Most economists believe a dip back into recession ”” as well as an equally debilitating bout of deflation, or broadly falling prices ”” will be avoided. But many have nonetheless warned that the prospects are rising, and say the more probable scenario isn’t much more appealing: a protracted economic malaise with imperceptible growth and stubbornly high joblessness.
“We are mired in a jobless recovery, and the government has run out of ammunition to help out the economy,” said Sung Won Sohn, an economics professor at Cal State Channel Islands. “The current situation doesn’t look very good.”
Perhaps it is time to try something different. Perhaps it is time to raise prime interest rates. Perhaps it is time to stop bailing out anyone. Perhaps it is time cut spending. What we have been doing isn’t working. Doing more of the same isn’t going to make anything better.
[url=http://www.businessweek.com/news/2010-08-10/buffett-shortens-bond-holding-duration-after-inflation-warning.html]Warren Buffet warns of inflation.[/url]
I remain convinced that deflation is a short term problem. There is too much money out there. Britain is already beginning to experience a sharp rise in CPI. We are following down the same path. But I do think they are correct about the double dip. The only difference is that this will be an inflationary depression, not deflationary.
The bailouts were better than the alternative which would have meant entire industries unemployed. What we have been doing is working in the sense that it could be worse right now.
“The bailouts were better than the alternative which would have meant entire industries unemployed.”
But the “bailouts” didn’t address the root problems, they just treated symptoms and it seems only those symptoms that were of importance to the parasitic auto workers unions.
A major negative factor that has been destroying the American auto industry has been the ability of auto worker unions to extort wage, benefit and workplace concessions from the auto industrys’ OWNERS that were and are way out of line with economic reality.
And who has had to pay for these extorted concessions?
Simple and true answer, the American people and now the American people through tax dollars that are being used to bail out extorted concessions that were in jeopardy when the auto companies were in danger of default.
Actually, I don’t think it would have meant any more unemployment than what is occurring now. The companies that made foolish decisions would go bankrupt. That is not the same thing as going out of business. They could then renegotiate contracts, cancel debts, and come back stronger and more efficient.
Did you not catch the fact that most of the TARP money went to overseas companies? Where did all the AIG money go? How much was bonuses? How much was lavish parties at swank resorts?
We should have let bankruptcy happen. If a business couldn’t pull itself out after renogotiated contracts and debt relief, then it could have been bought by another company. All we did was reward stupidity, arrogance, and fraud…with tax payer money.
Now, they will need to double taxes into the indefinite future just to give the country a chance at being solvent. Instead of a few companies going bankrupt…our entire nation is going broke. Our currency still may collapse.
RE: “The bailouts were better than the alternative which would have meant entire industries unemployed.”
Oh my — I disagree. We bailed out companies that needed to go bankrupt and now even more people are unemployed than might have occurred when we wasted money on the inept and corrrupt companies.
Look no further than the “job killer” in the WH and the Democratic Congress. They will crank up the money printing presses for unemployed Union workers but aren’t interested in creating any jobs.
The trouble is that Sarah is right. Bad businesses SHOULD die because the conditions that made them go bad – so often internal – do not change when they are allowed to remain unchanged. Tje upshot has been that the rich get richer and the poor have gotten poorer and the middle class has reached the point of intolerable social anxiety – which will make them give up the fight. This is how one builds a society of outcasts, outlaws, drug users, and emotional poverty – the worst kind of poverty there is, because improved income will not restore what has been lost.
The government has made one bad choice after another because those who rule have lost psycho-social contact with those who have to live with their D.C. life patterns and legislation. They fear the voters but have caught the Beltway Virus – whose symptoms we know only too well. Question: Why is it so contagious? Why is there no immunity? 2500 years ago, Confucius said” Without Humanity [an untranslatable Chinese character referring to that sympathy that is beyond the merely personal, a thing rooted in wisdom, not knowledge or information] men cannot long endure adversity nor long survive success.” Larry