If the economy weren't such a mess, it would be fun to just laugh at the howling of diametrically opposed views every day on how to fix it. (Well, okay, it's still fun, but if it would be more fun if the topic weren't so serious).
For example, today:
On the right, Stephen Moore of the Wall Street Journal applauds Ayn Rand's Atlas Shrugged suggestion that income taxes and the government be abolished and bemoans our culture of bailing out mediocrity. On the left, Paul Krugman pronounces Barack Obama's $775 billion stimulus woefully insufficient and suggests that we balloon government spending and the size of the deficit.
Perhaps someday some company will create virtual worlds in which we can implement Moore and Krugman's prescriptions to the letter, accelerate the action for 100 years, and see what happens. In the meantime, in the real world, the response will obviously be somewhere in the middle.
And the fix will take time:
* Even Obama's people project that, if his stimulus plan is adopted, unemployment will remain at the current level (7.3%) for three years.
* Consumers still have way too much debt, and they're now losing jobs at an accelerating rate. We're not going to suddenly jump back to irresponsible debt-fueled spending growth, especially with banks and credit-card companies tightening lending standards.
* House prices are falling at almost 20% year over year. Markets that big don't turn around on a dime, no matter what you do.
* Even after the collapse of house prices and stock, prices are only now in the realm of their long-term averages (stocks are a bit undervalued, houses are still a bit overvalued). If past is prologue, they'll keep falling and eventually spend a decade or so below their long-term averages.
* After financial crises of this magnitude, economies tend to struggle for years, regardless of what you do.
So enjoy the armchair quarterbacking. Because that's all it is.
See Also:
Jobs Numbers Much Worse Than You Think
Ayn Rand For Treasury Secretary
Paul Krugman For Treasury Secretary
As your article states we just have to wait it out because it takes time for the pendulum to swing back the other way. It has happened before and will definitely happen again in the future. Maybe next time we will have learned how not to let greed get the better of us.
Glenn Smith Author of Lotus Petal, A Parable To Help You To Overcome The Fear of Death
The suggestion that a stimulus package will make this go away quickly is not going to work as expected. It will be spent however, due to public pressure.
Stimulus packages will focus on 3 primary facets, along with other elements.
1) trianing
2) govt assistance
3) infrstructure spending.
The economy to get out of this mess, needs jobs that create wealth more so then, jobs that maintain wealth.
Training in general will pay an individual to take the course, lasting several months to a years length. Since those with the same training and experience are being laid off of, and not till the economy surges forward, will the trianing pay off. The money to the trainees will allow them to survive, pay expenses, spend minimumal. One can call this wealth maintenance.
Govt assiatance simply will allow the individual to pay their bills and survive, and very little discretionary spending. Again maintenance of wealth.
Infrastructure, will be small pockets throughout the country. While it lasts in an area, it will help stores survive and the economy to be boasted as workers purchase cigs, gas, chips, so on. And even construction materials, boosting the local economy to some degree.
But, when the job is over, the purchases disappear and the area goes into a decline. The short bubble won't last long enough and will go away. The building of a new road or repairing it, a new bridge or repair, park or library, so on, won't create new wealth long term, but allows the business to function perhaps more effecient and quicker delivery of goods, but not more goods or increased markets.
Job wealth creation, is jobs as: Henry Ford and his automobile company, by putting together what others had to some degree toyed with, he made it work and the job and wealth explosion was enormous and lasts to this day. The computer industry when Bill Gates and IBM got together, exploded into a job creating market and wealth generation by creating a whole industry based on micro computers. These type of job creations which are in decline will not be boasted by a stimulus package, Stimulus will only maintain the economy as it exists now, in it's decline.
A return to the status quo ante, where a few Wall Street insiders rake in millions tax free while the rest of us mortgage our futures in the face of falling wages and rising prices is not a FIX.
If there are no good paying PERMANENT jobs, there is no future.
What's to guarantee that other tariffs will not resault in other horrible situations?
They jumped $0.24 in one day this week ... 16.11% increase in the cost of gasoline in less than a week.
http://www.nytimes.com/2009/01/11/opinion/11rich.html?em
quote:
What’s most remarkable about the Times article, however, is how little stir it caused. When, in 1971, The Times got its hands on the Pentagon Papers, the internal federal history of the Vietnam disaster, the revelations caused a national uproar. But after eight years of battering by Bush, the nation has been rendered half-catatonic. The Iraq Pentagon Papers sank with barely a trace..
The $50 billion also pales next to other sums that remain unaccounted for in the Bush era, from the $345 billion in lost tax revenue due to unpoliced offshore corporate tax havens to the far-from-transparent disposition of some $350 billion in Wall Street bailout money. In the old Pat Moynihan phrase, the Bush years have “defined deviancy down†in terms of how low a standard of ethical behavior we now tolerate as the norm from public officials.
/quote
Well, the free ride is over. We played the roles of world policeman and world debtor for so long that we are now exhausted. We hear a lot about the evils of protectionism, and certainly to be foolishly protectionist is evil. But other nations have not hesitated to protect their essential industries all during this period of "free" markets. So do not hesitate to protect agriculture, manufacturing, health, and whatever else it takes to keep our people at work.
Nobody can do anything to stop world capitalism, so it does not need protecting. International finance can take care of itself. Right at the moment, it is buying up US resources, since if the price is right, Americans would sell their mother.
Our national priority is to agree on priorities. We cannot please everyone but we can take good care of ourselves. "Come home, America" is what George McGovern called for in his loss to Nixon pre-Watergate. Isn't it time to listen?
As for the rest of us no further comment.
I agree with your last statement. It's all armchair quarterbacking.
However, this IS something Americans are good at.
As for something useful to say....
We have run out the game of consumer is the economic driver. The consumer has proven itself to be not quite smart enough to run the economy by itself. Exhortations to GO SHOPPING by the pResident are fools errands if viewed in light of the current financial/economic fiasco. What we need is some industrial policy, some good regulation and enforcement, and good pay for jobs or work done.
The destroy the worker game is over too, see "consumer is the economic driver"- (game over). There are simply not enough yacht and mansion workers to power the economy to strength and health. Again, the answer is industrial policy.
Only government can use tax incentives and spending policy to drive the economy toward sustainability. That's what we elected these guys to do. Unfortunately there are more than a few 'dead enders" in the halls of American Power. They want to see the dead hand of Ayn Rand rule over and give the invisible middle finger to our voter's intents.
I hope we have learnt our lesson. But we seem to be about as smart as a field mouse.
Change for the better, or change for the worse,... short vs long term,... those are the questions,...
The solution is to create an urban and financial infrastructure system that can get America through the first half of the 21st century. This will mean more AFFORDABLE condominium buildings close to good schools and less McMansion suburbs. It means urban density close to jobs and functioning public services, not a pseudo-back to the prairie with a strip mall and a daily trek a hundred miles to work attitude.
I know that structural change is against the American mindset but tweaking any one number of the current system to what we want it to be won't cut it any longer. Either we change or we perish.
And change, remember "change..?"