wealth for Americans in the past and it is poised to do so again. To get out of the economic doldrums, it is time to invest in American corporations and purchase goods and services from local businesses.

The government cannot revitalize our economy with legislation, stimulus or promises. It is time for us to recognize that we are the masters of the recovery. What we do over the next few months will determine the economic future of the United States for the next decade. The elections in November are the pivot point for the American recovery. We need to elect politicians who will downsize the government, cut taxes, stop reckless spending and reduce the deficit over time. The Tea Party movement has reinvigorated the political environment. The politicians know that Tea Party activists will not only vote out the tax-and-spend politicians in both parties, but they will replace them with fiscally responsible representatives. Tea Partiers across the nation will be watching the new Congress to ensure that they stay on track and remain true to their promises. If fiscally responsible congressmen and women are elected and we support our local businesses, the economy will rebound within the next year or two.

After the elections, I expect that we will be more confident in our country and our future. People will invest their money, improve their homes and make purchases of items that were deferred during the recession. As a result, the stock market will continue to recover and our optimism will rebound. This will result in the creation of jobs that we so desperately need.

Another factor that will improve employment is the retirement of the baby boomers. Many of us, including me, are turning our endeavors over to the younger generation. As we withdraw from the workforce, there will be more jobs for our youth. It is time for them to have their finest hour as the older generation moves into the golden years. Finally we will be able to do those things we promised ourselves we would do and we can pass the baton to the next generation. They will take the lead, rebuild our country, our businesses and our communities. They in turn will pass the baton to their children when the time comes, ensuring that America will always be strong and free. Optimism starts here and now. Lets turn on the lights. America is open for business again.

© 2010 Gordon Smith - All Rights Reserved

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