What's the Best Fix?

Well DAH! Who hasn't already figured that out? OH ya the smart people running this country. Pity the poor fools.

Dollar Wise...actually, according to the Economics textbook I teach from (I teach Economics), fiscal policy is the control of both taxation and government spending to effect the demand side of the economy. Reduction in taxes and increases in government spending are referred to as "expansionary fiscal policy." At least that is what the textbook says.

George Will has gotten so many things so horribly wrong that you could use him as a 'reverse' indicator, "If Will says it's so, we know it isn't." The only healthy economy there ever can be or ever will be is an economy that encourges and rewards individual saving (as in savings accounts), rather than 'spending.' Right now, saving is punished, and punished severely, while irresponsible frenzied spending and enormous irresponsible debt are deemed to be "The Ultimate Blessings of Liberty." That's how governments behave. It's how corporations behave and how people behave. It's like smoking ten packs of cigarettes a day. The consequences are rapidly accruing and the lid is destined to blow sometime real soon and at eternal intervals. This will never, ever be capable of producing a healthy, stable economy or nation. The "enough is never enough" consumer model quite simply WILL NEVER BE ENOUGH to save us from calamity. In fact, it is the slam-dunk recipe for it. But no one will talk about it.

We created an artificial economy with massive borrowing and spending both at the personal and government levels. The Bush administration doubled the total national debt accumulated since 1776, to the tune of $5 trillion plus and the private sector is bullging at the seams with debt..

And now we are in a catch 22. If we don't continue the massive borrowing and spending, we end up in an extended recession. If we do continue the massive borrowing and spending, at some point the system collapses fromt he weight of the debt.

The best we can hope for with the stimulus packages is a soft landing as the economy adjusts to the new reality. And that will be a long, slow and painful process. Anybody thinking we are going back to the bubble days soon should share some of what they are smoking with the rest of us. It has to be really good stuff.

BA also outsources their jobs to Canada, not employing American people. That makes it hard for American people to pay BA their payments, thus defaulting. Irony is the only work I can think of, but there has to be a better one. Bank of America. Let's keep it AMERICAN!

How does replenishing the banks fraudulant losses (again) help people pay their "over-valued" mortgages and put people back to work when everyone is firing or laying-off workers?

Sorry about the 3 postings - I tried to sign up and kept getting "page not found", but evidently it was posting.

Yes, but the banks aren't lending out the money even to creditworthy borrowers. I applied for a $30K home equity line of credit to build a shop on my rural property. It has a high quality new home on 1 acre, which I bought way below appraised value about 20 months ago. I have a 15 year 20% down conventional mortgage and only owe $183k on the property. I have a condo free and clear in downtown Seattle. My fico score came back 838. I don't have any other debt, own 3 cars free and clear, 2 snowmobiles, a motorcycle, etc. No deal - BA turned me down. These are the same people who tried to give me my whole down payment back on a HELQ when I closed 20 months ago. I declined at that time.

I tried to explain that I'm not going to the Casino with the money, but it's all going back into the property. This is the kind of spending that would help the domestic economy - local labor - domestic building supplies. This is why America is stalled.

Yes, but the banks aren't lending out the money even to creditworthy borrowers. I applied for a $30K home equity line of credit to build a shop on my rural property. It has a high quality new home on 1 acre, which I bought way below appraised value about 20 months ago. I have a 15 year 20% down conventional mortgage and only owe $183k on the property. I have a condo free and clear in downtown Seattle. My fico score came back 838. I don't have any other debt, own 3 cars free and clear, 2 snowmobiles, a motorcycle, etc. No deal - BA turned me down. These are the same people who tried to give me my whole down payment back on a HELQ when I closed 20 months ago. I declined at that time.

I tried to explain that I'm not going to the Casino with the money, but it's all going back into the property. This is the kind of spending that would help the domestic economy - local labor - domestic building supplies. This is why America is stalled.

Yes, but the banks aren't lending out the money even to creditworthy borrowers. I applied for a $30K home equity line of credit to build a shop on my rural property. It has a high quality new home on 1 acre, which I bought way below appraised value about 20 months ago. I have a 15 year 20% down conventional mortgage and only owe $183k on the property. I have a condo free and clear in downtown Seattle. My fico score came back 838. I don't have any other debt, own 3 cars free and clear, 2 snowmobiles, a motorcycle, etc. No deal - BA turned me down. These are the same people who tried to give me my whole down payment back on a HELQ when I closed 20 months ago. I declined at that time.

I tried to explain that I'm not going to the Casino with the money, but it's all going back into the property. This is the kind of spending that would help the domestic economy - local labor - domestic building supplies. This is why America is stalled.

Interest rates cannot go any lower; unless the government requires that Credit Card companies to lower their rates, stop penalizing those who pay only the minimum, or miss a payment elsewhere; concentrated only on their own clientele.

LOL! If you call a national depression from 1929 to 1941 success in Keynesian economics, you need to right 'liberal' on your forehead.

<strong>Chairman Ben S. Bernanke, Let's Abolish Credit</strong>

All of Our Economic Problems Find They Root in the Existence of Credit.

<strong>A Credit Free, Free Market Economy Is Possible.</strong>

Both Dynamic on the Short Run & Stable on the Long Run.

<b>I Propose, Hence, to Lead for You an Exit Out of Credit:</b>

Let me outline for you my proposed strategy:


??? <a href="http://edsk.org/">Introduction.</a>

??? <a href="http://edsk.org/share.html">The Numbered Account.</a>

??? <a href="http://edsk.org/money.html">The Credit Free Money: The Dinar Shekel AKA The DaSh, Symbol: - .</a>

??? <a href="http://edsk.org/option.html">Asset Transfer: The Right Grant Operation.</a>

??? <a href="http://edsk.org/interest.html">A Specific Application of Employment Interest and Money.</a>
[Intended For my Fellows Economists].


If Risk Free Interest Rates Are at 0.00% Doesn't That Mean That Credit is Worthless?

We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.

<strong>In This Age of Turbulence The People Want an Exit Out of Credit:
An Adventure in a New World Economic Order.</strong>

The other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.

It will be either awfully deadly or dramatically long.

A price none of us can afford to pay.

<em>???The current crisis can be overcome only by developing a sense of common purpose.
The alternative to a new international order is chaos.???</em>

- Henry A. Kissinger


Let me provide you with a link to my press release for my open letter to you:

<a href="http://www.prlog.org/10165667-chairman-ben-bernanke-quantitative-easing-cant-work.html"><em><strong>Chairman Ben S. Bernanke, Quantitative Easing Can't Work!</strong></em></a>


I am, Mr Chairman, Yours Sincerely,

Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
<a href="http://edsk.org/">1 7 7 6 - <em>Annuit C??ptis</em></a>
Tel: +972 54 441-7640

<strong>Chairman Ben S. Bernanke, Let's Abolish Credit</strong>

All of Our Economic Problems Find They Root in the Existence of Credit.

<strong>A Credit Free, Free Market Economy Is Possible.</strong>

Both Dynamic on the Short Run & Stable on the Long Run.

<b>I Propose, Hence, to Lead for You an Exit Out of Credit:</b>

Let me outline for you my proposed strategy:


??? <a href="http://edsk.org/">Introduction.</a>

??? <a href="http://edsk.org/share.html">The Numbered Account.</a>

??? <a href="http://edsk.org/money.html">The Credit Free Money: The Dinar Shekel AKA The DaSh, Symbol: - .</a>

??? <a href="http://edsk.org/option.html">Asset Transfer: The Right Grant Operation.</a>

??? <a href="http://edsk.org/interest.html">A Specific Application of Employment Interest and Money.</a>
[Intended For my Fellows Economists].


If Risk Free Interest Rates Are at 0.00% Doesn't That Mean That Credit is Worthless?

We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.

<strong>In This Age of Turbulence The People Want an Exit Out of Credit:
An Adventure in a New World Economic Order.</strong>

The other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.

It will be either awfully deadly or dramatically long.

A price none of us can afford to pay.

<em>???The current crisis can be overcome only by developing a sense of common purpose.
The alternative to a new international order is chaos.???</em>

- Henry A. Kissinger


Let me provide you with a link to my press release for my open letter to you:

<a href="http://www.prlog.org/10165667-chairman-ben-bernanke-quantitative-easing-cant-work.html"><em><strong>Chairman Ben S. Bernanke, Quantitative Easing Can't Work!</strong></em></a>


I am, Mr Chairman, Yours Sincerely,

Shalom P. Hamou AKA 'MC Shalom'
Chief Economist - Master Conductor
<a href="http://edsk.org/">1 7 7 6 - <em>Annuit C??ptis</em></a>
Tel: +972 54 441-7640

Part 2:
Perhaps throwing federal dollars in now is a mistake once the horse is out of the barn due to the massive layoffs that have already happened due to the prolonged lending freeze and the best course is to lower interest rates and wait for the dust to settle. If money is spent now when it might be too late for it to matter, it does run the risk of long term harm by raising the national debt and the inevitable looming spectre of a downgrade in federal treasury ratings which will result if that debt begins to exceed income expected from future growth. Such a downgrade would essentially be financial armageddon and I think somebody needs to be watching the federal deficit to see just how close we are getting to that tipping point. For now, sadly, I agree that we are forced to spend tarp funds to clean up the balance sheets of these pitiful banks to get them lending. I totally disagree that we should have allowed outselves to become dependent on these banks and have to tolerate their abuse when we don't have to be as I stated above. Once the money is available the low interest rates will get things rolling again, it is just a matter of time. I think it is too late for a fiscal stimulus to make a difference now unless it were 10 times larger than what is proposed, and I don't think that is practical. I fear it will be the usual barrel of politically driven pork that is slowly killing this nation since there is such a lack of control over it that the federal budget has been driven so massively into the red over the years. I think it is only fair to help the irresponsible and naiive homeowners who got scammed by the subprime mortage process since we are helping the greedy morons who issued those loans.

I will keep this post as simple as possible to try to get at the big picture. Basically we have seen a trend away from laissez-faire with the development of the fed as a means to stop vicious cycles, panics, and depressions. This means government control and intervention. I think the article appropriately lauds the function of the fed at doing just that. But human nature is what it is. Eventually greed and avarice wins out over civility, responsibility and common sense. If the fed isn't wary and watching carefully, somebody will find a way to rip off the system to make a fast profit and bring it down, even if they had no intention of bringing it down. The herald of this event was the invention of derivatives and increasingly complex debt vehicles and the development subprime mortage lending. The fed and bush administration failed to regulate this process and effcetively was asleep at the wheel when these problems steered the economy towards the cliff as the bubble inflated and then over it once the bubble inevitably burst. This time the economy has been so screwed up that only an enormous effort can turn it around, and it appears to be out of the reach of even the federal government. On the nationalization and interventionalist side, I belive the best option would have been for the feds to use their deep pockets to take over lending from banks which were frozen by their horrid derivative investments and subprime debt rather than trying to revive them with cash without really knowing how much cash was really needed to overcome the debt due to the obscure nature of the value of these derivatives. After all it is the lending freeze that directly leads to layoffs as corporations depend on these large banks to lend big money to bankroll their payrolls. The governemnt really needs to create a mechanism whereas it will take over this lending process when the banks for whatever reason fail to do so. That way no bank will be too big to fail and the rats who created this mess with horrible and greedy lending for many years can be allowed to sink with their ships rather than bailing them out so they can do this again sometime in the future. New and smaller banks can then step in to fill in the void who are more responsible and the federal governemnt will withdraw from lending to the corporations when it is able. If the government needs to set aside 500 billion, a trillion or 2 trillion for this to be possible, then it needs to do so. Why in the 21st century should we allow bank failures to bring down the economy when the government has enough resources to prevent it? On the flip side is the laissez-faire view that painful recessions are good for the economy. It can help separate the wheat from the chaff, force a cutting of waste, and the survivors should be leaner and meaner once they get back on their feet.

The way this article initially dismisses the arguments against fiscal stimulus is far from robust. Discounting the Germans as valid critics because they have a bad-mark on their history? The Germans have proven to be quite well prepared for the current economic crisis. Then claiming that discussions of how messy a stimulus plan is is merely aesthetic?

How about this for an explanation of the present crisis: the problem is that along with many other industrialized countries we have not been saving money. Instead, going increasingly into debt. Assisting this downward spiral into debt has been the government, which consistently claims that the fiscal crisis can be solved by spending money. By the government spending money, or by the citizens spending money.

The situation is beginning to remind me of a said truth of government spending: if all of a department's money is not spent, the government will take some of that department's money next year because they "didn't need it", therefore government departments waste money on frivolous projects so that they'll have more cash next year. Only now, the government is encouraging its citizens to spend wastefully.