Fall Back or Spring Forward?

  As I walk up the street for a walk with the dog at 700AM I am encouraged at the signs for a new day which  happens to be the Saturday of Labor Day weekend.  I take Nicky up the block knowing my coffee pot is doing its job and will have a nice tasty brew waiting for me when I return.  I see all the papers strewn by sleeping neighbor homes and the slightly tall grass which will get cut sometime during the holiday.  I see a man from another block jogging down my street with his two young children following on their tiny bikes.  "Dad, slow down" I here as the kids need more time to peddle up the hill of my court.  Dad obliges and then I see a puppy pug heading towards us as I put the lead back on Nicky.  They get to know each other, check vital signs as we continue on.  As we walk I realize it will soon be fall and not because the holiday tells me so,  I feel it because the suns angle has shifted and light is fading faster at night this past month.  The morning air is crisp and the leaves are ready to change their colors.  It will only be in the 80's for the next few days thanks to the passing of Hurricane Earl, and I am grateful I that I will not remember her name in a short while.  Still on this peaceful morning my mind thinks of our nations economy.

This past Wednesday's USA Today cover story was all about the lack of investment and hoarding of cash by many of our Corporations.  Most companies have a lot of cash that gets reinvested daily with the Federal Reserve Banks.  Since our nations latest recession these amounts have increased in record numbers.  The figure reported on this day was over 1Trillion dollars. The money is kept in the nations biggest banks and moved to the FRB's on a nightly basis.  This is money kept as cash for emergencies and other contingencies that big business might need to make ends meet should the worst happen.  This why this number is so easily tracked, and can be figured out easier than an overnight Nielson rating.  A trillion dollars is 1/13 of our nations debt.  A trillion dollars is a huge sum of money. A trillion dollars in cash is too much money wasted right now.

I have known that we are not coming out of this recession until at a minimum next spring, because of my 7 month layoff earlier in the year.  Companies have given up on reinvestment for their business they are hoarding cash because they are scared to do business.  This excess cash that is being hoarded can be used by firms in a number of ways.  They can pay down debt by paying off loans, they can reduce the number of shares of stock outstanding by buying them back.  Firms can invest in areas of growth and thus increasing employees.  They can invest in smaller business which can provide them goods or services in the long term and they can own a stake should it take off.  Right now our big corporations executives are sitting on their hands in the big conference room dreading making any decisions at all.  Smaller companies which historically hire the most people to work during downturns are unable to do so this time because of the tightening credit crunch, and are struggling to survive.

In Maryland the unemployment rate is just shy of 10% in a State of only 5 million people. There is hardly any manufacturing base left to speak of, as this month we lose the mighty Solo Cup plant in Owing Mills with its 900 jobs.  Most jobs available are 3rd party contractor positions for the Govt., or in the fields of medical, education, computer, transportation, and retail jobs.  The retail jobs are dismal as they only average $11.00 an hour.  If this sounds dreary, it is because I feel we are stagnating from a recession with no growth cycle.  This is precisely why big business does not know what to do.  They never got their big profits after a recession they are supposed to.  They blame the recession extension on consumers because we are holding a too much debt and for not  buying the big ticket items.  I don't blame consumers as we had to watch while our taxes helped bail out the big banks and auto industries.  I blame big business for not being innovative and for sitting on their fat cat butts while the economy started tanking in 2008.   Obviously the Fortune 500 is waiting for consumers to blink first and pull the nation out of this economic slump.  As I titled this blog, Fall Back or Spring Forward?  What if we have an extended stay with stagnation?   I am not gonna blink either, but I  might think about growing potatoes in my back yard this spring!