Is it time to get off a sinking ship?

[Francis Xavier]

Makes me want to turn that neg into a pos.

the only way to get people buying US exports again is to debase the dollar.

that and we dont really make shit worth buying in north america... sure we have services..

The first one is off, the second one is a viable solution. Quality, design, and desirability of goods seems to be far more important than a lot of people here are willing to think. In many ways that's a biproduct of tradition and in many ways not. People buy Italian for a good reason. Exporting "information and services" was never a stable investment and we all know that.

Despite the attempted reaming, you have made a strong point against Xavier's argument. I don't think simply buying American is the answer. We live in a global economy now, and I just don't think the world is big enough anymore to go all protectionist successfully.

Not really. I think you've distorted my argument a bit by implying that I'm promoting isolationist economics. I'm not at all, I'm promoting self sufficiency which can compensate for job loss and create a buffer-zone for hard hits like the one we're seeing now. We would have experienced this with the policies of the last few years no matter what. A self-sufficient economy that produces its own goods and services, at least more so than it imports or at least half, would have been able to take this blow with less panic than we're seeing now. In an opposite scenario a government that had a shortage of workers would mechanize labor. At one time, that's what the japanese did instead of importing labor. During a job shortage, jobs can be created through promoting self sufficiency in regard to goods. That's one of the ways germany rebuilt itself after experiencing the treaty of versailles, which was meant to cripple the german economy long-term. Less money coming into a country than going out is part of this huge problem, especially at the disproportionate levels we see here in north america. Nobody is really addressing that because it was a slow trend. The effects of a slow, long term trend like that are felt when we experience a seemingly unrelated calamity like the one we're in now. Buying american is a propaganda movement that's been around for a while now simply because dogooders had the forsight to see that outsourcing would be a huge pothole if and when we ended up on crutches. We'll now we're on crutches. Yes, Jayrock. It's an idealistic movement that isn't necesarilly the "better deal." That's why I insisted, over and over, that this was a sacrifice. You see, in times like this, a nation with a strong feeling of community should make the necessary sacrifices to its comfort level to fix a huge problem that threatenes the whole. Buying american asks you to kindly not be so selfish and cheap. It asks you to pay more for a product you could have easily bought cheaper with sweat labor (like designer clothes!).

Jayrock thinks that exporting technological development is the answer, and it can be if you're able to keep pouring a ton of money into science and technology. Whether you like it or not though, that's a very temporary solution and an unstable one at that on top of being tragically short-sighted. It's a huge gamble because it's a race and the only solid insurance policy against taking a bath would be that we had few competitors in our league. That might not be the case soon. I was never promoting isolationism. That's an absurd thing to think from reading my rhetoric. I was promoting self-sufficiency. Renewable energy, yes. But don't count on that being a great and effective export once renewable energy is the norm in the better half of the developed world. To do so would be like relying on an arms race or munitions manufacturing to stabilize your economy as long as there's enough war constantly stimulating that market and nobody else is manufacturing their own guns. Eventually demand will run out as soon as other countries embrace self sufficiency.

[jayrock]

Your argument for domestic consumption is short-sighted, in the sense that you fail to grasp the concept that it is entirely impossible for us to maintain our current standard of living if we are to be making and purchasing everything within our own country. Flat-screen HDTVs are popular and in high demand because they are so cheap. Being preferential to domestic production makes sense when there is an actual competition between the value and price of the goods on a global scale, but if you cannot create the same good in the United States at a relatively similar cost, there is no way the average consumer will pay the extra price just for the feel good "buy American" bullshit.

There are too many people, with too many modern conveniences for us to be self-sufficient. We couldn't even feed and clothe ourselves, let alone provide all of our energy without imports. The only result of your poorly thought out solution would be a drastic decrease in the quality of life across the board, as Americans would no longer to be able to afford their wants and needs via domestic production.

[Francis Xavier]

Your argument for domestic consumption is short-sighted, in the sense that you fail to grasp the concept that it is entirely impossible for us to maintain our current standard of living if we are to be making and purchasing everything within our own country. Flat-screen HDTVs are popular and in high demand because they are so cheap. Being preferential to domestic production makes sense when there is an actual competition between the value and price of the goods on a global scale, but if you cannot create the same good in the United States at a relatively similar cost, there is no way the average consumer will pay the extra price just for the feel good "buy American" bullshit.

There are too many people, with too many modern conveniences for us to be self-sufficient. We couldn't even feed and clothe ourselves, let alone provide all of our energy without imports. The only result of your poorly thought out solution would be a drastic decrease in the quality of life across the board, as Americans would no longer to be able to afford their wants and needs via domestic production.

Did you not read "sacrifice, sacrifice, sacrifice?"

Whether you like it or not, the standard of living for most americans is going to deteriorate. We were purchasing with a fiat currency that never had the value that we thought it did. Relying on a technological race is a ludicrous answer to "maintaining our standards of living" through this mess. Our inflated views of prosperity and happiness stunted our national identity to the point that they became our national identity. What I'm saying is, its going to require americans to do the right thing for your country to get us out of this mess. The solution will not come from the top down. It's going to come from the bottom up. Saying that our consumption patterns will never change might be true, but if that's the case then that will be the reason that we fail to fix this. America sells its consumption above all else. It needs to sell some of that consumption back to itself. Right now, what we eat is immediately being shat out to fertilize other economies instead of using some of those nutrients to feed our own body. Our purchases will have to be highly political and informed. And as I've stated before, yes, it's idealistic. Yes, it's conceptual. I never stated that it would be a natural progression that could be enforced or promoted from the top down. You seem to be insisting that I'm implying cutting out all exports, which means you're not even reading what I write. Good job, there.

[jayrock]

When times get hard, people will make sacrifices required to get by. They will not pay a luxury tax on domestic goods just so they can feel good about themselves.

Corporations are migratory in the sense that they tend to move their bases of production to areas of the globe that have more favorable tax rates for them. This can explain the Irish tiger and more recently the huge economic boom occurring in Asia. The corporate tax rate in America is too high, and the average salary per capita is also too high to run a profitable operation, hence many corporations will not be setting up shop here.

The expansion in credit in the past decades is what led to our supposed increase in prosperity and wealth, and we are witnessing a violent contraction of that credit. With the purchasing power of Americans diminishing, our consumption based economy has an incredibly pathetic outlook.

In short, you have yet to provide me with a viable reason as to why I should sacrifice more of my disposable income with preferential domestic consumption. The fact that you completely disregard technological advancement as a solution to maintaining our standard of living completely negates all the progress made in the last century in the fields of medicine, science and communication. We can go from Walkmans to iPods in a decade, and you think we can't somehow improve our energy efficiency enough to maintain our current standards of living? I, for one, will not willingly live like I'm in a third world country when other solutions are available.

[Francis Xavier]

When times get hard, people will make sacrifices required to get by. They will not pay a luxury tax on domestic goods just so they can feel good about themselves.

Corporations are migratory in the sense that they tend to move their bases of production to areas of the globe that have more favorable tax rates for them. This can explain the Irish tiger and more recently the huge economic boom occurring in Asia. The corporate tax rate in America is too high, and the average salary per capita is also too high to run a profitable operation, hence many corporations will not be setting up shop here.

The expansion in credit in the past decades is what led to our supposed increase in prosperity and wealth, and we are witnessing a violent contraction of that credit. With the purchasing power of Americans diminishing, our consumption based economy has an incredibly pathetic outlook.

In short, you have yet to provide me with a viable reason as to why I should sacrifice more of my disposable income with preferential domestic consumption. The fact that you completely disregard technological advancement as a solution to maintaining our standard of living completely negates all the progress made in the last century in the fields of medicine, science and communication. We can go from Walkmans to iPods in a decade, and you think we can't somehow improve our energy efficiency enough to maintain our current standards of living? I, for one, will not willingly live like I'm in a third world country when other solutions are available.

-- I never said ANYTHING about luxury taxation -- You really, really need to stop putting words into my mouth to support whatever argument you muster.

With that last entry we actually agree on a lot more than we disagree on. I never said over-taxation of corporate entities within our borders was a good thing. I've actually gone on and on about how it killed the city in which I live and how democrats do this to create and maintain poverty -- thus creating a need for democrats. And I also said that, idealistically, we can create demand through an idealistic push. This is no new concept to americans. This has been practiced before. We inject our idealism into much of what we buy knowingly in that people react harshly to sweat-shop labor. Those people make the choice. And again, I'm saying idealistically, as i've said about a HUNDRED TIMES BEFORE, that americans can make this change only if they are willing to sacrifice. You're insistance that I'm saying that this is already and will naturally be the state of natural consumption by americans again proves that you're not reading what I'm saying. It's a matter of values. Values that many of us don't have, true. But values that we will need in order to become self sufficient. You're arguing to argue here. You're not actually reading what I'm saying and you're putting words into my mouth.

Also, i didn't completely disregard science and technology as an economic resource of export. I never, ever said that. I said that it could not support us alone. Like any portfolio we obviously need to diversify. The "viable reason" i'm providing you with, is values. Have a soul? Have a concern for your common man? A concern for your country and your countrymen. I'm asking you to be nationalistic in the best possible way.

[Quinnskimo]

Good debate going on here. I think the answer lies somewhere in the middle. There will likely be a couple systems in place which perpetuate this prosperity for as long as possible, and renewable energy could be the next wave we ride, but in a world economy, eventually something is going to fail when we're surrounding myself with plasma televisions made by kids who are working for a rice bowl every day.

[_ironman]

jayrock has the right idea, america needs to do something else, they'll lose at industrial manufacturing

but you guys really need to learn what clean energy is, how much it really costs, and stop listening to what everyone says about oh wind this solar that

a quick lesson: generally the cleaner an energy is, the less efficient it is. the less efficient it is, the more it costs. so...that doesn't work

but like i said, right idea

[Francis Xavier]

Consume less, export more to end crisis

Tom Abate, Chronicle Staff Writer

Sunday, January 25, 2009

(01-24) 19:40 PST -- Recession doesn't begin to describe the crisis over which President Obama now presides. For decades Americans have been living beyond their means, financing consumption with credit that is no longer cheap nor easy to obtain.

We are not alone. European and Asian economies are slowing down as a worldwide credit bubble bursts, undermining the financial system that overheated things in the first place.

"This is not an American problem, this is a global problem," said economist Nariman Behravesh with IHS Global Insight.

But it will be up to the United States, as the global leader, to pull the planet out of this tailspin and, to do so, experts say Americans will have to rebuild the engines that drive our economic growth. They say we'll have to throttle back on consumption and rev up production, borrow less and export more. We'll also have to figure out how to supervise global financial markets so they don't melt down again and make sure that, when prosperity returns, it is more broadly shared.

Mark Zandi with Moody's Economy.com calls this "a major inflection point" in business affairs.

"For over a quarter-century the global economy has been driven by U.S. consumers spending aggressively beyond their incomes by borrowing," Zandi said. "It will take time to adjust."

The forces at play are complex and interconnected. They include how technology and globalism have reshaped competition and changed employment, making today's office or retail worker just as vulnerable to job loss as the factory workers of the 1980s.

Transformation of work

"My grandfather worked for Illinois Bell for 41 years until he retired," said Daniel Pink, whose book "Free Agent Nation" charts the transformation of work. "Nowadays I don't think any organization is going to outlive us."

But the crisis may also provide a chance to rebuild transportation and electronic networks, expand training and education, and stimulate Silicon Valley's green industries, according to Mark Baldassare, president of the Public Policy Institute of California.

"Think about how we could rebuild our infrastructure and reboot our economy," he said.

Most experts agree that the first step toward recovery requires a big federal stimulus package to stop the erosion of jobs and get economic output growing.

"The bigger the better," Behravesh said. "The danger is doing too little, not too much."

But even if Congress passes such a package and the gross domestic product starts expanding by year end, the job market will take a lot longer to recover, Behravesh said.

That's because technology and globalization have made it possible to redistribute labor over computer networks. Behravesh said it took longer for employment to bounce back after the recessions of the early 1990s and 2001, as some jobs moved to cheaper overseas locations and others shifted within the United States.

"In the best-case scenario, GDP and profits turn up around the second half of 2009 but employment doesn't pick up until the second half of 2010," he said.

The U.S. economy that emerges from the current crisis will be more export-oriented because that's the only way output can grow, said Zandi of Economy.com.

From mall to airport

"Our focus will be selling our wares to the world," Zandi said. "Instead of the shopping mall as the symbol of the American economy, it will be the port or the airport or the e-commerce site."

It's all about the math, he said. About 25 years ago, before the United States started running deep trade deficits, consumer spending made up roughly 62 percent of GDP. That figure recently peaked at about 70 percent. Zandi said consumer spending as a percent of GDP must decline because we can no longer use our homes like ATMs to finance a lavish way of life.

"It's going to be a recovery, but it won't feel that way because we've been consuming more of the world's goods than we sold, and we're going to have to turn that around," said Zandi, adding that these exports will include high-tech, medical and biotech products as well as financial and other services in which we excel.

Productivity and wages

But even if the United States pulls off this export-driven recovery, complex problems will continue to put pressure on our standard of living, notably the disconnect between productivity and wages.

"As economists, we used to think that increases in productivity would lead to increases in wages and prosperity, but that just isn't the case," said Sylvia Allegretto, a labor economist at UC Berkeley.

Allegretto has charted federal data going back 60 years. From 1947 through 1973, as productivity rose 104 percent, median family income rose an equal amount.

But from 1973 through 2007, as workers got 82 percent more productive, median family income increased just 22 percent.

"We need policies to make sure that real wage growth and productivity are reconnected," Allegretto said. "Without this we can't have a broadly based, broadly shared prosperity."

Such policies would be complex and controversial, ranging from liberal solutions such as strengthening labor laws and unions to more conservative fixes that rely on things like expanding education and job-retraining programs.

Obama touched on this issue of sharing the wealth in his inaugural speech when he said, "The success of our economy has always depended not just on the size of our gross domestic product, but on the reach of our prosperity."

Silicon Valley entrepreneur Judith Estrin, a former chief technology officer at Cisco, said the modern economy has helped sharpen the divide between haves and have-nots.

Borrowing to buy

"We've had this polarization between the few that were becoming more prosperous and the broad base that were not," she said. "But businesses didn't notice this because people were borrowing to buy."

Estrin recently wrote "Closing the Innovation Gap," a book that argues for replacing the bubble mentality of the dot-com era with a more sustainable and equitable approach to entrepreneurship. She said green tech and medical technology should help broaden the base of prosperity because these industries create jobs, like solar installers and medical technicians, that don't require advanced degrees.

But she said investors and entrepreneurs must first quit expecting the quick returns they experienced during the dot-com and housing bubbles.

Bubbles have all gone bust

"We have gone from bubble to bubble, and now they've gone bust," Estrin said. "Sustainable growth sometimes means moving more slowly."

Baldassare, with the Public Policy Institute, said California has suffered disproportionately from the housing collapse and recession, but it could also benefit enormously from the infrastructure investments being considered in the stimulus package.

"We have let a lot of good work that was done in the '50s and '60s fall into disrepair," he said. "We have an opportunity to reshape the built landscape in California."

But Baldassare said state leaders must first solve California's budget crisis.

"If they don't, I worry we'll get left behind," he said.

The ultimate solutions to this many-layered economic crisis will require global cooperation, said Manuel Castells, a sociologist at the University of Southern California's Annenberg School for Communication. Castells is a co-author of "On the Edge," a collection of essays in which financier George Soros, former Federal Reserve Chairman Paul Volckerand others presage the current meltdown.

"This is first and foremost a financial crisis in which technology played a part, by linking together the finances of everybody and controlling these constructs with mathematical models that created wealth by selling derivatives," Castells said. "These systems existed with a lack of supervision and regulation. We have global flows of capital but we have no global regulators."

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/01/25/MNTO15F8SM.DTL

[jayrock]

-- I never said ANYTHING about luxury taxation -- You really, really need to stop putting words into my mouth to support whatever argument you muster.

YOU FAIL TO REALIZE THAT THE "LUXURY TAX" IS IMPLIED IN THE HIGHER COST OF DOMESTIC PRODUCTION. I'm not talking about a literal tax added on by the government. Even if Americans would willingly make the sacrifice, I fail to recognize how the rest of the world could justify the increase in price.

The "viable reason" i'm providing you with, is values. Have a soul? Have a concern for your common man? A concern for your country and your countrymen. I'm asking you to be nationalistic in the best possible way.

Nationalism is not the answer to a global problem. Maybe I'm in the globalist mindset too much already, but I fail to see how preferential treatment to some fatass in Michigan is of higher moral value that providing jobs and sustenance to third world countries trying to rise out of poverty. Americans need to evolve if they wish to survive, because it's awfully hard to make a living on an assembly line in this country.

In short, you're a fucking moron and I don't give two shits about you or your future. Good luck with the part-time job, and stay in school. I'll handle my own.

[shufon]

Shufon, thanks for the correction. Stocks was definitely not the right term, and I'm not even sure why I used it. Probably because I'm at work semi-looking over my shoulder as I type, and because I don't even totally understand what it is that is happening (then again, who actually does?) Wish someone would hire me in finance so it would actually be worthwhile for me to continue learning about it, because I do find all the complexities to be quite interesting. As it is, the only thing I've been getting out of it is angry.

No problem, it's understandable, the majority of the world had no idea what a credit default swap was until the last six months, so it's an easy mistake If you're that interested in it, you should look into financial engineering, you can make good money and you are the one creating the newest complexities of financial markets. Even with the constant negative commentary that derivative instruments have attracted over the past three to four years, they are definitely the future of financial markets and not a bad thing to learn about.

[Quinnskimo]

the majority of the world

me included. thanks for the info.

[Francis Xavier]

YOU FAIL TO REALIZE THAT THE "LUXURY TAX" IS IMPLIED IN THE HIGHER COST OF DOMESTIC PRODUCTION. I'm not talking about a literal tax added on by the government. Even if Americans would willingly make the sacrifice, I fail to recognize how the rest of the world could justify the increase in price.

Nationalism is not the answer to a global problem. Maybe I'm in the globalist mindset too much already, but I fail to see how preferential treatment to some fatass in Michigan is of higher moral value that providing jobs and sustenance to third world countries trying to rise out of poverty. Americans need to evolve if they wish to survive, because it's awfully hard to make a living on an assembly line in this country.

In short, you're a fucking moron and I don't give two shits about you or your future. Good luck with the part-time job, and stay in school. I'll handle my own.

Haha. Luxury tax. Just stop. Also, preferential treatment? Supporting third world countries trying to get out of poverty? You try to boost your argument by injecting it with some warped set of big brother values because I spoke of core communal values before. Let's talk about the "preferential treatment" of manufacturing in countries where the values we hold to be fundamentally democratic here in the united states are never extended to the people who make our goods because its CHEAPER. People who are paid unfair wages and live in complete shit. Sweat labor isn't "a start" if that's what you're implying and it won't lead to anything better for them. Our rights come at a price. And I'll laugh my head off if you try to prop your argument back up on China. It sickens me that some people are perfectly fine with propping our comfy material living conditions up on the violation of basic human rights that we're protected from experiencing in this country and claim we hold so universally due to all men. Your moral disengagement proves how much of a tool you truly are.

Over-taxation of production is a problem, yes. A problem that I already said needed to be addressed. Again, read what I write. You may be an idiot, but I extend you the courtesy of reading your arguments. As far as the global demand for everyday products that are "essential" to our daily lives, producing a larger chunk of what we consume here is entirely viable. Why? Because there are nations who's economies are driven by our own very high level of consumption. The majority of the people of those nations won't really benefit much from that over-consumption.

I don't think you understand that a large part of a long term solution to our situation within this global crisis is reducing our global dependence. You speak of globalism but I don't really think you see things on a macro or micro scale with great clarity. Instead you promote this depressing it doesn't matter because nothing will change. We'd rather just die off then allow our standards of living to materially reverse and stagnate mentality while claiming that the answer lies within exporting science and technology primarily as a long term solution (which is very funny). On top of that, you're only really attacking me because we fought a few times in the past, once over the welfare of the polar bear. Loller. Now you throw insults at me in threads which is fine, obviously I'm very willing to make sport because you become so emotional. But if you're going to do so, please stop ignoring my actual posts by twisting things to fit your responses.

"Nationalism is not the answer to a global problem"

Actually, yes it is.

Maybe not the kind of nationalism that is the "boogeyman in the closet" type of concept that we're taught over and over again from a very young age that will divide us and encourage active and organized racism. Ironic, coming from a person who usually likes to play a straight-right ticket in every political conversation I've seen him involved with on sufu. Polar Bears? Please. It's funny to see how you feel considering the ardent conservatism you always seem to promote.

Nationalism? Our national "identity," a national identity that was defined by our rather lavish standards of living. The american dream grew into a big ugly monster and now that we rely on an absurd amount of "necessary commodities" to maintain the material wealth of our daily living standards (most of which are made outside of this country and which we don't really need), we can't imagine a world either without them or facing the fact that these things don't bring happiness or stability. That identity will have to reinvent itself after that standard of living is lowered by the reality of our current global situation. What you fail to realize, you angry little ugly person, is that our communal identity is defined by things, many of which we don't really need. Those things are going away. Come to terms with that. While you're at it, you can stop propping up your argument against mine by putting words into my mouth (for the 100th time). What we do need, we need to focus at least SOME of our domestic production on so that we can be... Self sufficient. You seem to avoid that topic at all costs.

[Francis Xavier]

Here's an article that I read a while back that hits the nail on the head.

How Marketing The American Dream Caused Our Economic Crisis

John Quelch 1:24 PM Monday October 27, 2008

Tags: Economy, Marketing

The current economic crisis has been blamed on the greed of Wall Street, on bankers' excessive leveraging of assets, on irresponsible banks and mortgage brokers who fabricated applications for no downpayment home loans knowing that the risks could be readily laid off on unsuspecting third parties.

But underpinning the collapse of the housing bubble is a demand-side problem - the American Dream - that has been hijacked in countless political speeches from an embodiment of America's core values into a crass appeal to materialism and easy gratification.

Right wing politicians touting the American Dream consistently advocate lower taxes. The more money citizens can keep, the faster they can attain their dreams. But these same politicians are consistently unwilling to raise taxes when required. The massive budget deficits run up during the last eight years of war (now projected at 3.8% of GDP in 2009) reflect a Federal government living beyond its means like a drunken sailor, setting anything but a good example for the average citizen.

Left wing politicians are equally guilty of framing the American Dream in material terms. They claim the Dream is increasingly out of reach of middle class Americans, pointing to a $2,000 decline in median family income over the past eight years. On this basis, they justify policies to redistribute wealth so that we can cross-subsidize each other's dreams. The most egregious recent example: so-called affordable housing policies to enable as many Americans as possible to own their homes. It started appropriately enough with the 1977 Community Investment Act, which challenged redlining policies of local banks that set higher hurdles for home-ownership among minorities. But it ended with the recent $5.2 trillion guarantee of Fannie Mae and Freddie Mac assets after these quasi-government housing agencies over-leveraged themselves by lending against inflated home prices and requiring minimal evidence of ability to repay from borrowers.

Politicians on both sides have been equally culpable in defining the American Dream in material terms, in encouraging Americans to live beyond their means in its pursuit, and then putting in place policies that enable them to do so. Hardly any politician has had the courage to call for restraint.

Average household debt in the United States is currently 130% of average household income, up 20% since 2005 and double what it was twenty years ago. The US household savings rate is close to zero. Consumer confidence has plummeted with the value of 401K plans and retirement nest-eggs. Retail sales fell 1.2% in September, double the expected decline. Car sales are at a fifteen year low. And credit card defaults look like the next shoe to drop as cash-strapped Americans have run up credit card debt to postpone the day of reckoning.

Americans need a refresher course on the American dream. The Constitution speaks of life, liberty and the pursuit of happiness, not an automatic chicken in every pot. The American Dream embraced by immigrants over the past two centuries has been the opportunity to set one's own goals and pursue them honestly to the limits of one's ambition and ability. Too many Americans have been expressing the Dream through the acquisition of stuff. Others see the Dream as raising a family in a land that delivers Franklin Roosevelt's (and Norman Rockwell's) four freedoms. Still others dream of their children accessing the highest possible level of education, living healthy lives, being good citizens in their communities.

As defined by historian James Truslow Adams, who spoke first of the American Dream in his 1931 book Epic of America: "It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position."

Marketers as well as politicians have doubtless helped to distort the meaning of the Dream. A barrage of commercial advertising encourages people to focus on the acquisition and consumption of goods, to be consumers first and citizens second. Credit card offers flood the mail. Media supported by advertising encourage consumers to aspire to celebrity lifestyles, to keep up with the Jones's by acquiring more stuff. Even President Bush, following the shock of 9/11, called on Americans to show their patriotism by going out to shop.

The injustice of the current crisis is that citizens who acted responsibly and were saving for their retirement have seen the values of their homes and 401K plans collapse. Those who acted irresponsibly, living day-to-day, and not saving at all have barely been inconvenienced. They have been able to walk away from homes they couldn't afford with, in many cases, no penalty. Meanwhile, responsible citizens, and their children and grandchildren, will pay in extra taxes to clean up the mess.

In past downturns, the resilience of consumer spending has saved the day. Until recently, it has accounted for 72% of the American economy, compared to around 60% in European countries where government spending is higher. Given the likely depth and length of the current recession, consumers will not continue to spend at the same level. Christmas retail sales will be an early indicator. But, not to worry, the Federal government promises to come to the rescue, with both parties supporting a fiscal stimulus in the form of tax rebates and infrastructure spending that will pump more money into the economy, run up the deficit further and mortgage our children's ability to achieve their American Dreams.

This post is based on John Quelch's commentary, "Redefining The American Dream," in The Washington Times.

[sircheesecake]

3Eg1-64tVTs

discuss

[mis]

Everytime obama has a speech, the market tanks

[ProfMonnitoff]

in this case it was really just because the stimulus isn't some kind of magical miracle

what were they expecting though

i hope this stupid honeymoon shit is over soon so obama can just be judged by normal standards

[Whodinihimself]

What we need is free lobotomies for the general populace...only when the cancer is removed, can the body begin to heal.

[shufon]

in this case it was really just because the stimulus isn't some kind of magical miracle

what were they expecting though

i hope this stupid honeymoon shit is over soon so obama can just be judged by normal standards

We were expecting at least some more details on how Geithner wants to go about implementing his plans. Instead we just get a Paulson-esque concept with no details at all; it seemed like Geithner sat down for an hour this weekend and thought, "Let's see.. these should be the top problems we need to tackle, and this is how much money I think it will take... ok, that should work for the Congressional hearing." The market was expecting something more from this guy since it's his first big hearing, and instead it was a massive failure. They should've stopped him from becoming Treasury Secretary they found out he couldn't even figure out the correct amount of taxes he owed for the past five years.

[Quinnskimo]

Leave all the details out so you can legally throw money at your buddies' companies later on down the road and call it stimulation. That's how this political thing works, right?

[mis]

I think its pretty clear that the market hates the so called 'stimulus package'.

It sounds like the US is going down the same path as Japan did over a decade ago.

-Increasing interest rates which eventually led to bursting of the housing bubble

-Govt intervening to prevent large banks from going under

-Govt pumping money in to 'stimulate' the economy

http://mises.org/story/1099

[Bona Drag]

yeah, i've heard the japan comparison tossed around by people who understand this thing better than i do (although the mises inst. is somewhat sketchy)

a little worrisome

i will just add that while geithner probably did fuck this thing up*, it's entirely possible that a proposed plan that would make 'the market' happy would not necessarily be an ideal long term solution

if the last two years have proven nothing else, it's that 'the market' is pretty fucking stupid a lot of the time

*mis, did you mean the stimulus or the bailout? two different things, although i think what i said applies to both

[shufon]

I think its pretty clear that the market hates the so called 'stimulus package'.

It sounds like the US is going down the same path as Japan did over a decade ago.

-Increasing interest rates which eventually led to bursting of the housing bubble

-Govt intervening to prevent large banks from going under

-Govt pumping money in to 'stimulate' the economy

http://mises.org/story/1099

Yeah.. the market was indifferent to the "stimulus" package from the get go. We were all focused on Geithner's plans because the stimulus package is obviously shit, and there was hope that Geithner would step up and actually do something meaningful. Instead, we get, "We are willing to expand programs to improve consumer lending up to $2 trillion", "We will take steps to improve housing market conditions", "We will put 14 banks under stress tests to see how they fare." What the fuck does that mean? I mean seriously, this guy came with no details. Our government is just beating around the bush and wasting money, just like Japan did as you pointed out. I am close acquaintances with a former Federal Reserve president, and he and I both agreed in January of 2008 that the coming problems would be something the government cannot really stop, and that we are most likely headed into a Japan-like situation. Like I said a few pages back, it's a natural process that needs to happen and everybody just needs to accept that and let it happen.

[ProfMonnitoff]

ahahahahaha the austrian school of economics

probably the worst (best if you go by how funny it is) thing to ever come out of austria

[shufon]

ahahahahaha the austrian school of economics

probably the worst (best if you go by how funny it is) thing to ever come out of austria

Yeah I agree with you here but aside from some critical actions to avoid imminent collapse of functionality in the global financial system, much of the efforts by governments around the world to stave off this crisis have been futile and will possibly (probably?) have more negative repurcussive effects down the road than positive effects on the current situation.

[homi29]

I think its pretty clear that the market hates the so called 'stimulus package'.

the market hates everything lately. fuck em. if the government just let the recession be they'd be bitching even more. business leaders stay hiding underneath their desks waiting for this shit to blow over

[Francis Xavier]

Time to party like it's 1929!

[sircheesecake]

the market hates everything lately.

I took all of the money I had in stocks and threw it in an ING account. It might have a chance of making some money in there.

[mis]

the market hates everything lately. fuck em. if the government just let the recession be they'd be bitching even more. business leaders stay hiding underneath their desks waiting for this shit to blow over

I'm pretty sure the market spiked when there was talk that the stimulus package might not pass/ was going to be delayed.

Plus everyone's worried about Obama saying hes going to increase taxes on the upper percentile-people who actually buy/sell stocks in large quantities. I think part of the reason why the market sunk so badly during obamas inauguration was because he said nothing about taxes.

[Augustus]

The Guarantee Program

To bolster investor confidence in money market funds and protect the stability of the global financial system, on September 19,2008. the Treasury Department established the Guaranteed Program. Under the Guarantee Program. the Treasury Department guarantees the stabilized price (e g ,$1.00) of participating money market fund shares outstanding on September 19,2008, in limited circumstances. In particular, the Guarantee Program provides that in the event that a participating money market fund cannot maintain a stable net asset value for its shares, it must initiate a liquidation plan and upon the fund's liquidation, the Treasury Department will pay to the fund the difference between the liquidation value of shares subject to the guarantee and $1.00, thereby ensuring that holders of such shares receive $1 .OO for each. A requirement of the Guarantee Program is that from the time the money market fund determines that it can no longer maintain a stable net asset value for its shares until the completion of its liquidation, the fund must cease both the issuance and redemption of shares. The cessation of redemption requirement of the Guarantee Program is designed to facilitate orderly liquidations of money market funds pursuant to the Program and help prevent the sale of fund assets at "fire sale" prices. Rule 22e-3T is designed to permit money market funds liquidating under the Guarantee Program to suspend shareholders' right of redemption otherwise required by Section 22(e) of the 1940 Act.

Our economy has pretty much already collapsed.

[nickthechibi]

where the fuck is that video of the report done about the whole purchasing of a 40 million dollar jet that was going to be used twice (back and forth) to the Caribbean for a meeting between like 5 people from w/e bigass corporation

my bad, I'm so tired right now, I can't remember anything