Two editorials this week in The Washington Post – Is It 1929 Again? and No Depression – suggest that, while the current financial situation is dangerous, it isn’t the end of the earth. My thoughts exactly – we’ll muddle through.
There is not going to be massive unemployment. There is not going to be a major run on the banks. The US government is not going to let that happen, no matter who is elected next month. Smart investors are going to be buying, not selling – judiciously, to be sure – and if you don’t believe me, ask Warren Buffett.
Solving all the economic issues we face is going to take some work. We are inevitably going to have to deal with the Social Security overhang and health care, and both of these are going to require national government solutions – sorry, neocons and libertarians. The tax structure will have to be overhauled, with less income sheltered or excluded from tax, while at the same time lower- and middle-income taxpayers bear a lesser share.
For homeowners, I think limits are eventually going to be placed on deductions for mortgage interest – but I think most homeowners (or, I should say, mortgage-payers) will still be covered. Despite the mortgage debacle, encouraging home ownership remains in the best interest of the country and the community.