Posted on 02/13/2008 2:11:40 PM PST by Ernest_at_the_Beach
WE’RE sliding into recession, or worse, and Washington is turning to the normal remedies for economic downturns. But the normal remedies are not likely to work this time, because this isn’t a normal downturn.
The problem lies deeper. It is the culmination of three decades during which American consumers have spent beyond their means. That era is now coming to an end. Consumers have run out of ways to keep the spending binge going.
The only lasting remedy, other than for Americans to accept a lower standard of living and for businesses to adjust to a smaller economy, is to give middle- and lower-income Americans more buying power — and not just temporarily.
Much of the current debate is irrelevant. Even with more tax breaks for business like accelerated depreciation, companies won’t invest in more factories or equipment when demand is dropping for products and services across the board, as it is now. And temporary fixes like a stimulus package that would give households a one-time cash infusion won’t get consumers back to the malls, because consumers know the assistance is temporary. The problems most consumers face are permanent, so they are likely to pocket the extra money instead of spending it.
Another Fed rate cut might unfreeze credit markets and give consumers access to somewhat cheaper loans, but there’s no going back to the easy money of a few years ago. Lenders and borrowers have been badly burned, and the values of houses and other assets are dropping faster than interest rates can be lowered.
The underlying problem has been building for decades. America’s median hourly wage is barely higher than it was 35 years ago, adjusted for inflation.
(Excerpt) Read more at nytimes.com ...
What recession?
I guess this election IS going to be about immigration after all.
There’s a reason why hourly wages haven’t gone up in a while, and it has to do with importing cheap labor illegally, or legally through HB1 visas.
Only from the Times.........
No agenda here, nope, nope, nope.......
er, Wisconsin, not Michigan
The ironic thing is that Robert Reich is an outspoken proponent of illegal immigration. You should hear some of the rants he’s done on NPR, excoriating the “nativists” and whatnot.
imagine this guy in charge of the Fed in a Obama presidency
You haven’t seen it yet?...
Like a tax cut? Sign me up.
Trashing the economy, just like the Clintons did in ‘92 to get elected. “Worst economy in 50 years”.
I think he’s talking about a tax “rebate” of the kind Dubya just signed.
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What are you accusing me of...?
Remember when there was a real Recession in 2000 and mentioning it was referred to as “talking down the economy”?
Not even the famous ROBERT B. REICH is willing to say the country has been in a Great Depression since 1970 and it will go on forever. The only solution is to open outer space for development and that means to repeal the 1967 UN Outer Space Treaty.
Has this idiot ever been right on anything?
I heard an interesting theory, that if the US did two things at the same time, that it could dig itself out of the hole quickly.
The first is an iron clad constitutional balanced budget amendment, with no wiggle room for “off budget” items, and the ability to spend for emergencies only during a mutually declared state of war with a foreign nation, ending as soon as either nation ends the declared war, even if fighting continues.
The second, which is announced as soon as the amendment becomes part of the constitution, is to renounce all foreign holdings on our national debt. Only the debt held by US citizens would then exist.
Now, ordinarily, if the US renounced part of its national debt, it would destroy the equivalent of our “credit rating”. However, any future debt would have to be backed with 100% collateral, maintained in escrow outside of the jurisdiction of the US.
While this would mean that foreigners would no longer invest deeply in US treasury bonds, used to finance a debt we no longer would have or wanted; we could still develop debt for the purposes of foreign trade. It just means that we would have to pay cash in advance, instead of “We’ll owe you.” So no more “trade imbalance”, either.
Nationally, it would also mean no more pilfering of the Social Security trust fund. Once in the constitution, Congress could neither remove SS funds, nor make debts using those funds as collateral. This would mean a great big pot of money, instead of a box filled with useless IOUs.
No more laws for future generations to pay for, either. If a law wasn’t fully funded, then the parts of it not fully funded would not get done. Hey, if they aren’t willing to pay for it, why did they pass it?
I’m sure there are lots of holes in the idea, but it sure is fun to contemplate.
Space is the place
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