Where is the US economy headed?

NY Times article...


While many employee-owned companies have shown great success, I have far less confidence that either the government or unions owning big business will see such businesses thrive.

RJB: No problem with that paragraph.

I do see a real danger in government becoming a bigger and bigger shareholder in what was American private industry and in competition with private industry. I can't find any reason to think that is a good thing.

RJB: If it is anything other then temporary, I would agree. See comments below.

I also wonder why, if Chrysler filing Chapter 11 today is the only hope for Chrysler to dig itself out of the hole it dug for itself, why was the government bailout necessary? It appears that GM will follow suit.

RJB:: The bankruptcy filing became necessary because a few folks, holding something like $2B in loans, thought they could hold the entire, complicated deal up and get a sweeter deal.

Doesn't it make sense that in the end, allowing the normal consequences of bad management or poor business decisions to run their natural course is the best way to go? Look how much of the taxpayer money could have been saved and how many thousands of people would not now be under a government thumb.

RJB: I am okay with the thought there, until I got to the part about "people...now be(ing) under a government thumb." That gets pretty close to the conspiracy theory about the evil government intending to nationalize all of the banks and then looking into your bank account to see what movies you rented from Netflix, or whatever it is called.
We have talked about most of this before, so I will be brief. When the books start to come out, I have no doubt that the conclusion will be that there was a period (during the end of the Bush administration and the start of the Obama one), where the worldwide banking system came amazingly close to totally freezing up. The world economy is still bad and it will take years to recover from this , particularly for the 3rd world countries.
I cant fault Mr Bush or Mr Obama and the other world leaders. Doing nothing; letting the market sort it out, would have lead to, in my opinion, total economic chaos.
As always, I apologize for a too long post. -RJB-

RJB:: The bankruptcy filing became necessary because a few folks, holding something like $2B in loans, thought they could hold the entire, complicated deal up and get a sweeter deal.

Two top Fed officials see recession ending this year
By Kristina Cooke Kristina Cooke Mon May 4, 6:19 pm ET

NEW YORK (Reuters) " The U.S. recession will likely end this year and policymakers must be ready to act quickly to ensure inflation does not take hold when the economy recovers, two top Federal Reserve officials said on Monday.

Richmond Federal Reserve President Jeffrey Lacker and Kansas City Federal Reserve President Thomas Hoenig offered slightly different views on when the world's biggest economy will begin to grow again.

Lacker, speaking to business leaders in Charlottesville, Virginia, said that given the resilience of U.S. consumers --whose spending drives the U.S. economy -- and the unprecedented stimulus injected into the U.S. economy by the Fed, he expects growth to resume by year end.

Hoenig, speaking in New York, was less confident saying the economic outlook remained "uncertain" and it would take "most of the rest of the year" to move out of recession before starting on a path of "steady, slow" recovery in 2010.

Housing and construction data released on Monday added to other recent signs that the worst of the longest recession since the Great Depression may be over, driving the S&P 500 stock index into positive territory for the year.