Posted on 02/01/2010 6:33:06 PM PST by raptor22
Competitiveness: The latest index of economic freedom shows America falling fast, being ranked for the first time as "mostly free." We've fallen behind Canada, and it's look out below.
Our accelerating descent into a command-and-control economy with government pulling the strings is taking its toll.
The Heritage Foundation's 2010 index of leading economic indicators shows that the land of the free is only mostly free, falling to eighth in the world from sixth last year, now sandwiched between Canada and Denmark.
That Canada, long considered a bastion of socialized medicine, is ranked as economically freer may surprise some. But our neighbor to the north has at least been trying to develop its domestic energy reserves, from hydroelectric to natural gas to oil extracted from its tar sands. Energy is the lifeblood of a free economy.
We have shackled our domestic energy producers with environmental regulations, leaving vast pools of energy lying offshore and in the ground. We regulate what you can build, where you can build it, even how. Endangered critters rank above equally endangered entrepreneurs. Climate change is more important than the business climate.
(Excerpt) Read more at investors.com ...
Households are saving 5% of income now, they were saving zero at the top of the bubble. It was the top of the bubble that was unsustainable.
Yes federal spending needs to come down and Obama isn't helping. But health care and cap and trade are both dead, and the right is headed for major gains in November. The economy will recover and usual, and the right would be well advised to be ready for that inevitable development when it happens. If all they've done for two years is stand on a streetcorner screaming "doom, doom" and there is no doom in 2012, they are going to look awfully silly.
They ought to be highlighting the differences between the Fed's actions, which were entirely effective, and boon doggle giveaways on entitlements. But instead the entire populist set is in full cry against finance as such. Dumb.
Things are not going to be "meager for years to come". Unemployment will remain high for several years, most that can be said on that score.
Borrowing in a recession isn't a waste. Paying interest on capital isn't a waste. Investing in banks that pay it back in full with interest isn't a waste. Handouts to middle class voters who don't need it to buy their votes with their own money, now that's a waste.
It was one recession, we've had dozens. It was one election lost to the left, we've had dozens. It doesn't matter a tinker's darn in the grand scheme of things. The ship of state sails on, crushing such trivial obstacles beneath it.
That one will have real historical repurcussions. All this economic stuff that everyone is hot about every minute on the idiot box, it will be a footnote in some economist's thesis, discussing how Lehman was a screw up but the Fed fixed it pretty well afterward. And nobody else will care one way or another. Healthcare and such boondoggles, nobody will have the slightest idea they even happened.
What I don’t see in the near future is economic growth. There does not seem to be a wave of innovation that has given the US the steam to be an industry leader. Venture capital is not much there. IPOs aren’t there. New industries are moving to tax friendly nations. Where & what will be the next new “things” that propels us into 5% GDP growth & increased wages? (like tech).
Also, I think that people are saving more money because they are hoarding it. No one wants to spend in an uncertain environment. And because of that, tax revenues to the treasury will be lower again this year. (good). And the gov’t will be looking for more $, again.
I wouldn't call it hoarding, but rather behaving sensibly. I am going to have a drop of income this year of about 8%. Fortunately, it looks like I still have choices to make. I can cut back on funding my retirement account or continue to fund it and cut back my consumption. After taking a nice hit to the 401K, It wouldn't be wise to cut back on 401K contributions at this stage in my working career.
De-regulate....Detax....BTW ..the same minds that created the problem....are not capable of solving it...
“Our government has taken upon itself the task of picking winners and losers, instead of letting the free market decide, and as a result we all lose. From car companies to financial institutions, the long arm of government has grabbed freedom by the neck, seeking to decide who gets paid what and how big companies and banks can grow.”
We will NOT PULL OUT OF THIS UNTIL WE GET RID OF OBAMA. HE SET US UP TO FAIL . THAT WAS HIS GOAL ALL ALONG!
Many persons don’t have the 5% to save after a drop in salary. So any savings is actually hoarding as consumption has decreased more significantly in proportion to the decrease in capital earned.
I own my own biz. I have had an average of 12% decrease in revenue year to year since 2008, with 2009 being the worst since 1994. My net though has decrease less than 6%. How do I do it? No capital improvement expenditure, letting go personnel, freeze advertising, cutting any overhead, just so I can stay in biz.
On a personal level, no dinners out, no mall visits, no starbucks. No extra to fund that SEP/IRA.
“In the long run, betting against the US economy, like betting against the US military, is for losers.”
Growth in real health spending per capita has outpaced growth in real GDP per capita by more than 2 percentage points during the past 50 years. Should this trend continue for just 35 more years, our real standard of living—i.e., what we have to spend on everything besides health care—will begin to decline. That is, even though our aggregate standard of living (measured in GDP/capita terms) will continue to grow, our NET standard of living will decline because health care will have crowded out so much of what we can spend all the other things in life that make it worthwhile.
This is not betting against the U.S. economy: it is simply recognizing that a tumor largely of the government’s making needs to be addressed before it kills the otherwise healthy patient in which it is growing.
Our government is threatening businesses right now, so it’s not surprising.
But remember: a lot of these businesses helped get Obama elected....do they regret it now? Bet they thought when he said “Hope and Change” and “We’re going to redistribute the wealth” they thought he meant someone else’s.....
I don’t know of any “households saving 5% of income” these days. Just another BS government statistic.
It wasn’t the “top of the bubble that was unsustainable”. It was years leading into the top of the bubble that were based on borrowed money that that was unsustainable. That debt is still mostly floating around.
Let’s mark this post and return in a year and see what really happens, particularly if Obamacare becomes law and his tax increases on the “wealthy” happen.
All one entry accounting games that pretend that this or that piece of income or wealth that you don't care for, isn't income or wealth to those to benefit from it (and provide it, for that matter), are economic nonsense.
Why weren't they killed as traitors? Inciting rebellion for the downfall of the US is sedition is it not? Why are these things still alive?
If I'm paying for the health care of someone who is not my family then it is a total loss to me. Obamacare would be a finacial disaster.
Personally, I save between 15 and 25% of my income, depending on how you count things like 401k employer matching contributions, principle payments on a mortgage, and bank savings account savings that in practice I use now and then for big ticket items.
Plenty of Americans save material portions of their income, especially from middle age to retirement, as opposed to when just starting out. But their gross savings are partially obscured by net borrowing of others. Much of it investment in education, some of it just economic cycle or life cycle smoothing of their lifetime income. The recession cut off a ton of net borrowing by deadbeats, and that alone contributed to the savings rise.
Next to the underlying error. Debt is not unsustainable. Debt is not evil. Debt is not negative net worth. Debt is merely one form, one of the two major forms, in which assets are financed (the other being equity). It is entirely normal for total debt outstanding to rise continually, because the total value of all assets owned by Americans also rises continually. By large amounts, over full cycles. 7% a year on average since World War II.
The British government has had debts outstanding since the mid 18th century without the slightest ill effects to anybody.
Nor are investments magically more virtuous when financed 100% out of prior savings of the investor, than when half of the amount is borrowed, instead. If an investment is stupid, you can invest 100% equity out of income savings into it, and still lose every penny of the investment, and still suffer all the consequences of economic dislocation that such loss of capital entails. Not just for the investor, but for everyone else, all of whose activities adapted to his plans and commitments and demand, and have to readapt again when he comes a cropper.
If on the other hand an investment it financed by debt (the horror, the horror), but fully earns the returns the investor hoped for and expected when he decided that was a safe course of action, then it will fully cover the cost of that debt and fully justify that debt's value, in an increase in the total value of all assets combined.
Good investment makes debt sound, bad investment makes equity unsound. The form is not relevant to the outcome.
When too much debt is used to carry assets with *volatile* returns, rather than *low* or inadequate ones, it can cause a different problem - transfer of the assets to the lenders at the bottom of volatile swings, and messy fights over them sometimes. For that reason, there is a level of debt that is prudent for a given kind of asset, that depends on the smoothness or lack thereof in its returns.
That is really quite completely all.
Debt isn't negative net worth because somebody owns it. You can't borrow from the Great Pumpkin in the Sky. It is a liability to the borrower but an asset to the lender. One entry accounting is, again, at the root of every common economic fallacy.
Obamacare is stupid but because of the dead losses and inefficiencies it involves, not because it is a transfer. Transfers as such do not create or destroy wealth, or cause loss. They may be inequitable for other reasons; they may have secondary incentive effects. But you are pretending that a transfer is a loss, and that's just incorrect.
Doctors deserve their incomes. Medicine companies earn their profits. Johnson and Johnson is not a den of thieves. Health care spending is entire legitimate economic activity and part of our overall production and income.
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