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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (104767)	9/2/2009 6:30:46 PM
From: Gib Bogle	3 Recommendations Read Replies (3) \| Respond to of 110194

I expected to see Obama immediately start pouring money into infrastructure maintenance and replacement - real homeland security issues. Instead he's ramping up the military commitment to Afghanistan.

To: Hawkmoon who wrote (104767)	9/2/2009 7:31:37 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 110194

Let's assume for a moment that the unemployment rate was currently 30%. In order to maintain the remaining 70% employment rate you need a functioning bank system. I think the best way to maintain this would be through FDIC foreclosures of insolvent banks, rather than the Hank Paulson mega-investment plan. Rescuing AIG was a costly mistake. Regardless, banks are still lending just not on the same lax terms are they did previously - thank God. Grifters and the insolvent now need to file for bankruptcy or turn to their relatives or organized crime for loans. This change was long over due. As Gib Bogle points out, the U.S. spent 12% of GDP on infrastructure projects under President Eisenhower while in recent years this figure has been an anemic 3% of GDP, as available income was spent on granite kitchen counter-tops and cheap crap from China. The state of all types of infrastructure in the U.S. reflects this neglect. So infrastructure projects are a likely place to spend to create jobs. But Japan has 19 years of very costly infrastructure project under their belt, which has created the largest government debt to income ratio in the world. Worse still, Japan is still in an economic depression because they have not yet liquidated or paid back their excess debt load relative to incomes. That's plain stupid. Infrastructure spending can help you bridge a few rough years as the process of bankruptcies and foreclosures is wrapped up, but it would be a poor choice to try to emulate Japan's failure. .