dagblog - Comments for "Stocks Take Nose Dive On Economic Fears"

Regarding your last

Elusive Trope — Sat, 06 Aug 2011 16:52:45 +0000

In reply to Now you're getting lost in a

Regarding your last suggestion, I would be all for that. But as I have argued before, it is exactly this type of govenmental intervention in the private sector that is a bridge too far for most of Americans.

Now we have had a limited amount of the stimulus/unemployment benefits, (.5 trillion for the stimulus) and nothing happened except maintain the dire situation. Not getting better, but not getting much worse, overall.

So how much do we need the government to spend to get things going?

One issue is where and on what. Just did a quick google search. Here is one bridge project: the new Benicia-Martinez Bridge Project. The estimated cost of this project in 2007 was 1.057 billion dollars.

Now the federal government dumping that kind of dough into the Bay Area will do wonders for the Bay Area, but it would in and of itself not get much ripple effect on the national and global markets. Meanwhile folks in, say, Topeka will wonder why their tax dollars are going to help those other folks and not themselves.

There are roughly 40 urbans areas with a population of a million or more (based on the 2000 census). So to do a similiar project in all these areas, that would be 40 billion right there. Probably wouldn't be enough. And a lot of states, not to mention regions and cities would be left out, from Oklahoma City to Dayton to Bridgeport to Eugene. It would mean that the state of Indiana would get 1 billion dollars to spend (thanks to Indianapolis).

So what will it take? $3 trillion? $5 trillion? Over 2 years? 3 years?

I'm not saying we should avoid doing this, but unless we actually put out there what we are talking about, we're not going to get the discourse moving forward. At the same time, our debt is already on track to continue to increase even without this additional stimulus. And this is where we get into the notion of fiscal responsibility.

Even the most liberal of people have to admit that there is a point when the US can have too much debt. This is one reason the conservatives have been able to twist the framing of this debate. Right now the US government does not seem to be on track on every bringing in a balanced budget let along in reducing the debt. Eventually we will hit 20 trillion, then 25, then 30. It may be decades down the road, but it will come. If we can't address it now there is no reason we will be able to address it then.

Matt Taibibbi of Rolling

NCD — Sat, 06 Aug 2011 16:05:08 +0000

In reply to This is the kind of economic

Matt Taibibbi of Rolling Stone last year summed up the capabilities of many in DC in an article on John Boehner:

...Back when America was still a feared international bully that was flush with borrowed Saudi and Chinese cash and could stand to blow a few hundred extra billion in public funds every year on budget-padding deals — back in the Bush years — John Boehner was the perfect candidate for congressional leadership, a lifetime company man who didn't give a shit about most Americans but could shed tears on national television on behalf of Jamie Dimon's bottom line. Things are different now. America is so broke, there's no longer really any money in the Treasury to give away — the job of overseeing corporate handouts that used to belong to the leaders of Congress has now moved to the Federal Reserve, which itself is so broke that it has to invent dollars out of thin air before it can give them away to influential billionaires. This leaves congressional leaders with nothing to do but their ostensible jobs — i.e., fixing the country's actual problems — and few of the current leaders have any experience with that, Boehner being a prime example. The new speaker represents an increasingly endangered class of Beltway jobholders who know how to raise money and get elected, but not much beyond that.

When more US voters look to the national government not as an evil force or another source of theater and entertainment, but as a means to improve the lives of themselves, their families, communities and states, perhaps they will elect people who are at least trying to help the country and not destroy it to gain re-election.

Well, sure, a guy who can

jollyroger — Sat, 06 Aug 2011 14:14:48 +0000

In reply to It's all part of our master

Well, sure, a guy who can live on fermented mares' milk (and like it!) knows something about ravening hordes...

Why, Brew, you sound

jollyroger — Sat, 06 Aug 2011 14:10:23 +0000

In reply to Now you're getting lost in a

Why, Brew, you sound positively revolutionary...or compared to Trope, anyway.

Of course the looming debt to gdp ratio looks forboding when the denominator has been crippled by years (perhaps to chase decades) of underutilization of labor and plant capacity.

When the pugs whine that the Dems are 'big spenders' because the fedral expenditure totals 24% of gdp and we must get it down to 22% (or 18%!) they ignore the fact that by shrinking gdp you automatically raise the percentage that would be represented by a static or even slightly declining total spent.

Plus, when you raise war spending to it's highest level ever, you are bound to impact the percentages cited, without ameliorating in any fashion the plight of the unemployed.

There are laid off people in their fifties who are never going to work again unless something is done soon.

Now you're getting lost in a

brewmn — Fri, 05 Aug 2011 18:49:18 +0000

In reply to It matters because recovery

Now you're getting lost in a house of mirrors. The reason there is no investment is because there is no demand. The reason there is no demand is because consumers are either in too precarious of a financial situation to risk much spending, or are more concerned with paying down their own debt than spending more at this time. So, how do you increase demand? You increase it by putting more money in consumers' pockets. So, how do you do that? By either providing direct aid trasnfer (e.g., unemployment insurance) or by actually paying them to do the work the government needs done.

An austerity program does just the opposite. Unless and until government steps in, we are probably doomed to subpar growth for years, if not decades. The private sector simply cannot be relied on to jumpstart this economy.

And, while we're at it, if all those companies are doing is sitting on piles of cash, why not implement some measures that might let the government get its hands on those piles and put them to productive use?

It would be very

Verified Atheist — Fri, 05 Aug 2011 15:21:14 +0000

In reply to Apparently, on Senator

It would be very inappropriate of me to laugh at that, so I'm trying as hard as I can not to.

It matters because recovery

Elusive Trope — Fri, 05 Aug 2011 14:45:08 +0000

In reply to Trope, I agree with you more

It matters because recovery depends in good part on the multinational private sector deciding to spend their reserves on investments and hiring. With the mess in the US and Europe, the current situation looks like the troubles will be never ending. Fiscal responsibility means looking at the short term and the long term. As the last stimulus package showed, just throwing $500 billion at the problem isn't going to make a dent. A trillion probably would not fare much better. Even with the deal, we are still on track to go further into debt with no plan in place to deal with the problems looming decades down the road. The current toxicity of DC alone indicates that such solutions will never come to pass. Right now any long-term investment seems like a bad investment and if one's sole focus is on the share holders (it shouldn't be the sole focus, but it is) the result is to sit and wait and not touch those reserves.

Trope, I agree with you more

brewmn — Fri, 05 Aug 2011 14:30:20 +0000

In reply to Stating that the need to

Trope, I agree with you more often than not, but come on. How can anyone who gives a damn about the people they supposedly represent be looking at an extended period of high-single or low-double digit unemployment numbers and be claiming that "fiscal responsibility" is the number one issue facing the country right now? Without even acknowledging that one of the biggest drivers of our current deficit can be eliminated by getting back to 5-6% unemployment? The Democrats have been so tone deaf on this issue that I want to scream.

But I won't bother; they probably wouldn't hear me anyway.

Stating that the need to

Elusive Trope — Fri, 05 Aug 2011 14:14:48 +0000

In reply to This is the kind of economic

Stating that the need to balance our spending priorities with principles of fiscal discipline for the long term is not equated as saying our sole focus should be on deficit reduction. The most one can say it means that while we look at what needs to be spent now given the crisis in the economy it must be balanced with an eye to the fiscal state of the country 10 or 20 or 30 years down the road.

It's all part of our master

Michael Wolraich — Fri, 05 Aug 2011 00:37:12 +0000

In reply to Of course being good

It's all part of our master plan to f*ck the rest of the world. The genius of it is that they never expected us to nuke our stock market. I'm giggling maniacally (out loud) at the thought of bankrupting those smug Canadian retirees.

Next time, we'll default for real. That'll teach 'em.