5 posts tagged “economy”

Jon Taplin pointed his readers to Bill Gross's June 2008 Investment Outlook. This quote calls out the American people and our presidential contenders for fooling ourselves.

What this country needs is either a good 5¢ cigar or the reincarnation of an Illinois “rail-splitter” willing to tell the American people “what up” – “what really up.” We have for so long now been willing to be entertained rather than informed, that we more or less accept majority opinion, perpetually shaped by ratings obsessed media, at face value. After 12 months of an endless primary campaign barrage, for instance, most of us believe that a candidate’s preacher – Democrat orRepublican – should be a significant factor in how we vote. We care more about who’s going to be eliminated from this week’s American Idol than the deteriorating quality of our healthcare system. Alternative energy discussion takes a bleacher’s seat to the latest foibles of Lindsay Lohan or Britney Spears and then we wonder why gas is four bucks a gallon. We care as much as we always have – we just care about the wrong things: entertainment, as opposed to informed choices; trivia vs. hardcore ideological debate.

It’s Sunday afternoon at the Coliseum folks, and all good fun, but the hordes are crossing the Alps and headed for modern day Rome – better educated, harder working, and willing to sacrifice today for a better tomorrow. Can it be any wonder that an estimated 1% of America’s wealth migrates into foreign hands every year? We, as a people, are overweight, poorly educated, overindulged, and imbued with such a sense of self importance on a geopolitical scale, that our allies are dropping like flies. “Yes we can?” Well, if so, then the “we” is the critical element, not the leader that will be chosen in November. Let’s get off the couch and shape up – physically, intellectually, and institutionally – and begin to make some informed choices about our future. Lincoln didn’t say it, but might have agreed, that the worst part about being fooled is fooling yourself, and as a nation, we’ve been doing a pretty good job of that for a long time now.

The news today is that an economic stimulus package designed by the House and approved the White House* will include tax rebates aimed at the poorest Americans. The reason for making sure that poor families receive these rebates is poor families are more likely to spend the money, putting it back into the economy in an effort to stave off recession. In an era where the American savings rate is near Depression-era levels,  discouraging savings, especially among the poor, makes no sense to me.

This stimulant package reminds me of states' use of lottery games to fill their coffers. Lotteries are often called a tax on the poor, because the most common players of the game are those living below median income. The stimulant package reeks of the same ideas.

Giving them a tax rebate, because it will be likely be spent instead of saved is another method by which America's poor are forced to stay in their current conditions.

*The bill is unlikely to make it through the Senate in it's current state.

"Six months ago it was Iraq around the clock. Now it's all about the economy stupid"

Looks like I'm not alone in thinking that the looming (already here?) economy crisis has surpassed the Iraq war as the issue for the '08 Campaign.

The global origins of our current mess were actually laid out by none other than Ben Bernanke, in an influential speech he gave early in 2005, before he was named chairman of the Federal Reserve. Mr. Bernanke asked a good question: “Why is the United States, with the world’s largest economy, borrowing heavily on international capital markets — rather than lending, as would seem more natural?” -- Paul Krugman, New York Times, January 18, 2007.

I keep bringing this up because I think the current condition of America's economy is worse than anyone is willing to let on. I work for a large super-regional bank, and none of the stuff coming down from on high for 2008 indicates a problem. Trusting CEO's to speak the truth has never been a wise move though.

More smart analysis from Jon Tapin's blog.

An honest politician would tell the country the truth. The era of cheap oil, easy credit and spending more than you earn is over. America cannot exist with 70% of its economy based on consumers spending at the mall. We will actually have to rebuild our manufacturing base and that means we will have to rebuild our infrastructure. We can no longer be 16th in the world in Broadband Diffusion, 26th in the world in 12th grade science scores and pay our teachers like they were flipping hamburgers. This transition is going to be painful as people pay off their credit cards, reduce their silly spending for things they don’t need and become more resistant to the 5000 commercial messages a day they are bombarded with. I am reminded of John Kenneth Galbraith’s book, The Affluent Society. Galbraith’s assertion that the perfection of modern advertising in creating desire for products we didn’t know we needed puts the modern American member of the middle class in the position of the gerbil on the tread wheel: running faster and faster, but making no progress in relation to his neighbors.

I'm glad I'm debt free with savings in the bank, but I wish I could convince more friends and family to do the same. The problems we're facing aren't going away. The stimulus package being batted around on The Hill is a stop-gap measure at best. This is the new America, folks.