As I hear more and more about the topic of health care reform, this video I came across a while back comes to mind. It cuts through [Read more…]
Our economy is 70% consumerism. That means it is mostly based on individuals buying stuff. So the current setup of our economy holds two basic facts:
- Individuals buying more stuff than they can afford to buy (based on their income) has a net effect that is good for the economy.
- When individuals lower their spending and save and invest money, the net effect is bad for the U.S. economy.
That said, should we even care about “the economy” in its current setup? If individuals were really doing what is good for themselves (saving and investing), it would be terrible for the economy.
So could Obama’s stimulus really work? Absolutely not. Not if you consider “it really working” to mean more than just temporarily. We don’t need a stimulus. We don’t need a boosted economy. We need a changed economy. There are only three ways out of [Read more…]
CNN to Broadcast I.O.U.S.A. | Obama Foresees Trillion-Dollar
A Bipartisan Plea for Fiscal Responsibility | The Government We
CNN to Broadcast I.O.U.S.A.
The public has spoken, and we’ve listened. In response to demand
for information about our country’s financial challenges, CNN/U.S.
will air the broadcast premiere of the acclaimed documentary
I.O.U.S.A. on on Saturday, January 10 at 2:00 p.m. EST and on
Sunday, January 11 at 3:00 p.m. EST. Accompanying the documentary
will be an unscripted panel discussion with policy leaders about
various economic solutions currently under consideration.
This exclusive televised event will air only on CNN, and will be
hosted by Ali Velshi and Christine Romans, co-anchors of CNN’s
Your $$$$$, the network’s weekend business roundtable program.
Throughout I.O.U.S.A.’s broadcast premiere, Velshi and Romans will
engage a distinguished group of panelists, including Pete
Peterson, Chairman of the Peter G. Peterson Foundation and former
U.S. Commerce Secretary; Dave Walker, President and CEO of the
Peter G. Peterson Foundation and former U.S. Comptroller General;
Alice Rivlin, noted economist and former Director of the Office of
Management and Budget; and Bill Bradley, a Managing Director of
Allen & Company and former U.S. Senator and Democratic
presidential candidate, in discussions about issues raised in the
film and their ties to current economic events.
Learn more about the film at www.IOUSAtheMovie.com. And be sure to
spread the word about the U.S. broadcast premiere!
Obama Foresees Trillion-Dollar Deficits
CNNMoney.com reported on Tuesday that when President-elect Barack
Obama takes office on January 20, he’ll inherit an economy deeper
in debt than ever.
Obama commented on the unprecedented deficit, saying, [Read more…]
…our current circumstances. Rather than ignore the current economic problems, I choose to acknowledge this elephant in the living room during our Thanksgiving holiday.
We are bombarded with headlines like “What will fix our economic problems?” It is absolutely silly. The recession is the solution to the problem of the asinine acts of American government, corporations, and consumers. There is no galactic lottery that our country can win. We have to play by the rules of the game that we started. No person or government can perpetually spend more money than they earn. Such behavior can only be temporary and always leads to self inflicted unpleasantness.
I truly am thankful for our recession because it should help cleanse our government and society of self destructive behavior. We are now forced to [Read more…]
This is a message of prosperity rather than doom and gloom. Read through to the end.
A tremendous amount of homeowners are facing foreclosure. CNN Money reports foreclosures are up over 70% from this time last year. Banks are failing left and right, but let’s just take a look at the bailout concept in the most direct and extreme fashion for purposes of illustration.
The largest bailout possible
Imagine that every single homeowner that has less than 30% equity in their house at today’s prices receives from the Fed a check payable to their mortgage company that will pay their balance down to bring their equity to 30%. There is no more of a direct way to address the foreclosure and housing problem. What would the result be?
- Equity doesn’t matter. People got into mortgage loans that have payments higher than their income will support, and rising food and energy prices are lowering the household budget for mortgage payments. You could lower interest rates to 0% (forget about the market chaos that would create for a moment) and many people still wouldn’t be able to afford their homes.
- Home prices would fall because many would use the 30% equity in hopes of being able to sell their home and buy a less expensive home. This would accelerate the downward pressure the median home price. Many families would return to renting after touching the hot stove of home ownership. Of course, they would be seeking affordable rent which would also put a downward pressure on median home prices.
- I can’t estimate how many trillions of dollars would have to be created by the Fed for those types of bailout checks to be written… but you can be certain it would have a HUGE direct impact in raising inflation to levels unseen in American history. Injecting new money into the economy makes all prices go up. In this scenario, Americans would literally not be able to afford to eat if they stayed in their home. Home prices would crash almost to zero because three bedrooms and two bathrooms would become less important than food. There would be much larger social problems because, with this magnitude of inflation, food would become so expensive that theft, robbery, and violence would be the only viable means of survival for some.
A direct, swift bailout to cure economic symptoms would create very difficult times.
The smallest bailout possible
The smallest bailout is one that [Read more…]