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A bad economy demands action

“The only thing we have to fear is fear itself.”Franklin D. Roosevelt: March 4, 1933When Franklin D. Roosevelt made his memorable statement, this country was in the grip of the Great Depression, which lasted 10 years. Thirty percent of the country was unemployed, farmers had no market for their produce, and credit for small business owners was almost nonexistent. Yet, Roosevelt’s statement is as applicable today as it was 75 years ago.Rising gas prices, mounting foreclosures and bank failures may appear to be insurmountable problems. But now is not the time for fear, now is the time for action. The time to change bad financial habits and adopt a new way of life in order to create a more secure future for ourselves and future generations is now. Solving the problems of our national and personal economies will take time and innovation, but Americans have the resources, knowledge and the power of the vote necessary to complete the task.What actions can individuals take to improve the economy? Over the last few months Americans have had an impact on the price of gasoline by driving less. The price of any commodity is driven by the law of “supply and demand;” therefore, less demand for a product usually results in lower prices. But America’s energy needs, coupled with increased international demands on the world’s oil supply, means this nation must do more to address the energy crisis.Perhaps you have already seen the advertisement by T. Boone Pickens, CEO of BP Capital, wherein he announces a plan to end America’s reliance on foreign oil. Pickens outlined his plan in the July 9 edition of “The Wall Street Journal.” He said, “Consider this: The world produces about 85 million barrels of oil a day, but global demand now tops 86 million barrels a day. The U.S. uses nearly a quarter of the world’s oil, with just 4 percent of the (world’s) population and 3 percent of the world’s reserves.” Therefore, he asserts, Americans need to do more than conserve energy if we are going to end our reliance on foreign oil.When a man who has made billions from developing oil resources over the last 60 years is now promoting the development of wind power on a vast scale, it’s time to listen. Pickens wants to use wind power to produce electricity to heat homes and business. He said this will free-up America’s natural gas supplies for our transportation needs. “We need to look at all options, recognizing that there is no silver bullet,” Pickens added. He calls for more research and development to create more efficient fuel cells and improve batteries that will make solar power economically feasible. All of these steps and more are necessary to improve the national economy because we are currently spending “almost $700 billion on imported oil,” Pickens said.Pickens’ ideas are not new. Many people warned against our reliance on foreign oil during the 1973 oil embargo, when 24 percent of oil supplies were imported. Their ideas were dismissed as pipe dreams from the mother-earth culture. Fast-forward 35 years and the U.S. is now in danger of being held hostage to the whims of foreign powers who control 70 percent of our oil supply. Perhaps now that an oil baron is supporting these ideas, government officials will pay attention and take action.Americans are basically optimistic people, but we seem to have trouble learning from the past; which is what caused the economic problems we are now facing. “Let the good times roll” was the national saying during the 1920s, as the economy grew at exponential rates and stock prices zoomed upward. When the bottom dropped out of the market in 1929, millions of people were stunned to be left holding paper with little or no monetary value. This pattern of boom followed by bust has been repeated several times since then, so far on a lesser scale than during the 1930s but always with the same tragic results for many citizens’ personal finances. Good examples of this phenomenon are the failure of the savings and loan industry during the 1980s and the dot-com bust of the 1990s.Following a few basic principles of economics would help solve our personal economic woes. First, never spend more than you earn. Second, always save a portion of your income. Third, if it sounds too good to be true, it probably is.The “I want it all and I want it now” mentality many Americans operated under over the last few decades defies all of these principles. Credit card companies and mortgage brokers love exploiting this mindset. Yes – big homes, expensive cars and a multitude of electronic toys are great – if you can afford them. But that “got to have it now” attitude economically enslaves us, forcing people to expend future earnings on interest payments that may far exceed the value of the goods purchased. And remembering the last principle would have eliminated numerous foreclosures, if people exercised some fiscal responsibility instead of buying into the flim-flam “no money down” or “interest only” pitches by money lenders.Unfortunately, our optimistic nature made millions of people believe housing prices could never come down. Those of us living in Colorado should have known better. After all, 20 years ago El Paso County was dubbed “the foreclosure capital of the U.S.” Now, declining real estate values have impacted most of the nation, even whittling away the investments of those who never benefited from the easy credit madness.So now the “good times” have come to an end, and Americans must start applying common-sense economic principles to both our personal and national budgets. Ending our reliance on foreign oil will be a giant step in the right direction. Pickens ended his letter to the WSJ by saying, “We need action. Now.”I couldn’t agree more. Forget fear. Take action. Call your congressional representatives. Tell them you expect action, instead of the normal partisan bickering, to solve the energy crisis. Continue conserving energy, but talk to the political candidates before the November election and make sure they get the message, too.This column does not necessarily represent the views of The New Falcon Herald.

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