Economic Disaster?

The Franklin Times -

"The financial and economic crash of 2008, the worst in over 75 years, is a major geopolitical setback for the west...A brutal recession is unfolding in the United States, Europe, and probably Japan - a recession likely to be more harmful than the slump of 1981-82. The current financial crisis has deeply frightened consumers and businesses, and in response they have sharply retrenched. In addition, the usual recovery tools used by governments - monetary and fiscal stimuli - will be relatively ineffective under the circumstances" (Altman, 2009). These mark the opening lines of Roger C. Altman's recent essay in Foreign Affairs. The essay's dire forecasts are nothing new, but they do point to the dominant issue in the upcoming General Assembly elections - the economy.

Franklin's economy, like those of its counterparts in the western world, is faltering. The Treasury Ministry and National Bank are reporting sobering numbers as of late. The nation has officially moved into recession territory, with Franklin's GDP beginning to contract in the third quarter of 2008 and forecasted to drop dramatically in the fourth quarter - nearly five percent. Unemployment is on the rise, reaching a 17 year high of 7.8%. Home values have fallen by nearly 20%, and investment assets have fallen 25%. The Franklin Stock Exchange has seen its value drop nearly 40% percent in a single year. The nation's financial system is in shambles and with heavy ties to U.S. firms many economists fear the nation's entire credit market will completely freeze. Compounding problems are plummeting oil prices. Economic crisis in the United States has caused a severe drop in oil demand. As a result, the nation's number one export is suffering. Oil prices have fallen by some $110 per barrel in only six months (from a high of $150 to the current level of $40).

This financial and economic crisis is now leading to fiscal consequences. The government's tax base is drying up. Climbing unemployment and stagnant wages are reducing income tax receipts. Corporations throughout the country are reporting staggering loses reducing the tax base even more. Place falling oil prices on top of this disaster only serves to illustrate the fiscal straights the nation faces. Just last Spring, the Treasury was reporting approaching budget deficits. These projections have now ballooned. The nation, which had one prided itself on sound fiscal polices and budget surpluses, faces the worst fiscal situation since the 1930s.

With these issues in mind, it becomes clear that the new political parties will have to make the economy their priority. The nation's voters are growing nervous and are in need of an economic plan to turn this nation around.