Where is the US economy headed?

I admit to being a novice in regard to the banking industry, I do not understand it, but a couple of points or questions. Is it the larger banks, not the smaller and mid-sized banks that are in the worst trouble? I don't buy the idea that all banks are in trouble as you imply, and nor are all the holdings fdic insured, so your 1/100 prediction seems to be substantially overblown. Besides, if Obama can spend a trillion or even 2 trillion as I have heard speculated, why can't the government put more money into a federally backed insurance of deposits if it has to? If it cannot back the insurance, then how can you justify spending money on somebody's pet project? The priorities are out of order. And how did we get into this irresponsibile of a shape? Heads should roll in my opinion, where are the brooms?

In regard to businesses, I stand by my assertion that we should not support failed business models. And why should we support failed loan or banking practices, it is the same principle.

And I do not buy the dire picture you paint, if the correct solutions were instituted. Beyond that, it will become dire because I think the solutions now being considered are not the right ones. Central planning and redistributing wealth to lower income levels have never worked, so I do not look for it to work this time.

okie, If you had paid attention to the media for the past six months or so, you would know that the majority of banks, large, medium and small, are all in trouble. Very few have escaped the cash crisis simply because most people who borrowed money for whatever reason could not pay it back. Thousands are losing jobs every day; that translates into people not being able to pay their bills. Over two million people lost their jobs last year, and it's getting worse this year. Translate that, if you are able.

It could be a long overdue coreection ci. It does rather depend, from a strictly economic point of view, on what the lost jobs were. They may well have been jobs in the psychological scheme of things. The gee-jaw industries say. The froth.

You can't just say lost jobs are a bad thing without qualification.

Are there any farmers or sex workers or media? Any undertakers? Any military? Any public sector?

And what's a job anyway? Do you define a job as somewhere you get paid for a lazy 35 hour week. From an economic point of view weekends and holidays are unemployment. There are a lot of jobs which require other jobs to neutralise the damage they do. Is it a job pandering to your whims on a cruise ship? Did Sergeant Bilko have a job?

What about security at the failed inauguration. It did have to be done again in the Map Room at the White House. So it could have been done there in the first place. Were they jobs cleaning Washinton up? If so you can create as many jobs as you want simply by making a mess. The Chief Justice did render the whole show pointless from a swearing in point of view.

How much fancy packaging is there? Is making it all, distributing it all and disposing of it all a job in the economic sense?

And what about people who care for others without formal recognition. Are they not jobs.

I think you should be on the psychology threads ci. This says "economy". Not waste.

Spendius, you are touching on the logics of the free market, how it corrects itself. If ci would read the basic economics book by Thomas Sowell, he would understand some of this. Jobs in a healthy market never stay static, some jobs are lost, others are created, on a constant basis, as the river continues to flow and cleanse itself of stagnancy. I wish the government would work as efficiently.

Okay, but I believe you overstate the problem, and panicking and the government going on a spending spree is not the answer, that is precisely one reason why we are where we are. To fix this problem, again, we must determine what caused it. I believe some of the factors are overburdensome taxes, corporate taxes, unions, over regulation of industry and labor, and too much credit, brought on by many things, but government encouraging loans to people that are poor risks is one big one.

Now, we see the government rushing headlong to do even more of the irresponsible spending and policies, more regulation, you name it. Idiots, all of them. And I keep repeating this, but a tax evader overseeing the IRS, its an insult to working people that pay their taxes honestly.

No. It is banks of all levels that have problems, and investment houses as well. Insurance companies and money market funds. This problem is systemic, not isolated to just a few banks.



Okie, I do not know how to tell you this in any plainer terms: the FDIC cannot cover all that it has guaranteed. This is well known. Hamburger correctly pointed out on the last page that the FDIC has a diversified set of holdings, and many of those holdings are doing very poorly right now; and were banks to 'go under,' many of those holdings would vanish. We would be forced to print money.

If anything, my concerns are not strong enough; there's a strong possibility that printing money wouldn't help and we would face collapse. Don't want that to happen, I guarantee.



It can, but the inflation is nuts when we do that. You don't really want this.



We got into this shape, b/c Republicans don't like regulation and companies were allowed to massively over-leverage themselves on CDOs. This is the largest reason why we are facing this.

If you want heads to roll, maybe you should start with much of your own party, who encouraged this behavior and fought provisions to halt it.


I agree, we shouldn't. They should be Nationalized and ran as non-profits until their books can get back in order. But we shouldn't just let them fail.



Because you know little about banking and practically nothing as to what caused the current crisis - seeming to blame it on Democrats and poor folks, when the opposite is the real cause - I don't know why you would think anyone would look to you for advice on what the 'right solutions' are.

Cycloptichorn

You may want to start reading the Wall Street Journal. Its politics are fundamentally similar to yours, but unlike conservative talk radio hosts, it knows how the banking system works. If you won't take the truth from Cycloptichorn, maybe you'll take it from the Wall Street Journal.

And I do mean the whole Journal, not just the editorials and Op-Eds.

Also, the banking crisis is world-wide. This URL is for okie who seems to blame most of our current problems on Bill Clinton.
http://news.yahoo.com/s/nm/20090127/ts_nm/us_davos_bankers_5/print

Government appears to work like capitalism -- it was just cleansed of sewage that was stinking up the entire pond.

Our cohorts in Iraq appear to be following suit on economic recovery for their auto industry:

http://news.bbc.co.uk/2/hi/uk_news/politics/7853149.stm

I lost you! Iraq and the UK auto industry?

Well, cyclops, it may interest you that I have been expressing the opinion that at some point, the only way for the country or the government to pay for all of the debt that our lifestyle and the government's commitments is to pay for it with an inflated dollar, or greatly devalued dollar. I look at it as inevitable at some point. We can look for ways to avoid this, and we may stave it off for a while with smoke and mirrors, but again, the government simply cannot prop up their own irresponsibility and impossible debts and commitments, as well as failed banks with smoke and mirrors forever.

I am not an economist, obviously, and I admit to ignorance in regard to the banking industry, but it doesn't seem like rocket science, some things seem like a matter of common sense here. You cannot pay off debts if you don't have the money, unless you do it with dollars that are worth alot less than when the debt was incurred, it seems to me, which inflation would do, would it not? If this ends up being the case, it is very regrettable, because it rewards the people that have been irrresponsible and devalues the savings of people that have been responsible. It is easier to blindfold and rob people with a business suit on and a briefcase, and in the case of the government, they do it and don't even feel bad about it, and they are even proud of it.

Didn't quite get that sentence right -- I mean the UK, our cohorts in Iraq. They followed us there, now their following suit on bailing out their auto industry.

Gotcha; thought it might be something like that!
Their economy is in big doodoo too. Their involvement in Iraq was a huge mistake, and they're now paying big time for following Bush. They ended up being the "only" coalition of the willing.

Yes okie-- we know all that. It's been in the papers this last 50 years. Often on a daily basis.

But the shops are full of stuff, we have nicer houses, are kept warm and we have better medical care. And loads of other wonderful things.

Could all that have been done without creative accounting and "strange financial instruments"?

This is so much fun. Rush says he hopes O fails. O tells Reps not to listen to Rush. Rush says O hopes he fails. Of course, O did not say he wants Rush to fail.


Breaking Free From Rush
Last week, President Obama met with congressional leaders from both parties to discuss his economic recovery program, despite the GOP's apparent reluctance to compromise on the package. Obama told GOP members at the meeting that they need to stop listening to hate radio host Rush Limbaugh if Congress is to accomplish anything. "You can't just listen to Rush Limbaugh and get things done," Obama told Republican leaders. His scolding of the far right came days after Limbaugh notoriously declared, "I hope he fails," referring to Obama. Limbaugh fired back yesterday, stating, "I think Obama wants me to fail." The verbal tit-for-tat between Obama and Limbaugh carries a more significant meaning than what appears on the surface. In this time of crisis, the country needs a strong economic recovery package to be quickly shuttled through Congress and onto Obama's desk. Given that Limbaugh carries tremendous sway over congressional GOP, will they break away from him on the American Recovery and Reinvestment Act? Or will they continue to partake in Limbaugh's brand of "reflexive obstructionism?"

HOPING FOR FAILURE: Limbaugh's recent comment saying that he hopes Obama fails as president is deeply hypocritical. Conservatives long claimed that any criticism of President Bush's policies was evidence that liberals "want[ed] Bush to fail." For example, during the debate over Iraq, perhaps the most frequent right-wing talking point was that liberals wanted to "surrender." This straw man argument, of course, had no basis in reality. Yet today, with a progressive at the country's helm, Limbaugh is perfectly content saying that he wants the President to fail at reviving the economy. The comment also underscores just how radical Limbaugh is. Even fellow conservative talk radio host Bill Bennett hinted at disagreement, stating, "The locution 'I want him to fail' is not what you say the first week the man's been inaugurated." Limbaugh also remarked last week, "We are being told that we have to hope he succeeds, that we have to bend over, grab the ankles, bend over forward, backward, whichever, because his father was black, because this is the first black president."

FOLLOWING RUSH: Nevertheless, despite his radical and hateful views, Limbaugh has held considerable influence on the actions of the congressional GOP. His role in pulling the GOP away from immigration reform in 2007 was undeniable. His rants on the Fairness Doctrine culminated in legislation from Rep. Mike Pence (R-IN). Last year, when Limbaugh infamously referred to U.S. soldiers in Iraq who were critical of the war as "phony soldiers," the congressional GOP rushed to his defense. Rep. Jack Kingston (R-GA), for example, introduced a resolution "commending Rush Hudson Limbaugh III for his ongoing public support of American troops serving both here and abroad." Furthermore, GOP members have long boasted about their close relationship with Rush. "I mean, there's nothing particularly inflammatory about anything Rush Limbaugh says," Sen. Mitch McConnell (R-KY) said in 2002. In 1994, former House speaker Newt Gingrich made Limbaugh an honorary member of the 104th Congress.

GOP OBSTRUCTIONISM: In recent weeks, Limbaugh has been mounting a fight against Obama's ambitious recovery package. "Obama's plan would buy votes for the Democrat Party, in the same way FDR's New Deal established majority power for 50 years of Democrat rule," he said last week. The question going forward is whether congressional conservatives will work with Obama to pass a strong recovery package or continue to buckle under Limbaugh's demands. Thus far, the signs are discouraging. House Minority Leader John Boehner (R-OH) -- who said this week that he will not vote for the recovery as it stands -- and Limbaugh have been marching in lockstep in harping on the inclusion of family planning funding in the legislation. Several other prominent conservatives are buckling to their right-wing base in publicly opposing the recovery. Limbaugh has also made Treasury Secretary Tim Geithner his punching bag in recent weeks, upping the pressure around the controversy over Geithner's taxes. Yesterday, Geithner was confirmed by a 60-34 Senate vote. "[C]onservative talk radio rallied a flood of calls to Capitol Hill on Monday opposing his nomination. A majority of Senate Republicans heeded those calls," observes Politico.

--americanpoliticalaction.org

The problems with our government spending our money is shown by this example. Why can't they see this bailout of funds is not helping main street?

It isn't confined to the US and the UK -- we're in global recession and it's going to take a global inspired diplomacy to get all countries involved (I don't think any one is left out at this point) to cease believing the US is a country of elite snobs trying to play Big Daddy to the entire planet. That's too close to Big Brother for comfort.

LW, I understand that, but the UK got involved and created more handicap for themselves out of free choice, and made the mistake of supporting Bush's war.

I can't say I've noticed any "handicaps" ci.

What have you got in mind?

Reading stuff in the papers is not a handicap.

Do you enjoy scaring the kiddiwinksies with your tales of doom?