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Bush weighs new measures to help stimulate economy - Yahoo! News (broken link)
Headline reads: "Bush weighs new measures to help stimulate economy"
I honestly can't think of anything he can remotely do right now to jump start the economy. Any Ideas?
And to be honest he needs to stay out of the way. I know he really can't because of the upcoming election. But he needs to let the chips fall where they may and let the market figure out what to do with this slowdown. Even if most of the market is screaming for help right now. I believe intervention should be held off until if/or when we reach close to depression era unemployment. Remember at this point we really don't know how deep the slowdown going to be. So we should not panic just yet and cry out for government assistance.
Bernanke should raise rates to stabilize the dollar. These oil price increases are a far bigger threat to the economy than housing. Yes, it would cause short term pain in the credit markets if rates were to be hiked now, but sometimes it needs to be done to prevent a much worse catastrophe, as was done in the early '80s.
Bush can't do anything... Congress can (with Bush approving it at the end)... correct question would be... "What can Congress do?"... it is currently a democratically controlled House... which means ... NOTHING... they can do absolutely NOTHING.... now if you told me libertarians were in the House.. I would of said, don't worry, it'll be done by tonight... Democrats and Republicans don't know jack about the economy, they know how to be corrupt politicians but they don't know jack about how to run an economy... they ask libertarians how to do it and effed it up in the end by trying to add corruption into it...
Bush weighs new measures to help stimulate economy - Yahoo! News (broken link)
Headline reads: "Bush weighs new measures to help stimulate economy"
I honestly can't think of anything he can remotely do right now to jump start the economy. Any Ideas?
And to be honest he needs to stay out of the way. I know he really can't because of the upcoming election. But he needs to let the chips fall where they may and let the market figure out what to do with this slowdown. Even if most of the market is screaming for help right now. I believe intervention should be held off until if/or when we reach close to depression era unemployment. Remember at this point we really don't know how deep the slowdown going to be. So we should not panic just yet and cry out for government assistance.
the market never figures this stuff out by itself. There is always some form of govt intervention be it in the open or behind closed doors. One thing he could do is fund all these mass transit initiatives that many cities across the country are trying to do. Many have been put on hold or canceled out right because of the economy. This would put many to work.
I have no idea what Bush is thinking, other than his looking forward to time in Texas.
My response rambles a little, but it does get to a point...
As to what could be done to stimulate the economy? Stimulating it across the board might be the worst thing to do. The potential of $5 gas or higher is pulling out the underpinnings of the underclass that supports the whole infrastructure of retail. Those are the people who need a boost, even more than the manufacturers or other industries. Stimulating growth of certain sectors without addressing the problems of the low paid workers is going to exacerbate core problems rather than help.
First, we need to be realistic and not be entranced by the Libertarian bullcr*p. Libertarian ideas assume a totally free market economy, which we have never had and never will have. This economy is micromanaged by laws and regulations, some of which were instituted by public demand, others because of special interests. For example, we have enough waste heat from industrial sources to increase our electric supply by 50% or more. It hasn't been done because of regulations that prohibit such ludicrous things as crossing a road with a private power line, all in the name of protectionism.
Why my focus on energy? Because, as I have said before, we exist on a default energy standard, not a gold or silver standard. Both gold and silver were artificial standards of monetary value designed to favor the upper classes. It was hard to get, they had a lot, the poor were locked out of wealth. In contrast, energy = work, and the United States has historically built wealth based on how much work a person can do on his own, or how much he can control.
The energy standard is literally the relationship between currency and the price of a standard unit of energy. In an honest economy where a newdollar is fixed at the price of 60kwh (the energy in a gallon of gas), just about all of the problems with inflation evaporate. The core cost of goods becomes the cost of the energy used to produce those goods, plus equipment and delivery costs, plus tax. Put a flat tax on everything, with a fixed percentage going to state and local governments, eliminate income tax and all local taxation and fees and suddenly, the economy all starts to make sense to the common man.
The problem with a fixed energy newdollar is... the deception of government sneaking unsupported money into the system no longer works.
Our economic problems are NOT because of the price of gas or a housing crisis. Our real problems stem from an ever increasing float, where inflation has been a hidden tax. Manipulation of the economy to cover the worst effects of that tax up has promoted unsustainable optimism and growth. We are past the point where that works, and the fake money is beginning to fall on its own.
What is going to happen now? We have to look at the Federal minimum wage as an indicator of the health of the underclass. For those who say that few employers pay only minimum wage, I won't even bother to argue the point. HOWEVER, those wages just above minimum have social security, federal, state, and sometimes even municipal taxes taken out, flipping them back to actual take home in line with, or even less than, minimum wage.
Year min wage adjusted for inflation
1970 1.60 6.47
1980 3.10 5.90
1990 3.80 4.56
2000 5.15 4.69
2007 5.85 4.41
See the downward trend in inflation adjusted dollars? That equates to a wage crunch, where people have to work more hours, or spouses have to work, to maintain a standard of living. Since many jobs have cost of living increases or just plain old raises, lots of folks in more stable industries might not have seen this as an issue, figuring that the fast food workers and grocery baggers were the only ones affected. In reality, we ALL have been affected, but government slight-of-hand has kept it off our minds.
The inflation adjusted minimum wage changed slowly and people had time to adjust, even if they had to work more hours. That was key in the subtle eroding of the economic safety net of minimum wage. Employers have likewise become detrimentally used to those low wages, and adjusted their business practices to take advantage of them. The rotation of floor employees through some of the fast food chains can be as much as 200% or more per year. Hire 'em, give 'em minimum training, use them until they quit, then rinse lather and repeat. The key is fast on-the-job training and a large pool of potential workers. That isn't a sustainable business model in a changing economy.
When did this all start? Not co-incidentally, about 1970. Fast food was fast taking off, and the government was just beginning to play with inflation as a tax tool. Take a look at a chart:
Now lets add a new column to our data points. The cost of minimum wage vs. the cost of gasoline. we'll add a column for that, and then put how many energy units (gallons of gas) can be bought at minimum wage in the last column.
Year min wage adjusted for inflation
1970 1.60 6.47 $0.40 4 gal
1980 3.10 5.90 $0.60 5.1 gal
1990 3.80 4.56 $1.00 3.8 gal
2000 5.15 4.69 $1.50 3.4 gal
2007/8 5.85 4.41 $4.50 1.3 gal
What becomes obvious, looking at the figures, is that the minimum wage jobs are rapidly becoming unsustainable. The folks working at them have not only been losing via inflation, but now are totally tanking because their real energy dollar is gone, unlike in the 1980s when the last serious economic problems occurred.
Workers will try to adjust by using public transport or walking or carpooling. Some will quit and find jobs closer to home. There will be increased rotation for a while, and there will be people who are out-of-work trying to make ends meet by taking low paying jobs. Businesses will be blessed with less motivated workers, and more shrinkage as underpaid workers start to steal to make up what they perceive as a living wage. High gas costs will also result in a loss of income in fast food and retail as people drive less, an increase in cost of supplies, forcing rising retail prices which will lower consumption. The decreased profits will hit an unforgiving stock market, encouraging further speculation in energy related companies. I expect a big shakeout in the entire fast food sector and retail in general.
But that isn't the worst of it. As the ripple effect of high energy increasingly hits the food supply, people will not be able to buy the foods they are accustomed to. I'm seeing and experiencing that even now. The last time I went to the store, I flat-out refused to buy tomatoes at $3/lb. Can you imagine a minimum wage worker having to work over a frikkin hour to buy two or three tomatoes???? That has never occurred before. The price of milk is bad enough, but when basic produce gets that far out of whack from wages, there will be more people who just plain give up and get off the treadmill.
In the old days, there would be a reversion to planting big gardens and maybe having a family cow or a few chickens. Those options are impossible for people with lot line houses, condos, or apartments, especially if they are trying to juggle two jobs. The high food and gas costs will mean late rent payments, another round of foreclosures, and more crime. At the same time, states are beginning to understand the cost crunch of keeping people in prison. Alabama now has a law that allows the release of ill and terminally ill people that have been serving life terms. The cost of care is too much compared to the risk to the community. Will sentences be shorter for people who commit crimes, simply because states can't afford to house all the prisoners? Quite possibly. That means even more crime on the streets.
So what could be done to stave off some of this? Free MREs for the public? Government subsidized lower gas prices? Nationalization of the oil industry? All of these "solutions" create problems of their own.
The underground economy and barter are beginning to pick up. Unless government is willing to lose tons of sales tax revenues, and spend more for corrections, it has to raise minimum wage immediately by an amazingly large amount. A true adjustment would be to raise it to about $12/hr, and a minimal fix would be $10/hr. This will drive some businesses into bankruptcy, but frankly they will fail anyway, and delaying will take even more businesses down that route.
The second longer term boost will be incentives for car makers to make fuel efficient cars and get them on the streets without bureaucratic red tape holding them back. Check this one out:
When WWII started, production of tanks and planes on a massive scale protected our country. We need that same fast ramp-up and increased production today, but of cars like the Aptera, and more fuel-efficient trucks, BUILT ENTIRELY IN THE U.S.. The use of diesel fuel to heat homes needs to be banned, even if it means returning to coal furnaces. Incentives and mandates to do this will short-circuit the oil speculation almost completely. Energy dollars can't be wasted like they have been in the past. The railroads learned that when they were forced to switch from steam to diesel, and the average Joe needs to learn that as we switch from moving around in a ton of steel to a cocoon of composites.
Without something to focus on and look forward to, the American people WILL slump into a depression. What we must also understand is that the level of speculation on oil now has become a matter of national security. The speculators are undermining the economy as certainly as termites eating away at the foundation of a house. Moving the speculation away from oil has to be a top priority of government.
Harry, your point is all moot... you imply incorrectly that most americans earn a minimal wage... so your argument was bullcr*p and you need to stop blaming libertarians for your problems...
Just as not all Democrats agree with each other and not all Republicans agree with each other, not all Libertarians agree with each other, and some put a lot more importance on individual liberty than the importance of "free markets"...
That said, Bush is in a quandry. Mostly, when we have inflation, the economy is very strong and interest rates need to be raised to cool things off. Also mostly, when we have a recession, the economy is sluggish, people aren't spending, and the Fed usually lowers interest rates to stimulate the economy.
Now, we've got a sluggish economy, the housing and financial sectors are in the toilet, yet gas and food prices are increasing quickly.
I wouldn't want to be President right now, and George W Bush may feel the same way.
I'm guessing he'll ride it out and do nothing, let his successor deal with the mess.
Harry, your point is all moot... you imply incorrectly that most americans earn a minimal wage... so your argument was bullcr*p and you need to stop blaming libertarians for your problems...
Right... Read something you don't like, shut down your thinking, open mouth, and insert foot. Working your points backwards...
First of all, they aren't MY problems, so quit with the slanted ad hom attack.
Secondly, I never blamed Libertarians for getting us here, so THAT part of your response is nonsense.
Thirdly I never implied that most Americans earn minimum wage. I stated that those 2 million or so who do are massively impacted by the current increases in fuel and food costs.
Fourthly, the point (which I put in bold to assist those who were hard of seeing) works well for everyone in the country except those people speculating on oil. A moot point? I think not.
Your entire response has no merit.
Choosing the Heritage Foundation as your cite is as unbiased a cite as someone citing HillaryClinton.com or RushLimbaugh.com. However, I'll briefly play your own game, by using their figures. I especially enjoyed their brilliant starting deductions, such as: "Most workers who earn the minimum wage or less fall into two categories: young workers, usually in school, and older workers who have left school." Gee, how insightful. With razor-sharp logic like that, they somehow have come to the conclusion that "Minimum wage-earners’ average family income is almost $50,000 per year."
If you really believe that, then you must also think that most of the U.S. population should apply for minimum wages jobs to get a $1800/yr raise. After all, "median household income in 2006 was $48,201" according to:
Since the people earning minimum wage have been eliminated from the ranks of the poor by the Heritage Foundation, the ranks of the poor must... be... made... up... from... those... poor souls... earning MORE than minimum wage..????
The more telling, and probably more accurate, point on the epi.org website is:
"Between 2000 and 2006, the average income of the lowest fifth is down 4.5%, the middle fifth is down 2.5%, and only the top fifth is up, by 1%. Similarly, today’s report revealed that the share of income going to the top fifth of households was 50.5%, the highest share on record going back to 1967. The middle-income share was 14.5%, the lowest on record. The bottom income share has been 3.4% since 2003, also an historic low."
Speculation on oil is building on itself, to the point that it now is becoming a factor that is orders of magnitude more serious than Bear-Stearns, and much more global in its effect than the housing bubble.
This extreme oil speculation has to be stopped immediately for the health of the country. Outside of direct intervention in the markets, the best way to accomplish this is to provide massive dis-incentives to speculators. It would be entirely within the realm of governmental bureaucratic bungling to slap a fat tax on stock gains in the energy sector. That would be repressive and only a short term solution.
The much better long term solution is fast-tracking high efficiency multi-fuel cars built in the U.S..
This would
(a.) stop speculation on oil,
(b.) reduce the need for oil,
(c.) provide jobs,
(d.) reduce the wear and tear on the highway infrastructure, and
(e.) create a climate of hope and growth for all income levels.
What would fast-tracking entail? Motivational grants for X number of new vehicles on the road within one year, temporary relaxation of some safety standards and EPA rules, tax breaks for purchasers of the new cars, and tax relief for the car makers. We have a highly regulated auto industry, yet innovation is almost always messy and impossible to achieve in a highly regulated environment. We need to get the first generation of cars like the Aptera rolling now.
The alternative of doing nothing rips apart the fabric of retail and the lives of lower income families. But, for the Democrats, if the solution isn't from their ranks, it is no good, for the Republicans, the distaste is mutual, and for the Libertarians, none of it is any good, to allow the market to correct itself we just have to sit in the box and pound sand. How delightful. How resourceful. How positively insane.
Location: Sitting on a bar stool. Guinness in hand.
4,428 posts, read 6,511,903 times
Reputation: 1721
Quote:
Originally Posted by Wild Style
the market never figures this stuff out by itself. There is always some form of govt intervention be it in the open or behind closed doors. One thing he could do is fund all these mass transit initiatives that many cities across the country are trying to do. Many have been put on hold or canceled out right because of the economy. This would put many to work.
My biggest concern is that this administration is just going to come up with something similar to last time. Basically just throw money at the problem and hope it all goes away. This type of strategy just isn't going to work. And in fact I think it will make it worse. And I would like the nation at least try to let the market handle themselves first before we throw in the towel. But I willing to change my position of large government intervention if I start to see the unemployment rate getting to 12% to 15%.
Now with mass transit. I do have to say that I'm rather ignorant to who actually pay for what when it comes to mass transit. Of course in my birth state of MA. the Feds did help pay for the construction of the big dig. But I believe it was a state enterprise first then it became Federal after cost over runs for the project. Now I know the Feds didn't help build our road and bridge systems but that was a project that was for the nation as a whole (basically our interstate road networks.) I mean the Federal Government could delegate money to just about anything it wants if there are the votes for it. But I thought building local mass transit systems for a particular city would be up that city or state to fund first and then maybe get help from the Feds later if need be.
My biggest concern is that this administration is just going to come up with something similar to last time. Basically just throw money at the problem and hope it all goes away. This type of strategy just isn't going to work. And in fact I think it will make it worse. And I would like the nation at least try to let the market handle themselves first before we throw in the towel. But I willing to change my position of large government intervention if I start to see the unemployment rate getting to 12% to 15%.
Now with mass transit. I do have to say that I'm rather ignorant to who actually pay for what when it comes to mass transit. Of course in my birth state of MA. the Feds did help pay for the construction of the big dig. But I believe it was a state enterprise first then it became Federal after cost over runs for the project. Now I know the Feds didn't help build our road and bridge systems but that was a project that was for the nation as a whole (basically our interstate road networks.) I mean the Federal Government could delegate money to just about anything it wants if there are the votes for it. But I thought building local mass transit systems for a particular city would be up that city or state to fund first and then maybe get help from the Feds later if need be.
With the mass transit thing, I think we will see a private/public venture. Government will take to darn long to build out adequate mass transit like what is needed now in metro areas. Private can do it in a quarter of the time and at a far better price point.
I posted some links in another thread. I started showing how Brazil has done it and also how Argentinian cities are doing it. Again, with public/private partnerships.
I also agree with you, financing the problem via debt as they have done with the last few bubbles isn't going to work. This is why I believe America is under going one of the largest structure changes we have witnessed both economically and socially.
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Read something you don't like, shut down your thinking, open mouth, and insert foot. Working your points backwards...
