3/4/09

Spend Spend Spend

I know I'm not the only one who thinks that the government might be spending a little too much money. Back in 2007, we all thought that the Bush Administrations stimulus bill was an attempt to stave off Dow 10000 and 10% unemployment, ouch. That didnt work so well. So what has the Obama Administration decided to do, spend more money.

In the end, this was just a housing bubble, no different than the tech bubble before it except one major difference, it involved many more people, the bubble was larger and thus the fall has to be larger. BTW, if you are looking for someone to blame, there is plenty to go around from all parties and ideologies, more on this on a later blog.

I totally understand that it takes money to run the government, a lot of money but this is getting out of control and is a large gamble. If it works, Obama and democrats will be able to point to the spending bill and will be in power for a long time. They will also be able to say and rightly so that its better to have a slightly smaller piece of a bigger pie. If the spending bill does not work well then republicans will be able to say and rightly so that government is not the answer and will point to market forces as the answer once again. Only time will tell!

2 comments:

  1. Anonymous3/10/2009

    Lets expand our horizons and consider some facts. Only by understanding the root causes will we be able to fix the problem. For example, consider...

    - In 2007 gov't of India published a study showing that each offshored US IT job created seven other jobs. Guess what? The same offshored job multiplier effect worked in the US - in reverse!!!

    - In 1980, just under 50 per cent of corporate earnings came from manufacturing, and only five per cent from financials. By 2007, financials contributed 50 per cent and manufacturing a single digit. Guess which of the two creates wealth and which is a shell game? Hint, look at China.

    - Google "U.S. household cash to debt ratio" and you will find a chart that shows this ratio dropping like a rock from 1985 to present, all bubbles notwithstanding, and only slowing down an pausing briefly during the Clinton years.

    - In 1980, a single household breadwinner earned the median income. By 2007, median income required the full time effort of two adults and some part time effort chipped-in by the kids.

    These and many other easily accessible and verifiable facts, some courtesy of your gov't and elsewhere, speak for themselves. The talk of bubbles is a talk of symptoms, not root causes and only serves to distract the idiots among us from the real issues. Sure, there was a breach of fiduciary responsibility by the financial institutions, but the loosening of the control strings and the juicing of the economy, and the cooking of the gov’t books served to hide the real state of the economy from the people and to create illusion of progress.

    To judge a gov’t action as good or bad we learned in grade school when we learned about commerce. I know at least two grade school kids that know that a dollar spent in the economy, that circulates in the economy, is good for the economy, and a dollar taken out of economy, such as when spent on a foreign made item is not good for the economy. Its not a rocket science if we are willing to rise above politics.

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  2. Anonymous3/17/2009

    It is not about blame, but exposing the root cause(s).

    In this crisis, the gov't is spending too much only if that money winds up in the foreign banks and projects... in places like Middle East and China and offshore tax havens and in the pockets of parasitic corporate interests that suck the economic lifeblood out of the economy.

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