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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Smiling Bob who wrote (166306)11/22/2008 11:53:59 AM
From: neolibRead Replies (1) of 306849
 
There are several very significant problems with this current love affair with Keynes, despite the fact that this crisis looks like the iconic test of his theories:

1) We got into this problem via debt based consumption above what the economy could fundamentally support. How is more of the same going to help?

2) This is not the nation of the 1930's, where you could send out a crew with shovels to start looking busy in a very short period of time. Any project we do now will take months to get agreed on, more months to a year to plan/design, then finally the guys driving the equipment will get employed. In the 1930 you could pretty much draw a scrawl on a map and say, we need a road here and we need power lines there.

3) We won't get anywhere near the boost from this infrastructure spending now as the 1930's did, because our infrastructure is effectively much better to start with. There is not nearly the low hanging fruit we had then, in terms of improving the system. We won't get nearly the bang for the buck. This relates to 2 above on the time factor as well, because simple things don't take much planning, but incremental improvements today are competing against pretty good existing systems, so it takes more care and planning to improve things, hence more time is needed, unless you want to flush your $ down a hole.

What is needed is stabilization starting last month, and going forward the next 6 months. Not easy to do.

To understand how goofy Obama's idea is (IMHO) imagine if instead he had said he was going to create 2.5M jobs by jump starting the housing market and boosting home ownership (that VERY American dream) from 67% to 75%. Think of the boom times ahead!
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