Where is the US economy headed?

@cicerone imposter,

cicerone imposter wrote:

You're giving consumers too much credit for what you think they understand about the current crisis. They don't; what they are reacting to are the huge number of job losses...

I am not sure, ci, if I understand what you are saying.
We have been talking here about the newly unemployed and the under-employed. Their situations are pretty dire.
But last month, the amount of money coming into banks in the form of deposits to small savings accounts was noticibly large. The money came from folks who still have their heads above water.
That is good for them if the situation worsens, but not so good for the ecomomy as a whole, where we need people to start spending.

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What a load of shite.

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@realjohnboy,

That's because most people understand that they're one paycheck away from losing their jobs. Most have already seen their family, friends and neighbors lose their jobs. That's what they understand; not the cause of this crisis or the so-called solutions being implemented by Obama's team.

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@cicerone imposter,

cicerone imposter wrote:

It has everything to do with "our" security; spending money by the government is the only solution now. I only disagree with how they're spending the money; into too many programs that has nothing to do with the creation of jobs.

Sounds like we're back in agreement, for a while.

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@roger,

I'll accept "for awhile." Mr. Green

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Hamburger (or Thomas or Walter): I heard this idea without proof. Tell me whether or not it is true. The German government is willing to give folks 2500 euros (about $3000) if they will buy a new car. They have to bring in a car that is 9+ years old, that will be shredded.
To some extent it is being touted as an environmentally friendly move, but the buyer can buy any car they want and bring in any car they want.
The new car need not be German made.
Any of yall heard of this?

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@roger,

roger wrote:

cicerone imposter wrote:

It has everything to do with "our" security; spending money by the government is the only solution now. I only disagree with how they're spending the money; into too many programs that has nothing to do with the creation of jobs.

Sounds like we're back in agreement, for a while.

Agreed here as well. I read in the paper tonight that some of the things that Obama's stimulus bill will do, includes, now here is the list: Title above the list was "How stimulus money will affect state jobseekers."
- Money to help the jobless afford health insurance premims for 9 months.
- Money for state to extend unemployment benefits.
- Money for bigger unemployment checks.
- Money for updating computer systems to distribute unemployment benefits.

I was dumbfounded. Not one thing in the list creates jobs, they all actually make it easier to go longer without a job, thats all.

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@realjohnboy,

Confirmed. Didn't pay attention to the details, or note the required age of the turn-in.

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@okie,

I'll just go ahead and agree with that, too. I differ with the Obama administration on the theory that any government dropped into the economy, in any form, is automatically good. If that were true, why tout the idea of restricting deductions for charitable donations and mortgage interest for those above some level of income? Money's money, right?

Restrict mortgage interest deductions, while trying to prop up the housing market and home builders? If he (Obama) keeps pulling against himself, it will be interesting to see who wins.

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@roger,

I just posted on the conservatism thread my opinion that if the President would immediately scrap ALL spending that is not absolutely essential to meet existing obligations, provide national security, and keep the government running and would then devote ALL available remaining resources to fixing the banks, freeing up credit, and lowering taxes on business--no new taxes on anybody--I think we would see an immediate improvement in the economy and a reasonably quick full recovery.

I don't think our President is wired that way. But I think that's what he should do. And a side benefit would be that we wouldn't be saddling future generations with trillions of dollars of new debt.

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@Foxfyre,

I am in agreement with that. And to report what Rush says, and I am somewhat in agreement, some of the stuff seems to be designed to sabotage the economy rather than help it, which as Rush says, it leads to the consideration of two possibilities. One being Obama really thinks this stuff will help, via bad advice and all of his liberal staff reinforcing what he believes, or the second possibility which is not very appetizing, he may actually be trying to drive the economy down? The second possibility plays along with Emanuel's statement that a good crisis should never be wasted, and perhaps they believe the bigger the crisis, the more they can do to change everything more quickly and more drastically?

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I also posted this on the conservative thread.

This is what I've been talking about when our government gave AIG almost 200 billion of taxpayer money. HOld onto your hats, because this one gets real ugly. I swear, our government doesn't know what it's doing.

Quote:

Who got AIG's bailout billions?
By Toni Reinhold Toni Reinhold 27 mins ago

NEW YORK (Reuters) " Where, oh where, did AIG's bailout billions go? That question may reverberate even louder through the halls of government in the week ahead now that a partial list of beneficiaries has been published.

The Wall Street Journal reported on Friday that about $50 billion of more than $173 billion that the U.S. government has poured into American International Group Inc since last fall has been paid to at least two dozen U.S. and foreign financial institutions.

The newspaper reported that some of the banks paid by AIG since the insurer started getting taxpayer funds were: Goldman Sachs Group Inc, Deutsche Bank AG, Merrill Lynch, Societe Generale, Calyon, Barclays Plc, Rabobank, Danske, HSBC, Royal Bank of Scotland, Banco Santander, Morgan Stanley, Wachovia, Bank of America, and Lloyds Banking Group.

Morgan Stanley and Goldman Sachs declined to comment when contacted by Reuters. Bank of America, Calyon, and Wells Fargo, which has absorbed Wachovia, could not be reached for comment.

The U.S. Federal Reserve has refused to publicize a list of AIG's derivative counterparties and what they have been paid since the bailout, riling the U.S. Senate Banking Committee.

Federal Reserve Vice Chairman Donald Kohn testified before that committee on Thursday that revealing names risked jeopardizing AIG's continuing business. Kohn said there were millions of counterparties around the globe, including pension funds and U.S. households.

He said the intention was not to protect AIG or its counterparties, but to prevent the spread of AIG's infection.

The Wall Street Journal, citing a confidential document and people familiar with the matter, reported that Goldman Sachs and Deutsche Bank each got about $6 billion in payments between the middle of September and December last year.

Once the world's largest insurer, AIG has been described by the United States as being too extensively intertwined with the global financial system to be allowed to fail.

The Federal Reserve first rode to AIG's rescue in September with an $85 billion credit line after losses from toxic investments, many of which were mortgage related, and collateral demands from banks, left AIG staring down bankruptcy.

Late last year, the rescue packaged was increased to $150 billion. The bailout was overhauled again a week ago to offer the insurer an additional $30 billion in equity.

AIG was first bailed out shortly after investment bank Lehman Brothers was allowed to fail and brokerage Merrill Lynch sold itself to Bank of America Corp.

Bankruptcy for AIG would have led to complications and losses for financial institutions around the world doing business with the company and policy holders that AIG insured against losses.

Representative Paul Kanjorski told Reuters on Thursday that he had been informed that a large number of AIG's counterparties were European.

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@Foxfyre,

Hoover tried that to disastrous result. What makes you think this time will be any different?

What you are proposing is a slogan, not an actual plan for economic recovery.

Cycloptichorn

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@realjohnboy,

rjb :

yes , i read about it in the german news - don't know if it has been implemented , though .

got a pm from dutchy telling me that australian pensioner couples received an additional $ 2,100 aussie and the message : SPEND , SPEND , SPEND !

may decide to move to aussie land temporarily Wink

the bank of canada has reminded canadians NOT to go into panic mode and stop all spending to prevent the economy from going into a tailspin . that's sensible advice imo , but it would have been more sensible to warn people some years ago to not treat excessive credit lightly (but not many would have listened , i think ) .
when we saw $50,000 + weddings (for "ordinary" couples)
featured on TV shows , mrs h and i started to wonder how they'd ever pay for it (i guess it was to be from "future" earnings ) - SHUDDER !
imo this train has been gathering speed for probably the last 20 years - and that it eventually would jump the rails seemed unavoidable .
at least the "clean-up" crews will be busy . "trustees-in-bankruptcy" should have plenty of work for some time to come .
hbg

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@hamburger,

hbg, Your point about newlyweds spending some $50,000 for a wedding - and probably put on their credit card - is a frightening prospect; in debt with the danger of losing one's job. That must be very stressful for the newlyweds. We know that most marriages fail because of finances.

The stimulus plan in the US will help new homeowners with a $8,000 credit. They're also letting new car buyers deduct the sales tax on the purchase of a car. I think the best benefit will be the continuation of COBRA by paying 35% of the premium to continue their health insurance, and even that may be a stretch for most people who lose their jobs. The expansion of unemployment insurance will at least keep food on the table, but not much else.

Conservatives keep decrying these social programs - until they themselves must take advantage of these government benefits.

Makes you wonder of all conservatives are "self-sufficient," and don't need government handouts.

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@realjohnboy,

rjb - just saw your previous post :

Quote:

But last month, the amount of money coming into banks in the form of deposits to small savings accounts was noticibly large. The money came from folks who still have their heads above water.
That is good for them if the situation worsens, but not so good for the ecomomy as a whole, where we need people to start spending.

that's what the bank of canada is telling canadians : don't overspend , but don't stop all spending either .
individuals will make their decisions based on what they are comfortable with - not what the bank sugests is good for canada .

the canadian government introduced "tax-free" savings late last year . each person can contribute $5,000 a year to any savings/investment account without having to pay any tax on the interest or capital gains .
that's great for people that already have money saved , but not an enticement to spend .
mind you , the interest on a savings account is so low that it's hardly worthwhile to open a special account - and we are staying away from stockmarket investments for now - hoping to recoup some of our losses (so far not major ones) .

at least this seems to be a minor adjustment compared to germany's hyper-inlation in the early 1920's (that our parents lived through) and the time from 1939 to 1948 (the time that we lived through - it's all "relative" ) .
hbg

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@hamburger,

When interest rates on savings is almost zero, any tax benefits doesn't amount to much.

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@cicerone imposter,

yea , but at least it satisfies us to follow our government's agenda !
we want to be good canadian citizens : SAVE AND SPEND ! Cool

hbg

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@cicerone imposter,

Quote:

When interest rates on savings is almost zero, any tax benefits doesn't amount to much

doesn't matter, those who still have a good income are bulking up their rainy day fund. The consensus is that very bad weather is ahead. This becomes a self fulfilling prophecy as several economists have pointed out, individually saving is prudent, as a collective however saving money that otherwise would circulate though the economy increases the odds for depression.

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@hawkeye10,

Who are "those who still have good income?"

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Where is the US economy headed?

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