Posted on 10/01/2011 5:55:26 PM PDT by blam
HERE'S WHAT'S WRONG WITH THE ECONOMY... (And How To Fix It)
Henry Blodget
Oct. 1, 2011, 11:14 AM
The United States is in a very tough spot, economically and politically.
The 25-year debt-fueled boom of 1982-2007 has ended, and it has left the country with a stagnant economy, massive debts, high unemployment, huge wealth inequality, an enormous budget deficit, and a sense of entitlement engendered by a half-century of prosperity.
After decades of instant gratification, Americans have also come to believe that all problems can be solved instantly, if only the right leaders are put in charge and the right decisions are made. And so our government has devolved into a permanent election campaign, in which incumbents blame each other for the current mess, and challengers promise change.
The trouble is that our current problems cannot be solved with a simple fix. They also cannot be solved quickly. It took 25 years for us to get to this point, and it will likely take us at least a decade or two to work our way out of it, even if we make the right decisions.
So it is time that we began to face reality.
THE PROBLEM: TOO MUCH DEBT
The biggest debt binge in US history, by a mile. Four years ago, when the debt-fueled boom ended and the economy plunged into recession, most economists and politicians misdiagnosed the problem.
They thought we were having just another post-War recession—a serious recession, yes, but a cyclical one, a recession that easy money, government stimulus, and a return of "confidence" could fix.
A handful of economists, meanwhile, argued that the recession was actually fundamentally different—a "balance sheet" recession resulting from a quarter-century-long debt-binge, one that would take a decade or more to fix.
(snip)
(Excerpt) Read more at businessinsider.com ...
Bump
Just like FDR, Obama has turned a recession into a depression with his socialism.
Give me 6 months as supreme dictator and I’ll fix things.
You might want to hide in your basement for the duration but you can put SEAL team 6 on me to make sure I leave after 6 months.
Minimizes short-term pain, while
Getting the long-term deficit under control
Brilliant!!
Import tariffs.
Bring back American jobs and factories from communist China.
Import tariffs are fine but you have to be careful.
Reagan used them in very specific cases and actually brought Japanese manufacturers to America while helping American companies to compete.
Ideally import tariffs will strike a balance between the current mess (which actively destroys US jobs and our economy), vs too many tariffs which simply encourage shoddy American workmanship because there is no competition.
This will give us the very best of both worlds: lowest sustainable prices, and America jobs.
However we do not have competition now. We have destruction.
What’s wrong with pressing for energy independence which seems providentially within our reach?
So far no one seems to have read to the bottom of the article where this guy comes out swinging for infrastructure expenditure, then states that much of Europe (and Asia) has vaulted past us in infrastructure. How’s that working out for Europe?
Reagan was truly brilliant.
Harley Davison was failing due to competition from Japan. What he did was imposed a tariff on Japanese bikes over 1100cc. Rather than pay the tariff Japan simply started building bikes here and it wasn’t long before they decided to build all of their made for America bikes here. Americans preferred the big Harleys which were now competitively priced so Japan concentrated on their smaller bikes.
Smoot-Hawley. Tariffs are stupid.
Smoot-Hawley was stupid when America was manufacturer to the world.
It’s now our best option.
Federal spending is more like 25% of GDP, and Blodgett's grasp on history is nearly as accurate.
The economic situation in 1920 was grim. By that year unemployment had jumped from 4 percent to nearly 12 percent, and GNP declined 17 percent. No wonder, then, that Secretary of Commerce Herbert Hoover — falsely characterized as a supporter of laissez-faire economics — urged President Harding to consider an array of interventions to turn the economy around. Hoover was ignored.
Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third.
The Federal Reserve's activity, moreover, was hardly noticeable. As one economic historian puts it, "Despite the severity of the contraction, the Fed did not move to use its powers to turn the money supply around and fight the contraction." By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923.
Harding slashed taxes for all, cut spending, and cut federal debt, and the economy rebounded very rapidly free of government direction. We desperately need another President Harding and 'return to normalcy'.
The problem with debt based wealth is that it isn’t real. It’s a fun game until reality sets in.
The cure for this mess is cheap energy, and lots of it. Of course, smaller government and lower taxes would go a long ways towards putting money back into the economy where it belongs.
Yeah, Reagan was a moron. /s
HD had a lot more problems than japanese competition. They were still building 40s tech bikes. They did come out with the vastly improved EVO design. But the japanese were actively dumping in the USA. Dumping was the justification for tariffs as I recall. No company can survive foreign companies dumping for long regardless of how competitive their products are.
HD had a lot more problems than japanese competition. They were still building 40s tech bikes. They did come out with the vastly improved EVO design. But the japanese were actively dumping in the USA. Dumping was the justification for tariffs as I recall. No company can survive foreign companies dumping for long regardless of how competitive their products are.
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