Falling off a bridge - by Ilene Dover, and search for a softer landing

This humorous children’s pun is riddled with satirical undertones of the current financial market and rapidly rising unemployment. The economy has indeed fallen off a bridge or cliff, and we have hope of a soft landing but there may be more rocks below. One of the primary reasons for our market collapse is the collective action of individuals and organizations who leaned over, whether it was credit liens, overreliance on cheap money, search for the next bubble, or jumping out of the market in an attempt to preserve capital, halting capital spending, curtailing credit extensions -- the collective action is a free fall for all.

Everyone is focused on self-preservation. Just two months into TARP, and the needs for TARP are greatly stretched – I hope the TARP is elastic as it might unravel. I find it more than ironic that the financial market prognosticators somehow think that the financial markets are more important than the real economy (e.g., strategic economic industries such as automotive, industry, infrastructure, etc), particularly where jobs are concerned. Ironically, banks can be nationalized far more easily than industries particularly when what is needed is economic backing, market confidence, and liquidity. Whereas nationalizing industries becomes more problematic in terms of nationalized industries being market responsive in terms of innovation, productivity, output, and inventory control -- and contrary to Say's Law, automobile supply does not create its own demand in today's environment. Preserving strategic industries, transforming industries, and forging new economies and by reference jobs are a vital requirement for the next administration.

Beyond supporting or retooling legacy industries, a new Congress and president might look to the past for guidance --- Consider the power and value of National Science Policy Goals -- it is frequently quoted that the initial funds spent on NASA to put a man on the moon returned 7:1 benefit for the economy in terms of jobs and economic stimulus. What other mutually beneficial science policy goals could be invested in with a 7:1 benefit or greater? Be it energy, environment, medicine, or transportation in terms of new bridges and roads? Regardless of the X factor multiple put on spending, there will be some left out of the jobs equation as their skills are not sufficient or no longer needed in the future economy. Significant investment in education and job re-training with real jobs at the end of course completion need to materialize in the coming plan.

Beyond transformational investment, there will be a need for additional jobs and criminal diversion programs. Many historical economists incorrectly look back on the Great Depression as a time when crime diminished statistically, and somehow they pass early judgment that there will be no spike in crime with a 2nd Great Depression (where we are headed). What is frequently missed in their analysis is the fact that the US government was heavily involved in one of the greatest crime control diversion programs during the great Depression where the government extracted unemployed, poor, inner city young men and placed them in distributed work camps called the CCC or Conservative Conservation Corps. Touted publicly as a jobs program for the economy, the real underbelly of the program served a crime control purpose to remove likely offenders and thereby reduce crime opportunity by providing work for the young male population at greatest risk for crime involvement.

From J A Pandiani's (1978), Crime Control Corps - An Invisible New Deal Program , "The extreme economic hardship and social dislocation of the Great Depression were widely expected to produce a crime wave of major proportions. From the mid-1920's until 1933, crime rates rose, but then the trend mysteriously reversed itself. Between 1933 and 1941, large numbers of poor young men were institutionalized in work camps far from population centers as part of the CCC relief program. They were thereby effectively removed from the crime-committing population. The crime control function of the CCC was probably intended, but remained unrecognized by the public. The expressed purpose of the program was to provide economic relief for enrollees and their dependents and to perform various conservation projects, such as flood control and reforestation. At its peak in 1935, CCC operated 2,650 camps with a total enrollment of over 500,000 men. Thus, it appears that from 1932 to 1940 between one-quarter and one-third of the Nation's poor young men were in the CCC. This failure to recognize the important social control function as well as the program's overall success must be attributed to its striking correspondence with American values and traditions surrounding free enterprise. "

As one looks more deeply into the underlying economic conditions of the current market collapse and the portended increased storm of economic misery, associated unemployment, and crime opportunity, there will be a need for preparation of a thoughtful crime control strategy to work alongside the other financial plans. To this end, this blog is dedicated – to focus rhetoric on the baneful economic consequences of the current situation, highlight likely future courses of market direction, and proactive solutions that might be recommended to create a softer landing, and avoid the rocks below.