Our newly inaugurated President asserts that if we don't pass his stimulus package it will be a "catastrophe" for the economy. This is demonstrably false, sickeningly so, because it echoes so closely the late and not lamented Hank Paulson's adumbration to Congress regarding the urgency of passing the "No Banker Left Behind" bailout bill. Whenever anyone employs scare tactics of this sort, you have reason to believe you are dealing with a bad faith gesture coupled with more than a whiff of desperation.
It's equally nauseating because if one looks closely at the stimulus package one will see that in electrical terms it barely has enough wattage to run an alarm clock, let alone the electricity requirements of an entire household. And there is more rubbish in this stimulus package then on a New York City sidewalk after a trash workers strike.
In any event, more stimulus is not what this humble blogger thinks the U.S. economy needs. What it needs is a government that is honest, ditto for the monetary system, and a banking system that is thoroughly cleaned up. A proper cleanup probably involves setting up an RTC where the cost of dealing with all the "non performing assets" is fairly applied. That means that IF taxpayer money is used in substantial quantities, any and all gains in future go directly to the taxpayer. Any other arrangement is off the table and let the chips fall where they may.
Concurrent with the aforesaid sea change in government and the monetary system must come a great national debate on the advisability of trying to restore our way of life circa 2007 and before. I would argue that constant growth and insatiable consumption are not the way forward. Who is with me?
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I would argue that constant growth and insatiable consumption are not the way forward.
I agree, but that's so entrenched in America's minds that it'll be difficult to break. I think that'll take an generational change, though which generations are willing to realize this I can not say.
Our newly inaugurated President asserts that if we don't pass his stimulus package it will be a "catastrophe" for the economy.
If I had to guess, I'd say that he's basing it on the Keynesian belief that insufficient gov't spending and inactivity by the Fed was what dragged us into the Great D. Perhaps if he were properly educated on the Austrian School's explanation, he'd see things differently.
Edwardo, I would ask: where do you think most of the growth in consumption has gone?
Thai,
What exactly do you mean where has the growth in consumption gone?
Good post, Edwardo. You'll see that I posted pretty much the same thimg yesterday.
Edwardo, at it's most basic level, there has been a 'mismatch' between production, consumption and future security as a result of this credit bubble that has plagued us since the mid 1970's. Production and consumption increased to the possible detriment of future security.
What has all that growth in consumption been towards? I still keep sensing most people are missing the big issue. Wall Street may have profited from it, but were did the final 'energy consumption' (so to speak) get burned?
Thai wrote:
Production and consumption increased to the possible detriment of future security.
-By detriment to future security are you referring to the despoiling of the commons that took place as a result of all the production and consumption?
What has all that growth in consumption been towards?
-I'm not sure how to answer your question because I don't know if you are, A.) asking what was the point of the consumption, or if you are, B.) asking if there was perhaps a grand plan or vision in which consumption was cast to play a key role in bringing the vision or grand plan off. I happen to have some ideas about B that are somewhat conspiratorial, but still well within the parameters of the evolutionary biology paradigm. Well, at least, by my lights.
I still keep sensing most people are missing the big issue. Wall Street may have profited from it, but were did the final 'energy consumption' (so to speak) get burned?
-One answer is "In housing." In a metaphysical sense there there was never any there there. We have been, in essence, playing a game of "The emperor has no clothes", where little if any energy has been burned, yet there is obvious widespread wealth, (broadly defined) destruction.
Put another way, the nation engaged in a sort of epic sized perverse game of monopoly where real FRN notes were used to buy deeds on bogus properties. For a time, as long as events did not call on the deeds (CDS, CDOs, MBs etc.) to perform like real deeds, all was well, but then the inevitable happened.
There, all that and I've probably still not understood what you are asking.
A, not B
What I meant, but asked very poorly, was how did we spend all the money? What and where has it all gone? And are we continuing to spend it this way?
For if this credit bubble had never happened, what would our spending have really looked like today? And how is our spending today in our real world different from such a hypothetical alternate reality?
I just keep wondering if the real destructive part of this whole bubble has been in spending money on less lasting ways than housing and automobiles. For while there is a depreciating aspect to houses and cars, at least homes are still homes and can be used in the future as housing.
But where we spend more money on things which simply 'go away' after the money is spent (like SOME forms of health care spending), the money is gone and never recoverable. And to the extent our behaviors have been permanently changed, and we continue to spend the money in non-recoverable ways, we may actually continue to make matters worse than they otherwise would be.
I am not sure about this, I am just wondering and so I ask: do you know how the money we created was consumed?
Thai, my view is that the money that wasn't spent on homes and cars was spent on gegaws, doo dads, and flub dubs of the sort that go in homes; items such as flat screen and plasma televisions, I pods and I phones, 'puters, gameboys, big, oversized, ugly furniture, designer this and that, and lots and lots of meals out. Oh, and last but not least, expensive vacations. Mountains and mountains of spending on junk, and relatively little on items that were, how do I put it, value add propositions.
And then a lot of the money went to
I thought this at first, but then I remembered, what is growing faster than inflation?
Thanks for including us in your blogroll. We are brand new(launched 3 weeks ago), and just getting things rolling.
We are an avertising free site covering the bailouts on a path to federal bankruptcy. Since we're independent, we can pretty much say whatever the hell we want.
I posted 7 new bailout comedy videos as well as a few new songs this morning. The Wanda Sykes piece from Leno is the must see of all 7. It's about 4 stories down the front page.
http://dailybail.com/
Again, thanks for noticing us, we really appreciate it.
Steve
Publisher and writer, The Daily Bail
Have you seen this, Thai?
http://www.nytimes.com/imagepages/2008/02/10/opinion/10op.graphic.ready.html?ex=1360299600&en=9ef4be7cf82e4353&ei=5124&partner=digg&exprod=digg
No I haven't, thanks.
I keep wondering how this would hypothetically differ had we never not had this credit bubble?
You know, on a consumption per person basis, I am surprised at how small the difference really is if I am reading this correctly. And if housing is as big as it is for the upper 20%, the rich are going to get disproportionately killed as housing values fall dramatically.
Further, if I am reading this correctly, the lowest 20% gets a very substantial subsidy from the other groups (I am not saying this should stop so don't misunderstand me). The 'squeezed' middle class could make just as strong an argument that they are being 'brought down' by subsidizing the bottom group than they are being 'robbed' by rich freeloaders avoiding taxes at the top (but when it comes to bankers we certainly know the bankers are robbing all of us).
The fact that EVERYONE is willing to spend 6+ times more on transportation than they are on education shows you just how F$@KKD up our collective values have become. I guess our cars look good, even if we don't understand the basics of the internal combustion engine... bizarre.
Doo dads and trinkets do not seem a very big part of our spending however.
In fact, as I look at this I wonder if these numbers are correct? How can health care be 18% GDP using these numbers (which I do know it is)? Do these numbers include government spending or just how people spend their 'take home' pay?
We can make intelligent comments about our spending unless we look at the whole picture.
Interesting question. How might it have been different had there not been a credit bubble? I don't know. I think the list on proportional spending is something of an eye opener. And I'd be willing to bet that transportation costs are greatly effected by ye old family vacations where, until recently, and for several reasons, no one thought twice about driving and flying long distances.
In other words, it's not just those daily commutes to the job that are causing the transportation numbers to dwarf the education budget, but the round trip yearly migrations from, oh, say, Minnesota, Nebraska, and Indiana, down to the Gulf of Mexico in the family SUV or Minivan. Perhaps if we had a first class national rail system, transportation costs might be proportionally less than they are now.
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