Seven Questions about the economy...

[OSUchris]

Allright so here we are, We have a signed economic stimulus package, some state governors rejecting funding, and at least 46% of the nation questioning the wisdom of the plan to begin with. Soooo.... I pose the following questions:

1. Do you think that the United States (and the world) is in a profound economic crisis (If not...please explain why) ?

2. Do you think that we should allow banks/industries/individuals to fail during this time?

3. Do you think that Government involvement (i.e. tax cuts/spending increases) is required to alleviate this crisis?

4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy?

5. How exactly would tax cuts solve the problem, and please consider the current trend of a lack of consumer spending.

6. How exactly would an increase in government spending solve the problem, and please consider the impact of future generations on the fiscal deficit.

7. So, if you disagree w/ all approaches on this plan, what (if anything) would you do to rebuild our nation's economy?

FYI, I am sure you know I have my own opinions on these, but I have tried to make these questions as non-partisan overall as possible. I will answer my own questions in a response.

[Deepfork]

Government intervention in the mortgage industry and mismanagement of Freddie Mac and Fannie Mae got us in this position.

[OSUchris]

Government intervention in the mortgage industry and mismanagement of Freddie Mac and Fannie Mae got us in this position.

That's great Deepfork, please answer the questions though...

[CaliforniaCowboy]

I'll give it a shot, but the questions sound to partisian for my tastes, and way to melodramatic.... I don't even understand what some of the are asking...

but here goes.


Allright so here we are, We have a signed economic stimulus package, some state governors rejecting funding, and at least 46% of the nation questioning the wisdom of the plan to begin with. Soooo.... I pose the following questions:

1. Do you think that the United States (and the world) is in a profound economic crisis (If not...please explain why) ? No. It's a recession, and a worst a mild depression that won't last long. Nothing profound about it.

2. Do you think that we should allow banks/industries/individuals to fail during this time? They already are. A giant brokerage firm, more than a dozen banks so far in 2009, people forclosed on all over the place. etc. etc. A loan might be okay, but not a bail-out, and certainly not the pork package that the Dems forced down our throats.

3. Do you think that Government involvement (i.e. tax cuts/spending increases) is required to alleviate this crisis? Yes. Both. Mostly tax cuts, and not where Obama is cutting. Cut corporate tax. Cut capital gains tax. Create cheap loans for small business. Cut the international give aways and spend it on infrastructure.

4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy? I'm not sure we'll have "total lack of consumer confidence", unless it's caused by this current economic spendulous package.

5. How exactly would tax cuts solve the problem, and please consider the current trend of a lack of consumer spending. People aren't spending because their worried about thier jobs. Cut corporate tax, and capital gains tax. Personally, I think that "lack of consumer spending is vastly over stated by the media.

6. How exactly would an increase in government spending solve the problem, and please consider the impact of future generations on the fiscal deficit. It wouldn't, unless we cut somewhere else like I said above. Reagan increased spending but he did so on technology that put tons of folks to work.

7. So, if you disagree w/ all approaches on this plan, what (if anything) would you do to rebuild our nation's economy? I don't even know what the plan is... evidently we're trying to save the salt water marsh mouse and Amtrac; I'm not sure what else it's supposed to do except build a bullet train from Las Vegas to Disneyland that nobody will ride.

FYI, I am sure you know I have my own opinions on these, but I have tried to make these questions as non-partisan overall as possible. I will answer my own questions in a response.

Those questions aren't phrased very well, IMHO.

e.g., the first question should have asked where we're even in a crisis, not define one for us that many might not agree with.

[Vulgar Display of Orange]

Straight from the EIB teet.

[Tokyoken]

Some of you guys need to return to the classroom. Both questions and answers sound somewhat sophomoric or sophomoronic. I'll give you a little credit though for trying. Now, don't touch another drop of hootch the rest of the night.. Go Pokes!!!

[OSUchris]

Some of you guys need to return to the classroom. Both questions and answers sound somewhat sophomoric or sophomoronic. I'll give you a little credit though for trying. Now, don't touch another drop of hootch the rest of the night.. Go Pokes!!!

Okay Tokyo, give me your own questions...

[OSUchris]

Allright so here we are, We have a signed economic stimulus package, some state governors rejecting funding, and at least 46% of the nation questioning the wisdom of the plan to begin with. Soooo.... I pose the following questions:

1. Do you think that the United States (and the world) is in a profound economic crisis (If not...please explain why) ?
Yes, I think that because we live in a consumption based economy and nobody is consuming then we are in a crisis. Businesses aren't spending, consumers aren't spending, no one is spending. I don't think we are in a depression... yet, but I think that unless something is done then we will be in one.

2. Do you think that we should allow banks/industries/individuals to fail during this time

Some yes and some no, Some of the banks and individuals that contributed to this situation should be allowed to go under. But other banks possess too much of a psychological tie to the public to allow to go under (i.e. CitiBank, Bank of America, Fannie, Freddie etc...). Some individuals who bought homes they couldn't afford should go under, but those who bought homes at reasonable rates and saw the values of their homes go under because of foreclosures in their neighborhood, should be able to have help to restructure their loan.?

3. Do you think that Government involvement (i.e. tax cuts/spending increases) is required to alleviate this crisis?
Yes, and both, I think that reduced corporate rates are important, but I also think that a massive increase in infrastructure spending (even greater that BHO's bill does) is important and needed. I also think that because consumers aren't spending any money that the government is the only source that can.

4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy?
I think that because consumer's aren't confident in their economic situation and they aren't spending then nothing will change unless a jolt of money is infused into the right places.

5. How exactly would tax cuts solve the problem, and please consider the current trend of a lack of consumer spending.
I don't think tax cuts alone will solve the problem. Because people will save more than what they spend. Tax cuts have to be included w/ spending increases.

6. How exactly would an increase in government spending solve the problem, and please consider the impact of future generations on the fiscal deficit.
Government spending is the only spending that is happening right now. It will increase the deficit, but if the spending is done correctly it will result in future productivity increases and thus future revenue increases.

7. So, if you disagree w/ all approaches on this plan, what (if anything) would you do to rebuild our nation's economy?
I, for one, know that I am not smart enough to know what to do right now. I do know that things are bad. I work for a large (one of the largest) stable companies in the world. But I also know that if the client my company is contracted to now goes under, then so do I.


FYI, I am sure you know I have my own opinions on these, but I have tried to make these questions as non-partisan overall as possible. I will answer my own questions in a response.

[Vulgar Display of Orange]

1. Do you think that the United States (and the world) is in a profound economic crisis (If not...please explain why) ?

We'll see. I think once our big banks pull their thumbs out of their collective asses that things will turn around. Nothing like this is resolved overnight. I also think that once we get our act together that the rest of the world will follow.

2. Do you think that we should allow banks/industries/individuals to fail during this time?

Some yes and some no. We need strong banks. We need American cars built in America by Americans. What we need most though is responsibility. Other than the automakers, no other line of work in the US guarantees $55k + benefits and guaranteed raises out of the shoot with a pulse and a union card. This is unacceptable.

3. Do you think that Government involvement (i.e. tax cuts/spending increases) is required to alleviate this crisis?

Yes. I think we got the cart before the horse regarding the most recent economic stimulus as opposed to righting the banks. There should have been a comprehensive plan in place for the banks to manage their toxic assets and free up the credit market without completely throwing the taxpayers under the bus.

4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy?

Well the Bush tax cuts are staying in place until they were originally set to expire, so thats a start. The Times had a good article today about reducing the budget deficit, but nothing was exact. I think we will know more on Tuesday night and even more on Thursday when Obama's budget plan is released.

5. How exactly would tax cuts solve the problem, and please consider the current trend of a lack of consumer spending.

Tax cuts alone won't solve anything. The capital gains tax cut myth is farce at best. The payroll tax cut was a good start. Anything that will have an immediate impact is our best bet. Righting the banks should still be priority 1.

6. How exactly would an increase in government spending solve the problem, and please consider the impact of future generations on the fiscal deficit.

It's not so much the government spending, but spending in general. The banks are all but frozen, so no money is moving around. This relatively short-term influx of spending needs to happen while the credit market thaws out. If we get 12 or 15 or 18 months down the line and the banks are still pushing around their toxic assets then it will have all be for naught.

7. So, if you disagree w/ all approaches on this plan, what (if anything) would you do to rebuild our nation's economy?

Tighter regulations on the banking industry.

Organized labor for the most part has run its course in the US. It's time to open that can of worms. Labor unions securing lucrative contracts for their members to the detriment of the employer goes way beyond biting the hand that feeds. It is completely and utterly irresponsible.

And...

:ousucksnana::ousucksnana::ousucksnana:

For good measure.

[FloridaPoke]

Wow, so far a total lack of understanding of what makes our economy tick from the Obama'ites.

The stimulous package just passed is a perfect one to avoid the depression we endured in the 30's, but not for the current day.

We ARE NOT a consumer spending based economy. Our consumer spending only matters to the point that the transfer of payments go to foreign nations, who in turn buy our debt paper. Without our consumers, China can't buy our paper. Without our ability to sell paper, we collapse as a Republic. So, consumer spending is important in that realm. We ARE NOT an economy based on capital goods or manufacturing production (i.e., cars).

We have been, for many years now, an intellectual property economy. Our jobs are primarily in technology.

The government spending on infrastructure made sense when the masses of unemployed were blue collar workers. The WPA was a stroke of genious when the government spent money on infrastructure and simultaneously re-employed millions of out of work blue collar workers.

Today, spending billions on infrastructure will not put to work unemployed electrical engineers, software programmers and biochemists. In fact, the civil engineers of the Nation are laughing at what has been proposed as not even doable. There aren't enough engineers, draftsmen or skilled workers to complete the proposed projects, sans a major influx of workers from outside the US, thus creating a situation where our unemployed educated technologists will watch as uneducated, but skilled infrastructure workers spend their tax dollars on projects that will have little or no effect on the economy, which isn't hard goods, or civil engineering related.

The US has long been a leader and the envy of the world in intellectual property development. It is what our economy is based on. Why not invest where our strengths are versus the part of our economy we vacated and gave up decades ago? Why not invest in massive R&D?

Our housing wasn't the only irrational exuberence bubble. So were the balance sheets and profits of the financial industry broadly, the earnings multiples of all US stocks and asset pricing in general across the board. When a bubble occurs, it must be allowed to pop. The pain must be endured. And only then can rational asset pricing resume and normalcy proceed.

But borrowing debt from China, further leveraging our future.........so we can spend it on concrete and steel, installed by Mexicans.........is not going to "overnight" revert our economy to what it was 40 years ago. And even if it would, do we want to revert back to a low margin capital goods economy versus a high margin intellectual property economy? I don't think so. All one has to do is look at today's personal computer. The intel chip has $200 of margin in it. The Microsoft software has $180 of margin in it. All other components combined have about $30 of margin in it. And the assembly labor is at poverty levels. When confusion sets in, always follow the cash..........and the net margin. If we do that, we wouldn't be investing these levels of borrowed capital on crap that won't matter to the economy we already have, which is drastically different than what it was even 20 years ago.

Rant over

If

[FloridaPoke]

Here is a much better question than those asked above.

If the US government spent $390 billion by investing equity capital of new start-ups of entrepreneurial companies (versus $780 billion down a rathole), do you believe that would have a greater impact on the economy than what is proposed today?

Almost laughable if you really think about it. Yes, much of the investment would be lost on bad deals that don't pan out. But, the equity return on the good deals would pay back the $390B versus twice that going down a rathole.....and the resulting new business development and jobs would be exponential to the current package.

[Vulgar Display of Orange]

You realize that infrastructure is more than storm drains and parking lots right?

[FloridaPoke]

You realize that infrastructure is more than storm drains and parking lots right?

duhh

[legelegel]

FloridaPoke, please call Obama and tell him what you know and see.

[OSUchris]

Wow, so far a total lack of understanding of what makes our economy tick from the Obama'ites.
...

We ARE NOT a consumer spending based economy. Our consumer spending only matters to the point that the transfer of payments go to foreign nations, who in turn buy our debt paper. Without our consumers, China can't buy our paper. Without our ability to sell paper, we collapse as a Republic. So, consumer spending is important in that realm. We ARE NOT an economy based on capital goods or manufacturing production (i.e., cars).

We have been, for many years now, an intellectual property economy. Our jobs are primarily in technology.


OK, I will agree that we are not a manufacturing and exports based economy, but aren't the technology jobs and information capital jobs you reference dependent on consumers buying products, thus consuming? For example... Nike is headquartered about 2 miles from where I live, do they actually produce shoes there, no. But if people stopped buying Nike shoes do you think that IT workers, drafters, designers, engineers, would be immune to losing their jobs??? No!! Everything is connected, you can't separate a low paying job from a high paying job simply because of the salary grade and job title.

Let me use a more personal example... I work for a large multi-national corporation (let's just say the letters are a TLA (three-letter-acronym :) ), but the client I am contracted to is dependent on people traveling, what happens when other large multi-national corporations stop traveling for business? My company has no real 'low wage' workers, but relies heavily on the intellectual capital that you describe. Will I be immune from a job cut, no. Does that effect the high-tech worker you wax-poetic about in your rebuttal? Yes.


The government spending on infrastructure made sense when the masses of unemployed were blue collar workers. The WPA was a stroke of genious when the government spent money on infrastructure and simultaneously re-employed millions of out of work blue collar workers.

Today, spending billions on infrastructure will not put to work unemployed electrical engineers, software programmers and biochemists. In fact, the civil engineers of the Nation are laughing at what has been proposed as not even doable. There aren't enough engineers, draftsmen or skilled workers to complete the proposed projects, sans a major influx of workers from outside the US, thus creating a situation where our unemployed educated technologists will watch as uneducated, but skilled infrastructure workers spend their tax dollars on projects that will have little or no effect on the economy, which isn't hard goods, or civil engineering related.


As VDO says above, infrastructure is far more than roads and bridges, how is the broadband speed in Watonga, OK compared to any city in Europe?


The US has long been a leader and the envy of the world in intellectual property development. It is what our economy is based on. Why not invest where our strengths are versus the part of our economy we vacated and gave up decades ago? Why not invest in massive R&D?

R&D is great and absolutely necessary. But R&D into what? And who will monitor it? How will it immediately infuse capital into our economy?

[AnniePokely]

We can't be that broke...

We are going to pledge more than $900 million to help rebuild Gaza.
Forget all the jobs people are losing here...rebuild Gaza!



http://www.msnbc.msn.com/id/29352401

[Lewis the Pike]

1. Do you think that the United States (and the world) is in a profound economic crisis (If not...please explain why) ?
I believe we are in a major correction, that is the result of the overextension of credit from a prolong period of time, by the banking institutes. All banks, with very few exceptions, worked collectively to over extend credit, which in a short term will stimulate economic growth, but when that extension included houses (ARMs) and Cars (personal leasing versus buying) there was a point where the bubble had to burst. This is that time.


2. Do you think that we should allow banks/industries/individuals to fail during this time?
YES, if you make dumb decisions, you should not be reawarded; a new company should take it's place, one that will run smarter, more efficent and leaner.


3. Do you think that Government involvement (i.e. tax cuts/spending increases) is required to alleviate this crisis?
I believe tax cuts for research and development is a solid idea. I also belive a major overhaul of our nations infastructure is in order; So putting blue collar America back to work in the short term would kill two birds with one stone.


4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy?
I do not understand Consumer Confidence Indexes, so I am defering on this question.


5. How exactly would tax cuts solve the problem, and please consider the current trend of a lack of consumer spending.
I propose tax cuts for corporate investment, not for individual retail spending. I want tax cuts that will have a multiplier effect, not a one time upgrade on a DVD player.



6. How exactly would an increase in government spending solve the problem, and please consider the impact of future generations on the fiscal deficit.

I believe a more efficent infastructure, and greener economy will reduce our reliance on foreign imports of energy; will improve the environment, improve our trade defecit, and employ people on a short term basis. I believe it is the worst of a bad situation.

7. So, if you disagree w/ all approaches on this plan, what (if anything) would you do to rebuild our nation's economy?
I believe the rules of the game have changed, and individuals will need to collectively move from a borrowing mindset to a saving mindset. America "jumped the shark" about 5 years ago with overborrowing. MTV Cribs is for athletes/entertainers and moguls, not for Joe and Joanne Schmoe living in Broken Arrow, OK

[CaliforniaCowboy]

Here's a real question for you...

Do you think we would have been better off to take all three of the "stimulous" packages, roll them into one huge amount, and give it to the taxpayers, by tying it primarialy to mortages (good ones, bad ones, new ones)?

If we gave 25,000 to all of the 112 million households, told them to spend the money to fix their mortgages, spend the difference, or buy a home; then there would not by any bad mortages, people would have money to spend, banks would be out of trouble, investors would be out of trouble, home values would rise, housing starts would rise... etc., etc. (2.8 trillion)

Even if we prorated it to fix the really bad mortages, and gave those "solvent mortages" only 10,000; then at least EVERY taxpayer and home owner would get something instead of the good paying for the bad.

Credit would be flowing, companies would be hiring, etc., etc.

The problem was with mortages, and they're not solving the mortage/housing problem; they're building high speed trains, and medical systems, and saving the salt water marsh mouse... for gosh sakes.

Am I out in left field with this idea; or is the government just trying to steal from us to save their buddies and promote wealth redistribution?

[MisterE-NYC]

Some individuals who bought homes they couldn't afford should go under, but those who bought homes at reasonable rates and saw the values of their homes go under because of foreclosures in their neighborhood, should be able to have help to restructure their loan.[/I][/B]?


Ok, what does the current value of the persons home have to do with anything (unless they are trying to sell it). If you bought a 500,000 dollar home, but the fair market value is only 250,000, that just means if you sell it, you will only be able to get 250,000. Otherwise, it does not matter. You may feel like you got screwed, other properties may not be kept up, and you may be able to find something cheaper. But never the less, you signed a note for 500,000.

That means, you decided it was worth 500,000. All else being equal, i should not matter what anyone elses house is worth. It doesnt matter what it is currently worth. It matters what you thought it was worth when you bought it.

If you still have the same job and same income, why should you be less responsible for the house you bought. I have purchased plenty of crap, and it goes on sale a week after I can take it back. Am i perturbed? yes. But I decided to pay the price, because that is what I valued the object at. I determined the maximum price I would pay, and paid it. If I was just buying it because I thought it would be cool, or because i was being irresponsible, then I screwed myself.

Back to the matter. Basically it means instead of blaming myself for buying a house I couldn't afford, I am blaming an external source that has nothing to do with the problem at hand.

Now, if you want to sell the house, ya, you are kinda screwed. You bet on red 14 and it came up black 15. Sometimes you win sometimes you lose. And there are programs to help you sell if that is what you are trying to do.

If you want to stay in your house, a house that you bought and couldnt afford to begin with, and are blaming decreased values... then I have no sympathy.

I deal with people every day that were to busy keeping up with the Jones, that they forgot to first keep up with themselves.

Ya, there was predatory lending, but lets see, if you are taking out a 500,000 dollar mortgage, you should read it. If people are to irresponsible to do that, then too bad.

(Yes, I know there are some cases where a family member died, or you got laid off, and there are programs to help those people. I have no problem with that. It is the irresponsible people that grind my gears.)

These people pay 300 a month in cell phone and cable bills, and complain about not being able to afford their mortgage. Some have a 900$ lease, and they complain about not being able to pay their mortgage. Some people, a family of 2 spend 500 a week on grocery's, and complain about not being able to pay their mortgage (I spend between 30-50 a week).
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I could and may answer this whole little question thing eventually. I just dont know when I will, if I do.

[osupsycho]

MisterE I agree with most of what you say but the reason most of these people are now in trouble is that their ARM mortgage payment is now more than they can afford AND the house is no longer worth what they owe so they can't sell. For me I have little sympathy for these people becuase of the same things you listed and they should have known better...

[GoPokes83]

4. What impact do you think that a total lack of consumer confidence/spending will impact any changes in economic policy?

It won't impact policy at all. I've seen polls that say as many as 70% of Americans are against the stimulus package, yet it goes through in a landslide. Politicians don't care what we think or want, so why would anything we do short of armed rebellion change their policies. Washington no longer works for the people.

(Note: I'm not abdicating armed rebellion, just making a point.)

[jakeman]

MisterE I agree with most of what you say but the reason most of these people are now in trouble is that their ARM mortgage payment is now more than they can afford AND the house is no longer worth what they owe so they can't sell. For me I have little sympathy for these people becuase of the same things you listed and they should have known better...

Yep. Apparently these people's parents never told them, "if it sounds too good to be true, it probably is".

Like it or not, buying a house is a gamble. It always has been. It's an investment, sometimes investments lose money.

You can't sustain a 500k home on a 72k income. I don't really care that they have 4 kids either, and need the room. That was a personal choice. Nobody forced them to have more kids than they could afford. That was their choice. It's time for people to suffer some consequences for their irresponsible behavior. Sounds harsh doesn't it? Life is harsh. Deal with it.

[FloridaPoke]

For those questioning my infrastructure argument, a friend just emailed me an .xls spreadsheet of where the money is going, and it proves my point in spades. They want you to believe that high tech IT infrastructure is included, and that part doesn't show up in rounding error. From scanning it, it looks like 90% is roads, buildings, mass trans, and electrical gen infrastructure just as I suspected. Even the technology component is for R&D buildings and labs, not R&D. The education component is almost all buildings.

I heard the head of the American Society of Civil Engineers on NPR the other day say the entire thing was a farce, as there simply isn't enough bandwidth to complete all of the projects, meaning there will be shortcuts and malfeasance.

[JimBob]

Like it or not, buying a house is a gamble. It always has been. It's an investment, sometimes investments lose money.

No sheet, Sherlock. Wanna buy a condo in Dallas?:officechair:

[GoPokes83]

No sheet, Sherlock. Wanna buy a condo in Dallas?:officechair:

Pennies onthe dollar because someone didn't do what they promised? Hell yeah, where is it?