Where is the US economy headed?

How can any financial plan of today even compare to Roosevelt's time? That's like trying to compare an apple and tomatoe. Today's financial markets are a lot more complex then they were 75 years ago.

Attempting to compare the two periods and then criticizing what Obama's plan does or doesn't do is a very cheap shot, indeed!

You are batty...this crisis was brought on by the financial industry failure to execute just as 1929 was, which should tell everyone that the financial industry is in need a major reform. Roosevelt did it, Obama has no plan to do it. This idea that you have that we can't compare our situation to 1929 because the economy is different is nuts. There are some important differences to be sure, but the basic principles hardly change because human nature hardly changes.

the only difference that would matter is if globalization means that national governments no longer have the power to force reforms upon the corporate culture, which I am sad to say based upon the last 10 months looks like it may be the case. In which case capitalism is DEAD. That difference is going to matter.

Thou shalt not criticize Obama's plan. That according to imposter.

Hawkeye 10 wrote:

You are batty...this crisis was brought on by the financial industry failure to execute just as 1929 was, which should tell everyone that the financial industry is in need a major reform. Roosevelt did it, Obama has no plan to do it. This idea that you have that we can't compare our situation to 1929 because the economy is different is nuts. There are some important differences to be sure, but the basic principles hardly change because human nature hardly changes.
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Yes< Hawkeye 10, you are correct. Anyone who has read or is very familiar with the highly praised book--"The Forgotten Man" by Amity Shlaes--knows that the financial industry failed ORIGINALLY in 1929--Shlaes writes--"There were monetary and credit challenges at the young federal reserve and certainly at the banks...BUT THE DEEPEST PROBLEM WAS THE INTERVENTION, THE LACK OF FAITH IN THE MARKETPLACE...where the private sector could help to bring the economy back--in the area of utlities, for example--Roosevelt and the New Dealers often repressed it...

Shlaes continues:

...Business was terrified of the president...businesses decided to wait Roosevelt out, hold on to their cash, and invest in future years. YET ROOSEVELT RETALIATED BY INTRODUCING A TAX--THE UNDISTRIBUTED PROFITS TAX--to press the money out of them.

SUCH FORAYS PREVENTED RECOVERY ANBD TOOK THE COUNTRY INTO THE DEPRESSION WITHIN THE DEPRESSION OF 1937 AND 1938.

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Yes, Hawkeye 10, you are quite correct. Roosevelt did it(reform) BUT HE FAILED TO GET THE COUNTRY OUT OF THE DEPRESSION.

You said--"Obama has no plan to do it"

Correct--and the public is catching on very quickly.

Note: The prestigious Washington Post wrote that the public was losing favor with President Obama's economic plans.
Tuesday, June 9, 2009

ECONOMY


'New Road Map' Looks Familiar


President Obama and Vice President Biden announced yesterday a new "road map to recovery," intended to speed up stimulus spending and rebut the perception that the $787 billion stimulus package is not yet having much of an impact on job creation, given the 9.4 percent unemployment rate.

The list of spending plans detailed under the road map amounted to little more than a restatement of plans already underway for the coming months, without any explanation of what steps, if any, the White House would take to accelerate the pace of spending. And the push to spin the package was accompanied by a classic Biden misstatement -- that a big chunk of the money was geared toward "make-work projects."

As it stands, about $135 billion of the stimulus money has already been "obligated" -- that is, either sent out the door or approved to the point that it's sitting in a government account waiting for a state or other recipient to draw on it.

The White House has cautioned for weeks that the money wouldn't really start having an impact until this summer and fall, once various programs got up and running. Its goal, it says, is to spend 70 percent of the money by the end of the summer of 2010. But there are signs that the money is flowing even more slowly than the White House had led people to expect.

The Republican National Committee said that the new road map was a sign that the White House was losing this particular political battle.


-- Alec MacGillis


Poll Shows Skepticism


National Republicans have seized on a new Gallup poll that indicates growing skepticism among the American people about the direction of the economy and the approach being taken by President Obama.

The poll, which was in the field at the end of May, showed 55 percent of the sample approving of how Obama was handling the economy, with 42 percent disapproving. That disapproval number is up significantly from February's 30 percent, in another Gallup survey. (The earlier poll showed 59 percent approved of his handling of the economy.)

The data also showed the public divided on how Obama is handling the federal budget deficit -- 46 percent approving and 48 percent disapproving -- and slightly more negative than positive on how the administration is "controlling federal spending" (45 percent approve/51 percent disapprove).

"As the debt grows, so too does American discontent with the seemingly daily increase in red ink," said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.). "The fact that the federal government is doing the equivalent of taking a cash advance to make the minimum payment on the debt doesn't inspire confidence, and it shows."

I have not made up my mind about that....there is a good argument that government intervention in the economy prolonged the depression, yet the Roosevelt structural changes in the financial industry did prevent a return of depression for 80 years, which is outstanding based upon historical cycles. With Obama we have the intervention big time, in the form of bailouts, gutting bankruptcy law in order to save Chrysler, and GM. Bush is responsible for letting the FED do an end run around all of the law and law making apparatus when he let them on their own remake the financial industry companies last SEP.

And lets not forget that with Obama we have substituted the relatively inexpensive WPA approach making jobs with the hugely costly "stimulus package", and that the stimulus approach intrudes far more into the economy because most of the WPA work was never part of the private sector and was never going to be.

But we will not get structural reform out of obama, at least not unless the Chinese cut off our credit card and make him do it.

I am worried that with Obama we have the worst of FDR on steroids, but none of the best. I am awaiting more information.

You don't have to tell me the current financial crisis was created by the financial industry. That's where the similarity ends.

Hawkeye 10 wrote:


Re: genoves (Post 3680191)
Quote:
Yes, Hawkeye 10, you are quite correct. Roosevelt did it(reform) BUT HE FAILED TO GET THE COUNTRY OUT OF THE DEPRESSION

I have not made up my mind about that....there is a good argument that government intervention in the economy prolonged the depression, yet the Roosevelt structural changes in the financial industry did prevent a return of depression for 80 years, which is outstanding based upon historical cycles. With Obama we have the intervention big time, in the form of bailouts, gutting bankruptcy law in order to save Chrysler, and GM. Bush is responsible for letting the FED do an end run around all of the law and law making apparatus when he let them on their own remake the financial industry companies last SEP.

And lets not forget that with Obama we have substituted the relatively inexpensive WPA approach making jobs with the hugely costly "stimulus package", and that the stimulus approach intrudes far more into the economy because most of the WPA work was never part of the private sector and was never going to be.

But we will not get structural reform out of obama, at least not unless the Chinese cut off our credit card and make him do it.

I am worried that with Obama we have the worst of FDR on steroids, but none of the best. I am awaiting more information.

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I think you are correct, especially with your comment comparing the WPA with the "Stimulus Package"

With regard to your comment about the Chinese cutting off our credit card and making Obama do "it", I think the following article is instructive--

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China's hate-love-hate relationship with American debt.

China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless policies,” said Yu Yongding, a former adviser to the central bank.

The U.S. “should make the Chinese feel confident that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World Economics and Politics Institute at the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing.

Love, mixed with a lot of hate:

China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday....

Luo Ping, a director-general at the China Banking Regulatory Commission, said after a speech in New York on Wednesday that China would continue to buy Treasuries in spite of its misgivings about US finances.

“Except for US Treasuries, what can you hold?” he asked. “Gold? You don’t hold Japanese government bonds or UK bonds. US Treasuries are the safe haven. For everyone, including China, it is the only option

Bullshit. Lack of confidence in the financial system. Lack of confidence in the politicians. Markets Non-op. Massive drop in the value of assets. massive unemployment. Destabilization of various political systems. A wave of nationalism. Exacerbations of cracks in the social structures. Migrant workers being forced to return home with nothing and no prospects. The collapse taking on the wave action...coming on in wave after wave.

bingo! The business world has no confidence that Obama will leave them alone and allow them to reap the rewards of their work. I believe that problem lies at the foundation of this entire mess. We could get back to work, get back to a recovery, if Obama would simply go away. Simple as that. I am in business and that is the way I feel. I would invest in the energy business, but I probably won't because I have no confidence that Obama will not meddle with the sector and screw it up big time, to whatever dream he may have for it. Cap and trade, plus a host of other issues are big clouds on the horizon.

Politicians now have great opportunities to make a killing in the market, if they know what the meddling will be and when. Corruption will be unprecendentedly rampant in the future, as Obama is allowed to meddle with business sectors and the market.

We need to get rid of this administration, and soon, if we hope to get going again.

Great quotes from Bush in the news today, which is nothing more than common sense, which Obama apparently does not have:

"Former President George W. Bush fired a salvo at President Obama on Wednesday, asserting his administration's interrogation policies were within the law, declaring the private sector, not government, will fix the economy and rejecting the nationalization of health care, the Washington Times reported.

"I know it's going to be the private sector that leads this country out of the current economic times we're in," the former president said to applause in Erie, Pa. "You can spend your money better than the government can spend your money.""

'common sense' from GWB and Okie, now there's a laugh and a half. Heckava job you did, Georgie.

A great job compared to the current disaster.

Interesting story on unemployment:

http://www.foxnews.com/politics/2009/06/18/new-jobless-claims-rise-slightly-continuing-claims-fall-sharply/

"The Labor Department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years. The decline is a sign that layoffs are easing."

But another paragraph in the story:

"The department also said initial claims rose 3,000 to a seasonally adjusted 608,000 last week, above analysts' expectations. The four-week average, which smoothes fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week."

My interpretation is that first time claims are less now than the ones that are leaving the unemployment rolls due to time elapsed, not because they found a job. It is hard to decipher some of this, and also it is not unusual for them to revise their numbers later. This does not appear to be any indication at all that the economy is turning around, as first time jobless claims are declining slightly but are still very very high, and continuing.

You wouldn't know a disaster if your home was on fire!

Great quotes from Bush the liar is an oxymoron.

http://news.morningstar.com/articlenet/article.aspx?id=295797

"Fund Times: A Manager Says the Market Rally Is Pure Junk

• The smallest and cheapest--and, according to its quantitative model, the most fundamentally unsound--stocks performed best since the market bottomed in March. In the Russell Microcap Growth Index, the stocks ranked in the lowest quartile for the factor of market capitalization--stocks with market capitalizations of less than $26.5 million--returned 93.49% from March 6 to May 8.

• In the wake of the bear market, small stocks priced at $1 or less accounted for about 25% of the small-cap benchmarks' weightings, compared with the historical average of 5%.

• Stock indexes plummeted more than 50% from their peak in October 2007 to March 2009, erasing 12 years of gains. The only time the stock market had fallen harder was between August 1929 and June 1932, when the S&P 500 Index lost more than 83% of its value."

okie, Exactly what are your trying to imply? Please explain it to us in simple English, so we can understand where you are coming from?

All I did was post an article that I thought was interesting, as it was a new angle I had not previously read, thats all. I think the article implies that the recent gains in the stock market since the bottom at around 6500 perhaps is not based on the realities of the market. Based more on speculation than actual health of the companies and the market.

Just my own personal opinion on the market, I think people are wanting to invest, but are having a tough time finding sectors or stocks that they can have any confidence in. In other words, there may be a pent up demand, but not an attractive supply of stocks that look healthy. The market is poised to rebound in grand fashion, if the economy actually did turn around in earnest. So far, that does not seem to be happening, so we will continue with the malaise that we are in, and lurking out there are even greater problems down the road, beyond the current malaise.