To: RetiredNow who wrote (102429 ) 10/1/2011 12:57:50 PM From: tejek Respond to More stimulus? You are delusional. If you have been spending too much and borrowing to much, what course of action do you take to get your own fiscal house in order? Do you go on a spending orgy until all the banks and credit card companies refuse to lend you more money? You could. It certainly would feel good in the short run. You might even get lucky and land a big salary job, which enables you to live at those elevated standards. But the probable outcome is that you will crash and burn. More spending is heroin to the heroin addict. First of all, MM, while our deficit is bad its not as bad as your hysteria would suggest. Its estimated that our deficit is at 80% of GDP. Its up from 64% of GDP right before the recession mainly because the GDP has not been growing much. Now 80% of GDP is not good I grant you that and must be dealt with. However, its by no means anywhere close to Greece which I understand is now at 130% of GDP. And we as a country have assets that a country like Greece can only dream of. The smart thing to do is to cut back. Take the pain now, before it is too late and you destroy the entire free market system. Yes, it will involve significant pain. I can even tell you how much. We are currently running a $14T GDP and $1.5T of it is borrowed for deficit spending by our government. If we balanced the budget to live within our means, then that would be a 10%+ hit to GDP. If you took it all at once, it would be a 10%+ contraction in the first year. That means you could increase unemployment by 5-10% easily. Yes, it would be very painful. The sane thing to do is to cutback while raising tax rates on the wealthy back to where they were during Reagan's time......or at least Clinton's. But then the economy would be reset to baseline, sustainable growth. Malinvestment, such as the financialization of our economy, would be rolled back. Investment would go to those opportunities where risk and reward were carefully considered. Private industry does that best, not the government. Unemployment would come down faster over the longer run as certainty was restored in the free markets and businesses began to increase investment in new projects. The heroin addict would be cured and would no longer need the heroin. Its true that Americans had been on a spending frenzy during the Bush years and have learned the hard way why that is not a smart thing to do. They have gone through major pain and cut back accordingly. That's why our recovery has been so weak. Americans are saving rather than spending. This generation has learned a hard lesson. Its their need to save and not spend is why the gov't needs to continue to stimulate the economy until individual Americans get their personal finances back in order. And that's happening.........person after person I know, including me, is getting or has gotten a refi, taking advantage of historically low interest rates. That should increase personal spending and inject billions into the economy. AND cut taxes. That has never happened before.........in years past, we always have raised taxes to pay for wars, not cut. However, as we have learned all to well, the Rs are driven by stupidity and ideology, not by logic. I suspect that this debate is very similar to the AGW debate or religion. Either you believe in one side or the other, but you are not likely to change anyone's mind. All my Masters degrees are in business and I've spent 30 years in private industry. My mind is made up on what works in real world, free market economies. What Bernanke, Geithner, Obama, and the Democrats have done is to twist our free markets into something unrecognizeable. The stock market itself is no longer a mechanism for allocating capital based on risk and reward assessments. Rather, it is a puppet on strings manipulated by the Fed. I believe in what makes sense..........and not on some outdated ideology. As RW very eloquently pointed out to you getting rid of the banks wholesale would have been a big mistake. Cutting back spending like Hoover did would be another huge mistake. Your ideology blinds you. I want free markets back. That made this country great. Why turn our back on them now? Socialism and Communist Centrally Planned Economies NEVER work in the long run. How many collapsed socialist countries do we have to review for you to believe that? Cuba? USSR? North Korea? Venezuela? America's form of free markets is not working. That's part of the problem. Free markets have led to actors and athletes and CEOs making huge sums of money while the average worker's wages are deteriorating. Free markets and less gov't regulation during the Bush years are what helped get us into this mess, and if they continue on their present course, willl lead us to revolution. Katrina happened not because the gov't was doing too much regulating but because it was not doing enough. How quickly you forget.
