825 billion dollars in new borrowing and spending

[PLC1]

This is downright scary:

Senate Releases Second Portion of Bailout Fund

WASHINGTON — President-elect Barack Obama’s economic agenda advanced rapidly in Congress on Thursday as the Senate voted to release the second half of the financial industry bailout fund and House Democrats unveiled an $825 billion fiscal recovery plan aimed at putting millions of unemployed Americans back to work.

Republican leaders quickly criticized the plan.

“This is the first time Republicans and the American people have seen any specifics on the proposal Congressional Democrats intend to pass, and what we’re seeing is disappointing,” the Republican leader, Representative John A. Boehner of Ohio, said in a statement. “The plan released this morning by Congressional Democrats was developed with no Republican input and appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity.”

But, haven't the Republicans been trying to borrow and spend our way to prosperity for years already?

If the economy really turns around, and the government is actually able to make up for that $825 billion dollar spending spree, then great. If not, then we'll be in a deep recession, with a national debt approaching $12 trillion, or over $36,000 for every citizen of this late great nation of ours.

Does the federal government really know what it is doing this time around? What do you think?

 

[HankHill]

The government is just "trying" things out and hoping they work. In the midst of them "trying" things out, they are lining their pockets with the very green they propose to produce.

Oh, and they're also shoving in as many pet projects they couldn't get through during the Clinton and Bush years.

 

[The Scotsman]

Its a better option than doing the usual entranchment and opting for protectionist policies though surely!

 

[Andy]

This is downright scary:

Senate Releases Second Portion of Bailout Fund

But, haven't the Republicans been trying to borrow and spend our way to prosperity for years already?

Which should tell you it won't work.

If the economy really turns around, and the government is actually able to make up for that $825 billion dollar spending spree, then great. If not, then we'll be in a deep recession, with a national debt approaching $12 trillion, or over $36,000 for every citizen of this late great nation of ours.

Does the federal government really know what it is doing this time around? What do you think?

The democrats are going to do everything the republicans have done wrong, only ten times worse, and with a "we won the election" arrogance. Pride before a fall... get ready for a hard fall.

 

[Andy]

Its a better option than doing the usual entranchment and opting for protectionist policies though surely!

What? How? After the big down turn in the great depression, things started to recover, when FDR went on a spending spree, and enacted tons of government programs and crap. The result was our economy took a nose dive, and we spent many more years in the depression.

This is not a better option. If the bailout showed anything, it's that it didn't work. We should change direction, and move more towards capitalism, and less towards socialism which always fails.

 

[LogicalMind]

LONG LIVE THE DEMOCRAT WAY

LETS THROW MONEY AT EVERYTHING AND HOPE IT FIXES IT SELF

lets stop throwing money we don't have...get a flat tax so that everyone is paying the same percent of there income. and tax all the major business more and not the consumer. put a fence between us and Mexico so that we can our jobs and money in American hands and stop illegal immigrants from working and earning money with out paying taxes on it as well as getting free benefits

-LogicalMind

 

[The Scotsman]

How?

Demand promotes supply - supply promotes production - production promotes employment.

Keynes is interesting but not the be all and end all of econiomic theory.

 

[Andy]

Demand promotes supply - supply promotes production - production promotes employment.

Keynes is interesting but not the be all and end all of econiomic theory.

I must be missing something....

Most of these projects and government programs do not create any demand. Thus no supply or production.

In effect, most just toss money into a sink hole. For example, if I receive government funds for free, I have no need to produce anything. I am consuming, but not producing.

Thus I become nothing but a burden on those that are producing. This doesn't create wealth, but instead destroys it.

 

[The Scotsman]

I must be missing something....

.............probably

 

[Andy]

.............probably

That's not an answer to my point. I take you agree then?

 

[The Scotsman]

well......no not really.........look I think you're coming from it at the wrong angle. I know that there's this great hangup about "soclialism" and all that bollox in the US but this is more to do with trying to deal with an economy where not only is economic activity stumbling but there is no liquidity in the system in order to lubricate the potential for economic activity.

 

[Andy]

well......no not really.........look I think you're coming from it at the wrong angle. I know that there's this great hangup about "soclialism" and all that bollox in the US but this is more to do with trying to deal with an economy where not only is economic activity stumbling but there is no liquidity in the system in order to lubricate the potential for economic activity.

On what basis do you claim this? I have a friend who just bought a house. Clearly he had liquidity. My company is purchasing material and selling product. Clearly they have liquidity. I can't think of anywhere in which there isn't liquidity. Even GM and Chrysler don't have a problem selling their cars, just a problem making money on them because their labor costs are too high.

I don't see evidence of this claim you have.

 

[PLC1]

On what basis do you claim this? I have a friend who just bought a house. Clearly he had liquidity. My company is purchasing material and selling product. Clearly they have liquidity. I can't think of anywhere in which there isn't liquidity. Even GM and Chrysler don't have a problem selling their cars, just a problem making money on them because their labor costs are too high.

I don't see evidence of this claim you have.

GM cuts sales forecast, may need more help

New home sales: Biggest drop ever

Sure, some people have "liquidity". Unfortunately, a lot of people and businesses don't.

GM is having trouble selling its cars for a variety of reasons:

People don't have money.
People are holding on to the money that they do have.
Toyota and Honda make better cars, and even they are losing sales.

People who bought houses after the bubble burst are OK. People who bought them a year or so ago have lost tens, and in some cases hundreds, of thousands of dollars.

I'm glad to hear your company is purchasing material and selling product. As long as it is able to sell product, it will be able to purchase material, and stay in business. It will help keep the material suppliers in business as well. The problem for many business is that they are not selling product, at least not as much as they used to, so they and their suppliers are going out of business, and laying people off, thus ensuring that those still in business will have a harder time selling products.

That's how a recession works. It is a viscous circle. Whether or not the circle can be broken by a combination of tax cuts and spending programs is highly debatable.

 

[The Scotsman]

I don't see evidence of this claim you have.

Bear Stearns
Lehamn Brothers
AIG
Bank of America
numerous Icelandic Banks
numerous UK Banks
numerous European Banks


Whats the Fed rate at the moment.....pretty low
UK official rate lowest ever

........ do I go on!

 

[Andy]

GM cuts sales forecast, may need more help

New home sales: Biggest drop ever

Sure, some people have "liquidity". Unfortunately, a lot of people and businesses don't.

GM is having trouble selling its cars for a variety of reasons:

People don't have money.
People are holding on to the money that they do have.
Toyota and Honda make better cars, and even they are losing sales.

People who bought houses after the bubble burst are OK. People who bought them a year or so ago have lost tens, and in some cases hundreds, of thousands of dollars.

I'm glad to hear your company is purchasing material and selling product. As long as it is able to sell product, it will be able to purchase material, and stay in business. It will help keep the material suppliers in business as well. The problem for many business is that they are not selling product, at least not as much as they used to, so they and their suppliers are going out of business, and laying people off, thus ensuring that those still in business will have a harder time selling products.

That's how a recession works. It is a viscous circle. Whether or not the circle can be broken by a combination of tax cuts and spending programs is highly debatable.

I understand all this. What I'm having a problem with is how does a government program fix this?

It's never fixed it before. Why would it do so now?

Obviously we have pulled out of recession before without the need of government programs. Further, we've had government programs that have caused recessions. So the claim there is no liquidity, and thus a need for government programs, seems dubious to me.