All : Jobless and Poverty Rates are key to Economic Recovery
Submitted by (Juanita Brock) 12.08.2009 (Current Article)

Policy makers in the US Federal Reserve Bank are sitting down to discuss – amongst other things – interest rates, which are expected to remain the same at near zero percent. Also on the agenda, couched in eco-speak, is a concluding summary on the state of economy. SARTMA wonders – whose economy – theirs or ours.

JOBLESS and POVERTY  RATES ARE KEY TO ECONOMIC RECOVERY

An Editorial by J. Brock (SARTMA)

Having lived through difficult financial times before, familiar alarm bells ring when people tout recovery in 2009.

Policy makers in the US Federal Reserve Bank are sitting down to discuss – amongst other things – interest rates, which are expected to remain the same at near zero percent.  Also on the agenda, couched in eco-speak, is a concluding summary on the state of economy.  SARTMA wonders – whose economy – theirs or ours.

Ben Bernanke’s summary will only bring nervous stomach to investors, who are being cautious prior to the expected announcement.  The rest of us – especially the jobless and the poor - will continue seeking alternatives just to put food on our tables.

They have money to invest and we have emptied our savings accounts to pay our food and energy bills.  Prices have increased since rumours of green shoots have replaced prudent economic reporting.  For the still increasing numbers of jobless and those on fixed incomes this means too much month at the end of the money.

An uncomfortable memory from my high school years can be applied today.  I lived with my brothers and sister in a small town in Upstate New York where there was an industry that employed 40 people.  After successful negotiations the workers got a marginal pay rise and as a family we were happy to have money to pay for my spectacles.  The eye appointment was made but before it was kept the prices in all the shops increased to the point where we were worse off financially than we were before.  The eye appointment was cancelled and money I had saved to help pay for the glasses was kept until the opportunity arose again.

Our family were the lucky ones.  To get recompense for 40 people higher prices made the rest of the village worse off than they were prior to the pay rise.  The community fought back by car-pooling so that housewives could travel to a larger town where prices were affordable in supermarkets and a shopping mall.

In order to recoup their losses the village shops increased their prices even further, only to be faced with closing down as they lost custom.  Their Going out of Business sales were packed with shoppers lost since the pay rise for 40 people.

Had they not been greedy shop owners and employees still would be in the retail trade in our village instead of looking for work.

I think this is happening now but on a larger – more world wide scale.  At the moment crude prices as well as food prices are increasing.

People who are poor will struggle to find cost effective alternatives.  With green energy and hybrid vehicles some savings are made and unless these people have money to spend the trend towards alternatives will increase exponentially.

Talk about recovery is lost on people who have run out of benefits and don’t know where their next meal is coming from.  Their hope of better times is dashed each time green shoots are grazed by people looking to make a profit.  It’s time to let the pasture recover.

The key to a better economy is to give people the money to buy food and energy and to keep prices at a cost-effective level.  Other benefits will follow.  It is the number of jobless and poor people that will either be a benefit or detriment to the economy.  When food and energy prices are artificially high the jobless rate and numbers of people in poverty will also be high.

It’s my opinion that members of the Federal Reserve Bank know this and will not increase interest rates.   Would that the Federal Reserve could do more for people who, through no fault of their own have found themselves without work and on fixed incomes.    Agreed, this is not in their immediate remit but it would be q-dos for them if they acknowledged it in their closing remarks.