by Joe Kirkpatrick
It was a beautiful day. The skies were blue, and the temperature was just right. My flight instructor and I were practicing some maneuvers near the Hiwassee River when he told me we were going to do a "stall."
It was only my third lesson, and I wasn't yet really familiar with all the flying terminology. He told me to put the plane at full power, and then pull the yoke (steering wheel) back toward me. I knew from my first two lessons, when the yoke is pulled back, you go up, and it is pushed forward to go down.
As I began to pull it back toward me, the instructor told me to pull it back harder... as hard as I could. As I pulled back, the nose pitched up, and we were climbing at an unusually sharp angle. As our angle became sharper, our speed began to slow, and the engine was obviously laboring. Finally, the angle was too much, and the plane began to shutter... then, the engine quit. For a split second, the plane seemed to just hang there... the engine off, hanging in dead silence.
Think of where the engine is in a single engine plane: It is on the very front. What is the heaviest part of the plane? The engine. We hung for a split second, then the nose of the plane swung downward, and the plane was wildly spiraling down toward the earth.
As I have written before in my column, I did not do well in school. However, I was blessed with an overabundance of common sense, and a very good mind for finance. Three years ago, I could just not believe how many houses were selling for "0" per cent down. As the housing market kept climbing, I kept telling my friends and family, "there is no way this can last." One day as I was looking at the percentages of increase in various segments of the housing market, I had a revelation so to speak. I remembered that day many years ago in that plane, as it climbed, steeper and steeper, until it just could not climb any more. I then began to think about the housing market and how similar it was to the stall of a plane. Over a period of three years, it climbed, and climbed, houses bringing more and more. Many first time buyers buying $175K - $225K houses that a few years before they would not have been able to qualify to get a loan for.
Suddenly, the housing market shuttered then stalled, and the housing market began to spiral out of control, just as my plane did on the beautiful day over the Hiwassee River. However, there is a very big difference between stalling a plane and our mortgage crisis. After we had spiraled three or four times, I had reconciled myself to the fact we were about to crash and die. Then, my instructor yelled out, "watch this." He took his foot and mashed one of the two pedals on the floor, and almost miraculously, the plane quit spinning, and leveled right out.
Unfortunately, with the mortgage and economy crisis, there is just not a pedal on any floor to make things level out. Did the banks and mortgage companies really think that someone that could not come up with any down payment could actually make a monthly mortgage payment every month for 30 years? Did you know 82% of all Americans do not have $1000 in cash, checking, or savings? Many of these met minimal income requirements to qualify for those "$0" down mortgages.
The government's solution is to throw $700 billion in to rectify the crisis. This was done almost a month ago, and the stock market and the economy is still spiraling out of control. If you divide 700 billion by our population of 300 million, that means every man, woman and child in our country needs to send in a check for $2,333.00.
What is the solution? Manufacturing is the backbone of an economy. Unions were good to a point, but they, along with lowering taxes and restrictions on imported goods, have all but destroyed the manufacturing base that our economy was built on. Instead of throwing money at the problem, which was no better than putting a Band-Aid on a cancer, import restrictions and taxes should be put in place, as well as restrictions on union involvement in our industry.
This would not be quick, but over a period of five to ten years, could return our country to financial stability. If we fail to restore our manufacturing base, our economy will remain highly unstable.