Posts Tagged Economy

Robert Creamer: New Economic Data Shows that Right Wing Economic Theory Is Simply Wrong.

Robert Creamer: New Economic Data Shows that Right Wing Economic Theory Is Simply Wrong.

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Even as Republicans blather on about the evils of a so-called “government takeover of health care,” economic news has provided two new key illustrations that the intellectual foundation of right-wing economic orthodoxy has collapsed.

First, the most recent economic numbers on changes in Gross Domestic Product (GDP) and employment made it increasingly clear that — as The New York Times reported last Saturday — the Obama economic stimulus and the massive government intervention in the financial markets

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The Guy That Called The Economic Collapse

Nouriel Roubini. Someone to whom I listen.

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How I learned to stop worrying and love the deficit

Notwithstanding the neo-Hooverite talk from stimulus-program opponents, the current deficit isn’t too large. If anything, it may need to be even larger to revive the economy.

The government, in its efforts to stimulate the economy and fight a deepening recession, is doing what to many people seems counterintuitive – increasing spending and putting our country further in debt.

I’m admittedly no economic expert, and I have to resort to reading and listening to those who are. There are plenty of non-experts giving their opinions here at OneUtah and elsewhere. And opinions are like . . . well I won’t go there. But there is a great deal of hysteria without serious economic understanding when it comes to the deficit. So when I read the article, I felt it important to share here.

NY Times:

The good news is that there is little disagreement among economists who have studied the issue. The consensus is that short-run deficits help end recessions, and that whether long-run deficits matter depends entirely on how government spends the borrowed money. If failure to borrow meant forgoing productive investments, bigger long-run deficits would actually be better than smaller ones. Read the rest of this entry »

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We are becoming our grandparents

In recent weeks, I’ve had the same or nearly the same conversation with conservative friends. They assert that the problem with the economy is being made worse by the media reporting on problems in the economy and then go on to assert that things would be fine if only we believed things were fine. This conservation reminds me of a previous conservative talking point (the media should report the good news out of Iraq then more people would support the war). It’s a curious notion really that the problem would go away if we didn’t talk about it. I don’t buy the argument for one very simple reason – the economic downturn is real, has real causes and not talking about those things won’t make them go away. The claim that the media is making things worse is not so much analysis of the situation as it is wishful thinking.
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Our bailout dollars at work

I’m sorry this video isn’t embedded – CNBC didn’t offer that option; maybe I’ll figure it out later. Click on the graphic to link.

CNBC’s Maria Bartiromo discusses the future of Citigroup with the company’s largest shareholder, one of the wealthiest people in the world Prince Alwaleed Bin Talal of Saudi Arabia.

Is our Citigroup bailout money helping this guy? Well, yes. Someone enlighten me. Is this a good thing?

Alwaleed strongly supports Citi’s current CEO Vikram S. Pandit, referring to him repeatedly by first name, saying he’s only been there a year. We have to lay blame on the previous CEO. The prince doesn’t hold the board responsible at all.

I looked for a little more information on Pandit, and found this from May 2008 Blogging Stocks by Douglas McIntyre:

Vikram S. Pandit, the CEO of Citigroup (NYSE: C), got his start at the big bank by selling them his hedge fund business, Old Lane. A few months after the transaction, Pandit got the top job, but the business he sold Citi is in trouble.

According to The New York Times, “Citigroup said late Friday that it was planning to restructure Old Lane after ‘substantially all’ its outside investors withdrew their money.” The bank bought Pandit’s company for $800 million.

Ahhhhh. . . I see. Do you get the feeling you’ve been had? These are the people who need our billions of bailout dollars. These are the people our children will pay higher taxes in the future in order to help now. And yet, if we don’t bail them out, we will suffer even greater trouble? Perhaps torture is appropriate after all — for certain bank and auto executives.

On other topics, Alwaleed supports the auto industry bailout and says the U.S. government must ensure the big three can compete with European and Japanese automakers. He admits the recent astonomical price of oil was speculation and that a price of $50 to $60 is more realistic.

The prince has a truly impressive grasp of financial workings in the U.S. and is on a first name basis, a pick-up-the-phone-and-chat relationship with the big boys in U.S. finance.

It’s a very long video, but fascinating and unsettling.

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Read ‘em and weep

All the rules are out the window. We’re in new territory now and nobody knows anything. Don’t believe any predictions you hear because they really don’t know. The DJIA Thursday dropped to 7552.29, its lowest in five years. As my stock market savvy friend advised me, at this point you can be sure it won’t drop more than 7552.29. Hah!

Traditional market thresholds no longer matter:

There was a time when thresholds meant something. The Dow Jones average sinking below 8,000 must mean the bottom is near. The S&P 500 falling 50 percent from its high must signal the end of the free-fall.

Economists, money managers and traders who watch the markets closely say you can’t assume previous bear market measures mean much. They acknowledge they don’t know where the bottom is and anxiety remains high. So does the selling, which continued Thursday.

I’m curious, OneUtah readers, have you felt the pinch? Are you doing things differently because of the financial disasters we’ve seen? Or do you, like me, still feel somewhat isolated from the real pain — so far. My very smart friend predicts that we will all be feeling the pain before long.

Chart credit: MSNBC

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Bailout Lacks Oversight

This is what you call major violation of the public trust. It is so outrageous, there are no words for it. The Bush administration has managed to achieve one more major disaster before leaving office–give away BILLIONS of taxpayers dollars with NO OVERSIGHT. That’s right. We were told how absolutely necessary this bailout is, and we trusted they would spend our money wisely and carefully. HAH!

And now they want to bail out GM to the tune of more BILLIONS in order to save millions of jobs. And we all want to save those millions of jobs, don’t we? But who can be believed any more? Not George W. Bush. Not anyone in his administration.

Bailout Lacks Oversight Despite Billions Pledged

In the six weeks since lawmakers approved the Treasury’s massive bailout of financial firms, the government has poured money into the country’s largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

Six weeks! What have they been doing? When the hell are they going to get around to this? Is it not a priority? Shouldn’t they be on it 24/7?! I mean really!

I apologize for the shouting. This just pisses me off!

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Bush has regrets

In an interview on Tuesday, President George Bush spoke about regrets he has about his presidency. He said he regretted speaking in front of a “Mission Accomplished” banner just one month into the Iraq war. He said he regrets saying things like “Bring ‘em on” and “Dead or alive”.

Well those are good things to reget, but they’re the small stuff.

How about some regrets about starting a pre-emptive war/war of aggression by lying about weapons of mass destruction? How about the loss of many thousands of human lives as a result? I’m disappointed he doesn’t reget that.

How about some regets for allowing financial institutions practically free rein resulting in unprecented failure of major institutions on his watch?

How about the world-wide recession and down-spiraling economy that hit us while his administration was in denial and failed to act in time?

Bush says he may write a book. Maybe by that time he’ll begin to understand the really huge damage done under his lack of leadership.

I know, I haven’t listed them all. It’s too depressing. Feel free to add your own regrets here.

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And now, back to our economy

And by “our” I mean the whole world, since the economic crisis is worldwide. We had a nice diversion with the election, but in the cold light of morning, we realize the situation is as dire as it was before the election consumed us. The stock market took another dive yesterday. That matters to me because of my 401k, but I don’t think it’s the big news. I think even the bailouts are going to take a backseat to the bigger story of job losses.

From Reuters:

NEW YORK – Planned layoffs at U.S. firms surged to their highest in nearly five years during October, with cuts in the financial and auto sectors leading the charge as the economic outlook worsened, a report by outplacement firm Challenger, Gray & Christmas said on Wednesday.

Job cuts announced in October totaled 112,884, up 19 percent from September, the report said, citing evidence of widespread economic malaise as troubles that began in housing and banking infect the rest of the economy.

“The fact that nearly three out of four industry categories are cutting more jobs is proof of how widely the impact of this downturn has spread,” said John Challenger, chief executive officer of Challenger, Gray & Christmas.

“A year ago, job cuts were concentrated in the financial sector and home-building industries. Job cuts are now rising across the board.

October represented the year’s worst month for job cuts for several industries, said Challenger, including industrial goods manufacturing, consumer products, pharmaceutical, food and electronics.

The report comes as the government is expected to report 200,000 jobs were lost in October, bringing the total this year to nearly 1 million.

The unemployment rate is also seen rising to 6.3 percent from 6.1 percent. Economists forecast that the jobless rate will rise to more than 8 percent before the job market recovers.

“Year-end job cuts are typically higher than at other times of the year, but the fact that October was significantly higher than recent years suggests that companies not only have been hit hard by this downturn, but they do not see a rebound any time in the near future,” said Challenger (all emphasis, mine)

This is the thing that worries me the most. So many Americans live from paycheck to paycheck with no savings and no safety net. On a personal level, people need that steady flow of income to survive. In the bigger picture, the economy needs people to spend money to remain healthy.

I’m predicting job losses will be the greatest economic priority by the time Obama takes office in January.

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