Where is the US economy headed?

@realjohnboy,

rjb :

that's the way i see it too .
i compare today's economy (not just the U.S. but the world-economy) to a ship or airplane caught in "sustained" turbulence - such as a tsunami .
it doesn't help much at this point to look back trying to figure out how it happened or who might be at fault .
what is important NOW is trying to choose the best course of action to survive the turbulence and eventually try to get to a safe port .
hbg

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@hamburger,

We all know that hb. What is the best course of action is where the problem lies.

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@spendius,

I certainly agree with that, Spedius. Please look at the next post. Please feel free to "quote" it making whatever revisions you desire.

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IS THERE A DOCTOR IN THE HOUSE?

1) Stop The Bleeding:
a) Seize failing banks
b) Slow down foreclosures
c) Help the auto makers
d)
e)
f)
g)
2) Stabalize The Patient:
a) Extend unemployment benefits
b) Renogiate mortgages
c)
d)
e)
3) Operate:
a) Cut tax rates for some
b) Increase tax rates for some
c) Cut wasteful government spending
d)
e)
f)
4) Rehabilitate the patient:
a) Drill, drill, drill
b) Invest in infrastucture projects
c)
d)
e)
f)

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@spendius,

Quote:

What is the best course of action is where the problem lies.

as an article on the frontpage of the globe & mail (toronto's business newspaper) says today : "you might as well ask your next taxi driver" .
various "experts" (economists , business and government leaders ... and the list goes on) , have all prescribed varied and different "best course of action" remedies .
perhaps one of those remedies might work , but who'll be able to pick the right one ?
it's much like standing at an unmarked crossroad without a roadmap or compass .

it reminds me somewhat at the 1945 to 1948 after-war period in germany when people were "living for the day" .
if you had enough to eat to get you through the day , you were satisfied ; if you didn't , you hoped for better luck the next day .
there was no use for ordinary people to look "for a better future" . everything took on a grey colour .
once the currency reform arrived in june 1948 , people relized that there was a future after all .
but it is difficult - perhaps impossible - for younger people (under 60 !) to understand what happened during the time from 1945 - 1948 .

(and people in north-america had "the dirty thirties" - now largely forgotten )

i sure hope that is NOT going to happen now , but our parents and grand-parents went through those "recessions" twice and still made it - though not with many riches .
hbg

1 Reply

@realjohnboy,

rjb :

i think you got it right !
do you have an appointment with president-elect obama yet to submit your sensible suggestions ?
Wink

hbg

ps it might be a good idea to bring along a few trillion dollars to "grease the skids" .

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@hamburger,

You see hb. You can write a great post after all.

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@hamburger,

My posing of ideas under IS THERE A DOCTOR IN THE HOUSE were not necessarily what I would like to see. Rather it is a horizon of when things, whatever the things are, could likely be expected or needed to have happen. The "drill, drill. drill" option or the rebuilding of the infrastructure is a long way out. And with oil at $50 a barrel, even further out for that one.

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@realjohnboy,

There are many doctors in the house, but most will not know how to begin the cure for "this" illness. This disease will spread much further for the next couple of years, because we're still in a state of "spreading the disease." A placebo such as what happened on Friday that gave confidence to some investors will be short-lived. Many more people will become ill while the doctors try to figure out the best course of action to remedy this milady.

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@cicerone imposter,

the problem will get worse because nobody is ready to understand how radical the cure must be, how deep and how profound the cutting out must be to get rid of the diseased parts.

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@cicerone imposter,

I, for what it is worth, was asked on some economics thread for an opinion of how long this all might take to get back to "normal." I said it might be 5 years. Hawkeye, would you like to take a wack at the DOCTOR post. It is easy to complain, isn't it? You, too, CI. Would you rather complain or do you have a suggestion. If not, I guess that is fine, as long as yall don't come along later and second guess.
I don't mean to be harsh. It is not my style if any of yall know me. I am suggesting that these are troubled times, and it will be so easy for folks to second guess and pretend that they had a better idea. Post the better idea here, now.

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@realjohnboy,

Obama has it right....we have to stimulate the economy and we may as well spend the money doing stuff that needs to be done. Also, better to protect the average citizen by making sure that they have a job with income than to protect the fat cats who caused this problem.

Long term we need a new financial system, and much more regulation. We need more transparency, more government involvement,better government involvement, we need to end the revolving door between jobs as regulator and a job in the industry, we need a much higher min wage, we need higher taxes on those making more than 50K a year, a lot higher taxes on those making 150k a year or more. Right now we need to let those who took the risks take the fall as well, only in the most extreme situations should the government be bailing out companies, nationalizing the risks. The current mega bailouts are mega stupid, let the companies take the loses and protect the little people as best as possible.

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@realjohnboy,

I don't mean to belittle you comments, hawkeye, but what have you suggested?

realjohnboy wrote:

IS THERE A DOCTOR IN THE HOUSE?

1) Stop The Bleeding:
a) Increase the minimum wage
b) Let businesses that made wrong decisions fail
c)
d)
e)
f)
g)
2) Stabilize The Patient:
a)
b)
c)
d)
e)
3) Operate:
a) Increase tax rates on those making over $50K or $150 K
b)
c)
d)
e)
f)
4) Rehabilitate the patient:
a) Establish a new system with more regulation; more transparency
b)
c)
d)
e)
f)

Is that it?

1 Reply

@realjohnboy,

rjb, I've given my response to your "doctor in the house" in a manner that suggests nobody knows the "real" answer to your question, although I made guesstimates on other threads "at about five years." Even then, the definition of "normal" will never be the same as in the past.

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@cicerone imposter,

nobody knows what will work....A lot of the FDR programs did not do what they were expected to do, and the economy is a lot more complex now. Our ability to see the results of our actions when we change the economy is very poor. We will for years be discovering unintended and undesirable consequences to just the actions that have already been taken to save the financial system from collapse. We are walking in fog, the idea that Obama or anyone could put together a 30 point plan now that would work long term is naive.

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@realjohnboy,

rjb :

i appreciate your "doctor in the house anology" .

north-america (and perhaps the world) should learn from sweden and other nordic countries .

they are , of course , much smaller countries . that is no doubt a great advantage in trying to adjust course .

if you are interested , read what the swedish government's approach to the economy is :

Quote:

Press release
22 September 2008
Ministry of Finance

The budget for 2009: Putting Sweden to work - safeguarding welfare
Today the Government presents the 2009 Budget Bill, containing SEK 32 billion in reforms that will mitigate the effects of a weaker economic environment, permanently raise the level of employment and strengthen welfare. By these initiatives, the Government is acting both to meet current problems and prepare Sweden for the future.

full text :
http://www.regeringen.se/sb/d/10213/a/111839

or read how finland views social security :

Quote:

The social protection system has guaranteed social cohesion, fairness and equality. Almost all households get some kind of income transfer or use social and health services from time to time. During the severe economic recession in the early 1990s, the role of social protection was mainly to act as a safety net in coping with the high unemployment. The system of income transfers has effectively levelled out income distribution, which is fairly even in Finland, measured in terms of households’ disposable income. The poverty rate is one of the lowest in the OECD.

full text :
http://pre20031103.stm.fi/english/tao/publicat/year2001/summary.htm

these countries are not "very exciting" by north-american standards ; you won't find a las vegas , a superbowl , not even a canadian "grey cup" .
you won't find many billionaires there either ; instead what you will find is a reasonably well established middle-class and a social welfare system
that has something for almost everyone - and probably considered "unbearable" by many north-americans .

-----------------------------------------------------------------------------------------------

imo what needs to be done is for north-america to bring together the best minds from business , science , labour and finance etc. and forge a consensus on what action needs to be taken "to change course" .
no doubt , not everyone will be willing to accept the majority opinion of such a group , but i can see no other way out of the crisis .
no doubt , not all decisions by such a group will be successful , but even a 51% success rate will be better than total chaos .

imo there are two major choices :
- we all accept part of the blame for the current fiasco and adjust our living standards and expectations accordingly ,

or

- we'll let the chips fall where they may (and not worry about our actions ) .

just an opinion from canada - tinged by having grown up in germany , no doubt .
hbg

1 Reply

@hamburger,

hbg, I agree; it's important to get the best minds with real experience to try to make the right decisions to repair our economy. They won't be 100% correct, but if they can make more good decisions than bad, it's a head-start for the recovery.

hawkeye, After listening to Bush and McCain tell us our economy is fundamentally strong just a couple of months ago, we know they know nothing about the economy. At least with Obama, he's picking the best and brightest to direct his policies which is a far cry from Bush and his incompetents.

How long the recovery will take is a guessing game; some say a couple of years while others say over ten years. If Japan's history is any indication, we've got a long, hard, bumpy, road ahead.

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@cicerone imposter,

Quote:

After listening to Bush and McCain tell us our economy is fundamentally strong just a couple of months ago, we know they know nothing about the economy

MY you are generous today....it is much more likely that Bush was being dishonest yet again.

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@hawkeye10,

Not really; Bush hasn't done anything right during his eight years. Can you name one? Most have ended up as disasters. Maybe you can find something to credit Bush with.

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@realjohnboy,

realjohnboy wrote:

I would suggest, Okie, that it is naive to attribute one day of the market's volatility to one event. The mass media, with only a few seconds to cover a complicated story does that. And bloggers with a political agenda on both sides are eager to do that also. The appointment of Tim Geithner to be the designated new Treasury guy was probably not as much of a factor as other issues. I would argue that the decline after 11/4 was probably not a function of Obama winning as much as it was some disclosure of a real-time economic event. I personally prefer to stick to the fundamentals of the economic news of the day as the driver.
I am amazed at what has been taking place during the last hour of trading in, for example, the Dow. Both up and down. Tremendous moves in the last hour. Friday could be attributable to investors covering their short position before the weekend. I don't know.

With regards to your last paragraphs about "uncertainty" I have no problem with you being concerned about where Obama's policies might take us in the next few years. I have no problem with you being "partisan" anymore than you should have a problem with my believing that McCain's policies would not have been good had he been elected.
I would differ from you, or would jump to a different thought, on your use of the word "uncertainty." Rather, I would use the word "certainty." Many Americans may not have much formal education in economics, but they probably know someone who has lost a job and can't find a new one. They know someone who has or is in danger of going into foreclosure. They see their bank suddenly change names virtually overnight. That is their "certainty" that something ain't right.

Okay, but headlines or interpretations are in the eye of the beholder. If nothing at all happened to the market to influence it, it would either go up or down, and I am sure somebody would find a fictitious reason for it, but statistically the DOW would by definition oscillate. I am simply pointing out the hypocrisy of the main stream press in the tank for Obama, and I am very convinced that the election, both leading up to it and following, and all of Obama's selections and plans, do in fact play a part in the market, not all of it, but they do have a significant influence.

1 Reply

Where is the US economy headed?

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