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Whom Exactly?

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serenity blaze
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25 posted 07-24-2010 10:20 AM       View Profile for serenity blaze   Email serenity blaze   Edit/Delete Message      Find Poems  View IP for serenity blaze

Oh. I allow retroactive into previous administrations, which would imply foresight.

Although it's hindsight now.
Denise
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26 posted 07-24-2010 11:14 AM       View Profile for Denise   Edit/Delete Message      Find Poems  View IP for Denise

I don't think it's any more provable that the bail-outs 'saved' us from something far worse, any more than it is provable that the stimulus prevented things from being even worse than they are today.

I would rather have seen Wall Street pay the piper for its greed and stupidity than to be bailed out by the government. Main Street wasn't helped.

I would rather have seen GM and Chrysler go under and reorganize privately than to be taken over by the government.

What would I like to see? Pro-job and pro-business policies. Free markets create jobs and growth. Government can't create wealth and growth. All the government can do is control it and redistribute it. I'd also like to see tax cuts. I think that is the best economic stimulus that could be used in these trying times.
Grinch
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27 posted 07-24-2010 12:23 PM       View Profile for Grinch   Email Grinch   Edit/Delete Message      Find Poems  View IP for Grinch


quote:
What would I like to see? Pro-job and pro-business policies.

quote:
I'd also like to see tax cuts.


What pro-job and pro-business policies Denise, could you be more specific? Also how do you propose to pay for the tax cuts?

.
Balladeer
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28 posted 07-24-2010 03:49 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

I second your emotions, Denise. By the way, if you need a job, Wall  Street is the place. They have been hiring like crazy these month. Go figure...
Denise
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29 posted 07-24-2010 04:50 PM       View Profile for Denise   Edit/Delete Message      Find Poems  View IP for Denise

For starters Grinch, we could get rid of the 159 and counting new bureaucracies created by Obamacare, one of the biggest anti-business programs.

More ideas can be found here:
http://republicanwhip.house.gov/YouCut/

Yeah Michael, Wall Street and the Federal Government. Neither are hurting in the employment department are they?


Ron
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30 posted 07-24-2010 05:48 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

quote:
You aren't going to respond to specifics any more than you don't respond to the lies of the shovel-ready jobs. That's fine.

We can talk about any specifics you want, Mike. Just so long as everyone realizes that most of them, including shovel-ready jobs, are completely irrelevant to any discussion about the efficacy of the stimulus plan. Remember? The real purpose of the plan was what again?

If you want to talk about shovel-ready jobs, Mike, you can start by defining them. I've seen a lot of what I would call shovel-ready jobs, but perhaps they weren't shovel-ready enough for you?

quote:
I think--just a hunch, we don't see the same massive run on banks today because more peops live on credit.

LOL. Well, I'm sort of hoping someone still has some money in the banks, guys, else we're in a lot more trouble than any of us thought. And apparently who ever it is with that money has enough confidence to leave it there. Yes, Denise, in large part that is a reflection of their faith in the FDIC. Uh, what does that F stand for again?

quote:
I would rather have seen Wall Street pay the piper for its greed and stupidity than to be bailed out by the government. Main Street wasn't helped.

I would rather have seen GM and Chrysler go under and reorganize privately than to be taken over by the government.

Denise, that was also pretty much Hoover's response in 1929. His Treasury Secretary, Andrew Mellon, announced the government intended to let Wall Street stabilize on its own. "Liquidate labor, liquidate stocks, liquidate real estates," he advised. "Values will be adjusted and enterprising people will pick up the wreck from less competent people." That certainly sounds like a sentiment with which you might agree?

Unfortunately for America, that didn't work out quite as well as Hoover and Mellon had hoped.

From 1929 to 1931, Congress passed the Agricultural Marketing Act to help support desolate farmers, the Federal Reserve lowered the prime from 6 to 4 percent, and a really unwise tariff bill (already mentioned in another post) was enacted in hopes of protecting American jobs. That's it. The Republican bills passed to address the Depression can be counted on one hand. With several fingers still unused.

The result of doing nothing for slightly more than two years?

The worst years of the Great Depression were 1932 and 1933, Denise. Unemployment hit 23.6 percent, stocks lost 80 percent of their value, 10,000 banks crashed and burned, $2 billion in deposits was lost, GNP dropped 31 percent, farm prices plummeted 53 percent, and more than 13 million Americans lost their jobs.

Anyone who has followed the Philosophy forum from several years ago will know I am a strong proponent of laissez-faire Capitalism. I don't like regulations, I sure don't like price fixing, and I am utterly convinced that nine times out of ten any interference with free enterprise by the government will backfire and shoot us in the, uh, foot.

Nine times out of ten, however, is not ten times out of ten.

While Capitalism is a beast not easily controlled, it is STILL a beast and without controls will quickly run rampant. Many believe the Great Depression was a direct result of Coolidge's non-interventionist administration. "The business of America," declared Coolidge, "Is business." Capitalism, the beast, was unleashed and largely unfettered when Coolidge took office in 1922. By the end of the decade, 6,000 previously independent companies had been merged or acquired, resulting in only 200 corporations controlling over half of all American industry. When the stock market crashed in October 1929, the richest one percent owned forty percent of the nation's wealth and the middle class had shrunk to only 15 to 20 percent of all Americans; everyone else was either rich or living below minimum subsistence levels (i.e., dirt poor). Capitalism had done what, by definition, unfettered Capitalism must inevitably do -- it rewarded those with the most capital. The rich got richer.

In my opinion, our government should never do anything it doesn't absolutely have to do. But it should never fail to do what it must. The wisdom, of course -- and the inevitable argument -- is deciding which is which.

(If it sounds like the Republican administrations of Coolidge and Hoover caused the Great Depression of 1929, rest assured that is only part of the story. In 1932 the Democrats easily won control of both Congress and the White House. Sound familiar? They then proceeded to unnecessarily extend the Depression another seven years, right up until WWII finally forced them to reverse course. For the better part of twenty years, America got economically trashed by both parties.)

What's that old saying, guys? If we aren't willing to learn from history we're doomed to repeat it?


Balladeer
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31 posted 07-24-2010 06:59 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

If you want to talk about shovel-ready jobs, Mike, you can start by defining them. I've seen a lot of what I would call shovel-ready jobs, but perhaps they weren't shovel-ready enough for you?

Aw, c'mon, Ron. You know exactly what I mean. Obama tried to sell the public on the fact that, with his stimulus plan, there would be immediate work available to provide jobs and control unemployment. He called them shovel-ready jobs, jobs that were ready, just waiting for that stimulus cash to come in. You know that and you know exactly what I mean. This spinning and dancing isn't worthy of you.

The real purpose of the plan was what again?

If you feel the purpose was to instill confidence in the American people, then it failed. If it's purpose was to provide jobs, then it failed. If it was to give the government more power and control, then it succeeded.
Ron
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32 posted 07-24-2010 08:53 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

quote:
He called them shovel-ready jobs, jobs that were ready, just waiting for that stimulus cash to come in. You know that and you know exactly what I mean. This spinning and dancing isn't worthy of you.

I'm not dancing, Mike. I needed to know if you thought "jobs being ready" meant someone was already hired and standing at the time clock waiting to punch in as soon as the money was ready? Or if, as a businessman, you recognize the need for preparation and planning to maximize money and efforts? And of course we shouldn't forget that preparation and planning is a job, too, even if it's not usually at the end of a shovel.

Let's talk about just one example. Since you're contending there aren't any examples, one should be enough?

Stimulus brings VP Joe Biden to K'zoo June 9, 2009

The overpass and stretch of road being rebuilt on I-94 was a shovel-ready job, Mike. In fact, it had been shovel-ready since about 2004, I think. It's about forty miles from my house and less than five from where I used to teach in Kalamazoo, so I knew it pretty well. A year later and it's still disrupting a very busy and commercial part of the town. But it's providing a whole lot of jobs in the process.

Just as promised.

quote:
If you feel the purpose was to instill confidence in the American people, then it failed.

It will have failed, Mike, only when America fails. So long as people keep on spending their discretionary income they will continue, in the only manner that is meaningful, to express their confidence in the country and the economy.


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33 posted 07-24-2010 09:31 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

I needed to know if you thought "jobs being ready" meant someone was already hired and standing at the time clock waiting to punch in as soon as the money was ready? Or if, as a businessman, you recognize the need for preparation and planning to maximize money and efforts?

No, Ron, not hired and standing at the time clock but planned, prepared and ready to go into action when funding was available. That was Obama's promise and why he claimed unemployment would not rise due to the stimulus dollars. Obviously no planning or preparation had been done since only a small fraction of the money had been used after many months later...and still hasn't. It was just a ploy of his to go along with the immediate, "we must pass it now or we're doomed!!", scenario.

Oh, it will be spent soon. Obama has obviously held it back to be released right before the upcoming elections. There will be a great show of "Look what we are doing for you!" just before the voters go to the polls. Slick fella, Obama. It's all a game to him....
Ron
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34 posted 07-24-2010 11:50 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

Is there a complaint in there somewhere, Mike? Or a suggestion?

Planned, prepared and ready to go into action when funding was available? Isn't that a little bit like asking your architect to draw up plans for your new house on spec so it'll be ready if/when your bank loan goes through? Or are you suggesting a trillion dollar plan should have been planned on the back of a cocktail napkin? Over lunch or dinner?

Trust me, we paid for the architectural drawings. That was, I suspect, the first shovel-ready job in the stimulus budget. I have to wonder, Mike, if you weren't protesting the architect took too long, would you instead be complaining he rushed through the plans too quickly?

I had a friend back in the early Eighties who absolutely loved the San Diego Chargers but absolutely hated their quarterback, Dan Fouts. Every game they lost was Fouts' fault. And the wins? All my buddy could do then was pick apart the plays that had gone badly. Fouts made the wrong call. Fouts threw the ball too short. Fouts threw the ball too long. Fouts couldn't handle the pressure. Fouts, Fouts, Fouts. My friend lost sight of the big picture, of the whole reason the game was being played, and let himself get all caught in petty details that never really mattered beyond the space of a breath.

Here's the big picture, Mike.

America is coming out of the recession. Considering the severity of our economic picture two years ago, which really was on a parallel with 1929, we're emerging from the recession a lot earlier than anyone could have expected. We're not out of the woods yet? It's not as fast as you would have liked? You wish unemployment was a leading indicator instead of a trailing one? Obama, Obama, Obama?

The bottom line, Mike, is that history proves the ONLY reliable way to pull out of a deep recession is through deficit spending. Our government clearly knew that. They knew the greatest thing we had to fear "was fear itself -- nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance." You can kvetch about when the money is spent, what it is spent on, and who gets to spend it all day if you want.

It doesn’t matter. Those are the details. They get decided by the people who won the last election. It could have been your guys. It wasn't and I think you know who to blame for that? That doesn't matter either, though, because your guys would have been doing the same important things that do matter.

What matters is that our government acted quickly to quell the fear. What matters is that our government injected a whole lot of money into our economy. Everything else is detail.


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35 posted 07-25-2010 12:38 AM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

What matters is that our government acted quickly to quell the fear. What matters is that our government injected a whole lot of money into our economy.

Where did they act quickly? Where did they inject all that money? Why, after almost a year of passing the stimulus plan, was less than 25% of it used? I don't see the major injection. In this last extension of unemployment benefits, Scott Brown made the suggestion that they take 38 Billion out of unused stimulus money to cover it. Obama refused, preferring to go into debt more than to touch the stimulus money they haven't used.

Ron, I just can't see where Obama's actions have improved anything. I think the health care bill will make it even worse. I think the coming tax raises will make it worse yet and I don't see unemployment going down.

Could the republicans have done any better? I can't even say that, although they wouldn't have gotten involved with the new health care bill, the way it was written.

The proof will be in the putting, er, pudding, I suppose
Denise
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36 posted 07-25-2010 12:08 PM       View Profile for Denise   Edit/Delete Message      Find Poems  View IP for Denise

People still have discretionary funds? Where can I get me some of that?!!!!
Ringo
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37 posted 07-25-2010 04:25 PM       View Profile for Ringo   Email Ringo   Edit/Delete Message      Find Poems  View IP for Ringo

quote:
This is not made by or for the Department of Labour though is it?

Actually, it doesn't need to be. The graphic as depicted is close enough to their numbers as well.

According to the Bureau of Labor Statistics (a government agency), the following has happened in the last year (actually, June 2009 to June 2010):
~The number of employed workers dropped by 1 million from 140 million to 139 million.
~Number of people not in the workforce increased from 3 million to 3.8 million
~The number of people NOT COUNTED in the unemployment statistics increased from 2.1% of workers to 2.5% of total workers
~ The forecast for August unemployment numbers is 9.8%

The people who are not counted in the unemployment figures include:
~Those who are out of work due to bad weather and will be able to resume their jobs at a later time (regardless of how long it takes)
~Discouraged Workers who have used up all of their unemployment compensation and have no job prospects
~Workers who are unable to find full time jobs to support themselves and their families, so they are working at part time jobs (25 hours or less) to keep from starving.
~Those on Maternity Leave
~Those who have been out of work for longer than 4 weeks
~Teenagers who have lost their jobs due to the economy

Does one (the Democratic Blank check) have anything to do with the other (true unemployment being in the neighborhood of 17%)? I don't actually believe so in the specifics. I feel, though, that it does apply in the fact that the entire thing last February was yet another of the Congressional "Must Passes" that did nothing to stop the economic decline, and- instead- added to the economic smack down because it increased the deficit and the debt, which- in turn- caused the American public to lose confidence in their government, their elected leaders, and the economy. Once that started happening, the pocketbooks snapped shut and the dollars stayed in their wallets because they "knew" the worst was yet to come, and they wanted to have cash for when it got "really bad" and couldn't make enough at that point.


Life's journey is not to arrive at the grave safely in a well preserved body, but rather to skid in sideways, totally worn out, shouting, "WHAT A RIDE
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38 posted 07-25-2010 08:57 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

quote:
Where did they act quickly?

Uh, Mike, weren't you the one who just said, "It was just a ploy of his to go along with the immediate, 'we must pass it now or we're doomed!!', scenario?"

quote:
Where did they inject all that money?

Well, Kalamazoo for starters, Mike. All over the place.

quote:
Obama refused, preferring to go into debt more than to touch the stimulus money they haven't used.
I'm no financial guru, Mike, but I don't think money is ever unused. Not unless you bury it under your mattress? Money, after is, is capital. If it's not under your mattress, it's circulating.

quote:
Ron, I just can't see where Obama's actions have improved anything. I think the health care bill will make it even worse.

So do I, Mike. I can, however, understand how other people can see that cost as acceptable. For example, the money we are spending on defense right now will also make the economy worse. Do you think the economy should be more important than security?

quote:
I think the coming tax raises will make it worse yet ...

What coming tax raises, Mike? I haven't heard anything about taxes being raised?

Or are you talking about the scheduled elimination of Bush's tax cuts?

Don't worry, it won't happen. It should, especially the cuts for the wealthy, but it won't. The Dems are split, with too many holding to the conventional wisdom that taxes shouldn't increase in a recession. I don't think they'll come up with the necessary votes to pass new tax cuts before Bush's expire, so I'm guessing they'll vote to "extend" the existing cuts. Until after the elections in November. Ya gotta love politics, right?

quote:
... and I don't see unemployment going down.

It'll continue to go down, I think. It just won't go down very fast. And that's going to be the biggest single factor determining the elections in 2012. I predict unemployment will be about 8 percent at the end of Obama's first term. Which may well prevent him from ever seeing a second term.

quote:
... that did nothing to stop the economic decline, and- instead- added to the economic smack down because it increased the deficit and the debt, which- in turn- caused the American public to lose confidence in their government, their elected leaders, and the economy.

So, Ringo, you don't believe deficit spending is the correct move in a deep recession? In spite of what history clearly shows?


Balladeer
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39 posted 07-25-2010 09:22 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

I stand corrected, Ron. Yes, they DID act quickly....to get it passed. That's about it...and, yes, the money does appear to be under a big government mattress, Kalamazoo notwithstanding.

You don't think the tax cuts will be eliminated? I'd like to agree but I don't think so. Holder, the fellow who doesn't consider paying his own taxes a priority, was on tv today predicting that, at least, the cut on those fabulously wealthy individuals making 200,000 or families at 250,000, would be eliminated. We'll have to see. There will be a lot of arm-twisting behind the scenes on this one.

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40 posted 07-26-2010 08:45 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

WASHINGTON (Reuters) – The economy is not likely to slip back into recession but letting tax cuts  for the wealthiest Americans expire is necessary to show commitment to cutting budget deficits, Treasury Secretary Timothy Geithner said on Sunday.

In appearances on several Sunday talk shows, Geithner said only 2 to 3 percent of Americans -- those making $250,000 or more a year -- will be affected when tax cuts enacted under former President George W. Bush end on schedule this year.

Republicans want to extend the tax cuts and Democrats are divided but Geithner said reductions for top earners should end.

.

...and, in one of the more incredible comments to come out of his mouth..
"We think that's the responsible thing to do because we need to make sure we can show the world that (we're) willing as a country now to start to make some progress bringing down our long-term deficits," he said on ABC's "This Week" program.

Duh! Ya think???
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41 posted 07-26-2010 10:11 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

I happen to agree with Geithner; tax cuts for the wealthy make absolutely no economic sense at all. Not only should they be eliminated, they should never have been passed in the first place.

I spent a lot of time in this thread talking about the past, about the Great Depression, about our climb out of the Depression, about the economic boom America experienced for almost two decades following WWII. That boom was a time of incredible prosperity and equally incredible optimism (the Cold War notwithstanding).

Get ready for a laugh. When the war ended in 1945 the top tax rate in this country was 91 percent! It never dropped below 88 percent until 1963, when it was lowered to 70 percent. We're talking about the most prosperous time this country has ever seen.

Letting the rich pay for the privilege of being rich didn't seem to destroy our economy then. I don't think it will now either.

'Course here's the thing: I don't get to vote either for or against the tax breaks. And neither does Geithner.  


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42 posted 07-26-2010 10:14 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

Then do you also agree that 200,000 describes "the rich"? Even for small business owners, you know, the guys who hire people? Are these "the wealthy" you refer to, Ron?
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43 posted 07-26-2010 11:29 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

Occupation doesn't greatly matter to me, Mike. If someone is netting (and that's an important distinction) $200K a year in personal income, yea, I think they should pay taxes that are commensurate with the opportunities they enjoyed.

Income tax certainly doesn't have any impact at all on the number of people they might or might not hire. Those are direct costs, of course, and are deducted from gross before arriving at net. Indeed, if someone at that income level wants to pay less in taxes . . . they can hire more people and thus incur more costs of doing business. That would be foolish, of course, but no less foolish than NOT hiring people because you have to pay taxes on the money you make.
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44 posted 07-26-2010 11:44 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

with the opportunities they enjoyed....nice phrasing. How about with the ways they busted their asses to make it? Maybe we should just put up signs..WORK HARDER SO YOU CAN PAY THE GOVERNMENT MORE.? That should encourage people, dontcha think? That should go hand in hand with the signs WORK LESS SO YOU CAN PAY NOTHING.

This is a time we should be encouraging people to expand their businesses, not the reverse. We already pay a self-employment tax that average workers don't pay.

Net income? That will be interesting to see. I believe the government will find a way to get around that, too, as well as lowering the 200k limit next time around.
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45 posted 07-27-2010 10:50 AM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

quote:
How about with the ways they busted their asses to make it? Maybe we should just put up signs..WORK HARDER SO YOU CAN PAY THE GOVERNMENT MORE.?

Pragmatically, Mike, that makes more sense than "Work harder and pay less." I think it would be great if we could penalize lazy people and reward ambitious ones. Unfortunately, running the country on the backs of the poor isn't going to work.

I know a whole lot of people making really good money who have never busted their ass a single day in their life. And I've known just as many others who have worked from sun up 'til sun down and struggled just to put enough food on the table. Effort and success are poor correlaters; there's a reason we call it capitalism, not effortism. I suspect that's why we tax income, not sweat?

quote:
We already pay a self-employment tax that average workers don't pay.

Don't be silly, Mike. Everyone pays for social security. Those employed by others simply pay for it in lost wages instead of writing a check to the government. It's the price we pay for believing, as a country, that people are too stupid to save for their retirement without being forced.

quote:
Net income? That will be interesting to see. I believe the government will find a way to get around that, too, as well as lowering the 200k limit next time around.

They haven't tried to "get around it" since the Civil War, when the first income tax laws were passed. It's always been calculated on net, not gross, and you'd have a really hard time convincing me that was likely to change in our lifetime.


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46 posted 07-27-2010 08:10 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

I know a whole lot of people making really good money who have never busted their ass a single day in their life. And I've known just as many others who have worked from sun up 'til sun down and struggled just to put enough food on the table.

....and you don't know any who have worked hard and made a success for themselves by their hard work and perserverance? You should read more, Ron....

It's always been calculated on net, not gross, and you'd have a really hard time convincing me that was likely to change in our lifetime.

Oh, it will be based on net, alright. The question will be how will that "net" change?

.
NEW YORK – The disconnect between Wall Street and Main Street is growing.

Americans' confidence in the economy faded further in July, according to a monthly survey released Tuesday, amid job worries and skimpy wage growth. That's at odds with Wall Street's recent rally fueled by upbeat earnings reports from big businesses such as chemical maker DuPont Co. and equipment maker Caterpillar Inc. That's because the pumped-up profits are being fueled by cost cuts like layoffs and overseas sales. In fact, big companies have shown few signs they're ready to hire.

The Consumer Confidence Index came in at 50.4 in July, a steeper-than-expected decline from the revised 54.3 in June, according to a survey the Conference Board. The decline follows last month's decline of nearly 10 points, from 62.7 in May, and is the lowest point since February. It takes a reading of 90 to indicate a healthy economy — a level not seen since the recession began in December 2007.

"Consumers have a much different view of the economy than the stock market does, and their views matter more to the economy," said Mark Vitner, an economist at Wells Fargo. The index "tells me the economy is heading for slower growth in the second half. We have low expectations for back-to-school."

http://news.yahoo.com/s/ap/20100727/ap_on_bi_go_ec_fi/us_economy

If that was the purpose of the stimulus package, Ron, to instill confidence in the populace, it's not going so well.....
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47 posted 07-27-2010 09:58 PM       View Profile for Ron   Email Ron   Edit/Delete Message      Find Poems   Click to visit Ron's Home Page   View IP for Ron

Still listening to what people say instead of what they do, Mike?  

People are worried. I'm not denying that. But almost no one has panicked. People are still spending money, people are still making plans for the future, and by and large, people are still getting by. Had there not been quick and decisive action by our government, none of that would be true.

The Great Depression was triggered by economic events that were not at all dissimilar to what we faced two years ago. I mean, think about it. The largest company in the world just went bankrupt. The stock market crashed. Millions are out of work. Hundreds of banks have failed. And America keeps trucking along, worried no doubt, but still taking care of business.

I don't think one should confuse concern with lack of confidence, Mike. All you have to do is read about what happened in the early 1930's to see the difference.
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48 posted 07-27-2010 11:26 PM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

Had there not been quick and decisive action by our government, none of that would be true.

We will agree to disagree there.

I don't think one should confuse concern with lack of confidence, Mike.

I quoted the Consumer Confidence Report, Ron, not the Consumer Concern Report.

Of course, people are still spending. How can they not and live? How are they spending is the question. There was an article in the Miami Herald a while back giving a glimpse of that. Guess which businesses have fallen on hard times. Hairdressers, pool cleaners, lawn maintenance,  fitness gyms, manicurists, restaurants, catering halls.....see any common denominators there? They are services that can be done without...or done by the people themselves. That's where people are cutting back. They are getting more down to the basics, that is, if they are not buying 72 foot yachts like Kerry or 5 million dollar weddings like Clinton or vacations in Spain, paying for 30 5-star hotel rooms, like Michelle. They are spending as little as possible because they lack confidence that things will get better any time soon.  Small businesses are not hiring because they are uncertain what Obama is going to slap them with, so they are waiting it out. This is not a nation of confidence, Ron. It's a nation of flinchers, a nation of people waiting for the other shoe to drop. It is not the ambiance to promote confidence. Yes, there are those who will state that our economy is invincible. After all, we survived the great depression, world wars, recessions and we're still here. They claim we will bounce back because we always have. I hope they are right but I feel we are headed for a different America that survived those pitfalls....and I'm not confident about this one....unless we shrug.
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49 posted 07-28-2010 08:09 AM       View Profile for Balladeer   Email Balladeer   Edit/Delete Message      Find Poems   Click to visit Balladeer's Home Page   View IP for Balladeer

WASHINGTON—Eighteen months after President Barack Obama administered a massive dose of spending increases and tax cuts to a weak economy, a brawl has broken out among economists and politicians about whether fiscal-stimulus medicine is curing the illness or making it worse.

The debate is more than academic. It is shaping congressional decisions on whether to respond to the distressing prognosis for the U.S. economy with more government spending or a dose of deficit reduction.

One side says Mr. Obama's $862 billion fiscal stimulus prevented an even graver recession. Cutting the deficit right now, this side insists, would send the economy into a tailspin. The other side questions the benefits of the stimulus and argues addressing long-term deficits now is crucial to avoid higher interest rates and even bigger economic problems down the road.

And then there is a camp in the middle—defending last year's stimulus, but urging a deficit-cutting plan now.

Meanwhile, the White House says it will allow taxes to rise on families with incomes above $250,000. Republicans and a few Democrats argue that allowing President George W. Bush's income-tax cuts on those upper-income households to expire at year-end, as the law currently provides, will choke the economy.

"Too many are searching for answers in the discredited economic playbook of borrow-and-spend Keynesian policies," Rep. Paul Ryan, a Wisconsin Republican who is pushing a long-run deficit cutting plan, said this month. "I reject the false premise that only forceful and sustained government intervention in the economy can secure this country's renewed prosperity."

Richard Trumka, president of the AFL-CIO union alliance, says if the government starts cutting deficits now, "We'll slip back into recession and possibly depression."

Public opinion seems to be with the deficit fighters. A June Wall Street Journal/NBC News poll asked respondents which statement came closest to their views: (1) The president and Congress should worry more about boosting the economy even if it means bigger deficits; or (2) The president and Congress should worry more about keeping the deficit down even if it means the economy will take longer to recover. Some 63% chose deficit-fighting.

Most mainstream economists agree on some points: The U.S. economy needed some kind of fiscal help in 2009 as the financial system teetered and the Federal Reserve pushed interest rates near zero. The deficit has to be reined in eventually, in part by restraining the growth of spending on health and other benefits. And developing a long-term plan to do so now would reduce risks of a future financial market calamity and help hold interest rates down.

But today, neither side can say with certainty whether the latest stimulus worked, because nobody knows what would have happened in its absence.

Unlike the U.S., Europe has embraced, at least rhetorically, the primacy of deficit-reduction now. In some instances this is because of pressure from markets and the International Monetary Fund, such as in the cases of Greece and Spain, and in other instances because of local politics, as in the cases as the U.K. and Germany.

"It is an error to think that fiscal austerity is a threat to growth and job creation," European Central Bank President Jean-Claude Trichet said recently. "Economies embarking on austerity policies that lend credibility to their fiscal policy strengthen confidence, growth and job creation."

The case that government deficit spending can be vital at times of recessions dates to John Maynard Keynes, the British economist whose teachings dominated economics for decades after the Great Depression. "Pyramid-building, earthquakes, even wars may serve to increase wealth," Mr. Keynes said in his 1936 classic, "The General Theory of Employment, Interest and Money."

Both camps emphasize past victories. Keynesians cite deficit spending as the eventual cure for the Great Depression and see parallels to today and to Japan's premature deficit-cutting in 1997 as the cause for its return to recession.

The other side points to Margaret Thatcher, who in 1981—ignoring protests from hundreds of economists—raised taxes and tightened government purse strings to cut a budget deficit in mid-recession. The U.K. emerged with lower inflation, lower interest rates and a recovery.

Keynesians say that episode isn't relevant today because the U.S. can't cut interest rates, as the British did. Another difference: The British pound lost half of its value in the 1980s, spurring exports. The dollar, by contrast, strengthened after the financial crisis hit because global investors saw it as a safe haven.

The Obama administration is stocked with heirs of Mr. Keynes, including academics Christina Romer and Mr. Summers. Ms. Romer famously projected in January 2009 that without government support, the unemployment rate would reach 9%, but with support the government could keep it under 8%. It's 9.5% today.

It's hard to isolate the impact of fiscal stimulus from other actions. Congressional approval of the stimulus in February 2009 coincided with an improvement in the economy. But before Mr. Obama's stimulus was enacted, the Fed pushed short-term interest rates to zero and began buying mortgage-linked securities to drive down long-term interest rates. Soon after the stimulus was okayed, the Fed expanded its securities purchases. A turnaround in the stock market coincided with the Fed's expanded effort and with a separate Fed-Treasury "stress test" to shore up confidence in the nation's banks.

A study of 91 fiscal stimulus programs in 21 developed economies between 1970 and 2007 by Harvard's Alberto Alesina found tax cuts were more stimulative than government spending. "I would have done more on the tax side than on the spending side," he says.

Underlying the debate is a long-running argument about how much of a lift the government gets from spending more or taxing less. Keynesians argue that when the economy is distressed, a dollar spent by the government multiplies in value. It gives a worker income the private sector has failed to produce, which he spends, creating demand for goods and services.

Ms. Romer argued last year that this "multiplier" for government meant every dollar spent created about $1.50 worth of demand.

Some economists say that's too high. Valerie Ramey of the University of California at San Diego, initially thinking as a Keynesian, developed doubts after sifting through historical examples. During the military build-ups of World War II, the Korean War and the Reagan era, a dollar spent added roughly a dollar of growth, she says. Although Ms. Ramey supported stimulus in 2009 because the economy was so weak, she doesn't advocate more now. "We just don't have enough evidence to prove that it's good."

Robert Barro, a Harvard economist, found even smaller multipliers: A government dollar spent creates about 80 cents worth of growth, or possibly less, he says. Government spending, he says, crowds out private sector spending that would otherwise be taking place.

Economists who say Mr. Obama should have relied more on tax cuts cite research of an unlikely source: Ms. Romer, his adviser. In a study she and her husband, David Romer, conducted before she joined the administration, Ms. Romer found large multipliers from tax cuts, which she concluded "have very large and persistent positive output effects." Tax increases, she also found, hurt growth.

That study didn't address whether spending is better than tax cuts, though. And she says the gravity of the economic situation called for both tax cuts and spending.

Tax cuts haven't been a cure-all. President Bush tried $168 billion of tax rebates in 2008, and a recession ensued anyhow. Economists note that households tend to save temporary tax cuts or use them to pay down debt, so they don't provide much short-term stimulus.

Before the debate over the efficacy the 2009 stimulus is resolved, Congress is turning to whether it's time to start cutting deficits.

Mr. Alesina says it is: In 107 periods since 1980 when governments cut deficits, doing so tended to quicken economic growth, not slow it. But his study focused on periods when central banks could offset deficit cutting with lower interest rates. The Fed has exhausted that avenue.

Carmen Reinhart, a University of Maryland economist who has studied the fiscal aftermath of financial crises, says more stimulus could be counterproductive because it could lead the public to expect even higher taxes in the future.

Instead, policy makers now need to convince the public that they are committed to reducing future deficits, without acting on that commitment right away, she says. That could hold interest rates down, without yanking money from an ailing economy too quickly.

"We are not in an easy position," she says. "Credibility is going to be difficult to achieve."
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