I favor tax cuts simply because the impact of pumping money into the consumer's pocket is faster and cheaper than having government try to spend money. Moreover, the speed of rescinding a tax cut is faster than trying to get the Feds to stop spending money.

That said, I would suggest what we need now is a bit of stability and patience. For one, I would repeal the HC law and start over.

But, that is just me.

The Great Obama smack down
 

Perhaps he should take early retirement?
 

We are giving him his retirement in 2 years. He should then move to California and straighten out there mess. :D

encouraging people to spend when they're leveraged to the hilt & their personal asset bubble (HOUSE) just popped is ludicrous. the thing i don't understand is this:

why do people assume that if money is SAVED, it is not working in the economy?

if people aren't spending, they are either:

a) placing it into some type of savings account, whereby it can then be loaned out to others. this has a multiplier effect.

b) investing it, whereby it can provide needed capital for future production

c) de-leveraging

the real problem is that right now, most people fall into category C. they are paying down debt rather than saving. encouraging spending when, in aggregate, the populace is leveraged to the hilt, is not only irresponsible, it won't work! we pulled forward too much future demand with borrowed money. that leaves a consumption gap. at some point, we will have to pay the piper. the longer we wait, the worse it will get......

I would agree with insite, in that many consumers need to simply right the ship. It seems that pols don't seem happy with that scenario but as Gov Christie says: "it is time to stop kicking the can down the road."

Now this is an assumption on my part, but maybe this is why your investors are not investing. I am 65 and I am retiring in January 2011. I lost about $75K in the bubble burst so I am not investing in any risky stocks and I want to preserve my basic capital left so I can use it during my retirement years. There are many more like me because we are the War babies and we have entered into our retirement days. Now as for the others go, I think they over extended and cannot help in the short term, but we baby Boomers invested for more than 30 years...so it my take a long time to rebuild the economy.

by not investing, though, i'm guessing you at least have your money in a bank. this allows it to be loaned out to others & it still works in the economy.

you raise a great point, though: after having been burned recently in the markets, a lot of people are very hesitant to jump back in that water. bernanke has a solution for that: quantitative easing, you will notice, has driven the returns on your savings accounts & money market accounts to virtually zero. his policies have ensured that conservative-minded investors cannot make money in low risk investments. in fact, he has ensured that you will LOSE money to inflation. he is trying to force people into risky assets because, to him, for some reason, the market = the economy.....

most of us of course know that this is BS; the market is NOT the economy, and the fact that the market is doing quite well while the economy is by most measures NOT doing well.

i,m retired and the wife still works but we have been buying condos and townhouses in our old people gated community. there are some pretty good deals now days...we are becoming suburban slumlords...beats what the savings account is paying

^ more money in bank deposits does not encourage more loan making. This has been the unwelcome surprise of the Fed, Hank Paulson under Bush and now Geithner under Obama. If the banks have excess cash, as they do now with trillions in reserve, they will simply find other ways to use it like funding foreign investment projects or lending to Wall Street trading firms. The banks will take your deposits, pay you a Turkish Lira in interest and tell you to have a nice day.

The banks can be up their necks in cash but unless credit demand remains weak the cash pegged for consumer loans -- and busines loans frankly since they exist on consumer demand-- will sit idle. The banks are sticking to pre-bubble lending standards that do not correllate with post-bubble incomes and spending. Sure you bailed us out, took the haircutt and the bounce will only be "bonused" to our guys. This spells a very very weak recovery that although it is trending in the right direction sets up the economy like a big 757 jetliner that loses two of its engines mid-flight.
We can't produce the necessary lift to climb fast enough. All this had little to do with the govt and much to do with the role of the American worker in a new economy. We outsourced and consumed ourselves out of rising wages. What did you think was going to happen when China's GDP goes from under $1 trillion to over $6 trillion on American consumptio of cheap goods? The banks have no skin in the game because even with 10% unemployment the big ones at least are turning profits. When 8 of every 10 Americans owns $1 of every $10 dollars invested on Wall Street and are making no more than they were 10 years ago you have to start wondering what the game plan has been all these years.

[QUOTE=Perfectlap. We outsourced and consumed ourselves out of rising wages. What did you think was going to happen when China's GDP goes from under $1 trillion to over $6 trillion on American consumptio of cheap goods?[/QUOTE]

At the rate that we are paid, the outsourcing only awaited China's adoption of capitalism. But then how is it that Germany has escaped our fate? Even while outsourcing some BMW production to the US.

Banks are lending. Indeed, it would be stupid not to do what earns you money.

That said, they have higher lending standards now. That is not hard to understand, as they just spent two years being beaten to a pulp with loan defaults, band failures etc.

If I were running a bank, I would do the same thing: cut the default rate.

How hard is this to figure out?

That is the supply side.

Demand is also weak. We are in a period of deleveging which is a good thing for the average schmo. Only Paul Krugman doesn't get this issue.

[QUOTE=brp987] actually they were awaiting our adoption of unfair trade. They've been ready for capitalism for quite a while. But the barriers that were in place all those decades, that allowed for rising U.S. wages, job growth comensurate with population growth, increases in household net worth, etc. ALL came down in one fell swoop. Rather than incrementally opening up the markets to allow our workforce enough time to shift towards the German economic model you reference, one of high end manufacturing, we let Pandora out of our box in a blink. We spent 40 years fighting a coldwar against communist dictatorship only to turn around and fund, on the most massive scale ever witnessed, a more freedom-hating bunch of communists who are now buying up the world's assets on the cheap and pouring millions into advanced weapons like air craft carrier-killer missiles. Glad to see we put ourselves into trillions of debt at the end of 80's to beat the Soviets only put ourselves in the wealthy pocket of China in the 2000's with our manufacturing tossed in as icing.

i think it will be chinas planet in 50 years . maybe sooner if they choose

I always love the use of the term "we."

I assume you referring to someone other than me, as no one asked my permission to do pretty much anything.

:D

Given all that, would you move to China?

I wouldn't.

i,m a fat cat money luvin capitalistic pig that like fast cars that get bad mileage...i aint eatin fish heads and rice.....besides i,m old and wont be around when china starts throwning her weight around. this country has its share of problems but its been very good to me

My son was recently in China during the summer for sponsored tour. Based on the parts he was in it was nice and the Chinese people love Americans. As far as their economic policy, I believe we did the same thing after the turn of the Century to England. What goes around comes around. I do not believe the idoit using quantitative easing as a solution...didn't the Japanese do the something with no results. Give back the 5% yields on CD's...it's us old farts who are spending and have money left. Then of course they could crash the dollar and take over the banks and give us 1/10 of our money. :ah:

The Treasury is pumping them out, but who's buying? Ben is. Only Ben is. Let's see how long this charade can last.

http://www.youtube.com/user/visionvictory?blend=2&ob=4

It's funny. As the pols lament how stupid we all are, actually, the covers are off the whole political process.

They HATE it.