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Why is America's economy still in such bad shape?

Thunder

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We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?
 
Doing the same thing over and over that isn't working now. What's the point of trying to make interest rates lower and lower, even though that will cause it's own problems when there is no desire for this money?
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

Not sure yet consider this ... notice how the Republicans' neglect to mention the 750,000 jobs that were lost on average in the first three months of 2009, during which the stimulus took effect and how that number declined to 35,000 by the beginning of 2010?

Obama invested in our country while trying to straighten out the nose dive the economy was taking at the end of the Bush regime.

He staved off a depression ... is the economy the ideal it was when it was handed to the Bush admin? ... No! ... yet get real. The right wings hacks best yet most deceptive skill is taking something positive and making a negative spin. They turned the word stimulus (which invested in our country) into a 4 letter word. Freakin' idiot hacks would prefer to sink the economy to win elections for special global corporate interests and a handful of the wealthiest people.

The Obama admn is not without critique ... he could have used his political mojo and quit reaching so far across across the aisle to pacify special interests.

He should have gone in straightforward on investing in our infrastructure and HCR with a public option ... made the decisions he knew were right and forget the ignorant base of the republicans ... they will not support him if he rescues him from their stupidity, saves their life and increases their disability check.

And am I the only one who finds it strange that Republican leadership wants to deem the stimulus a failure, but fails to mention the evidence based facts performed by economists across the political spectrum that credit the stimulus for staving off a depression.
 
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Not sure yet consider this ... notice how the Republicans' neglect to mention the 750,000 jobs that were lost on average in the first three months of 2009, during which the stimulus took effect and how that number declined to 35,000 by the beginning of 2010?

Obama invested in our country while trying to straighten out the nose dive the economy was taking at the end of the Bush regime.

He staved off a depression ... is the economy the ideal it was when it was handed to the Bush admin? ... No! ... yet get real. The right wings hacks best yet most deceptive skill is taking something positive and making a negative spin. They turned the word stimulus (which invested in our country) into a 4 letter word. Freakin' idiot hacks would prefer to sink the economy to win elections for special global corporate interests and a handful of the wealthiest people.

The Obama admn is not without critique ... he could have used his political mojo and quit reaching so far across across the aisle to pacify special interests.

He should have gone in straightforward on investing in our infrastructure and HCR with a public option ... made the decisions he knew were right and forget the ignorant base of the republicans ... they will not support him if he rescues him from their stupidity, saves their life and increases their disability check.

And am I the only one who finds it strange that Republican leadership wants to deem the stimulus a failure, but fails to mention the evidence based facts performed by economists across the political spectrum that credit the stimulus for staving off a depression.

Yeah I think you are, remember the mid-terms and many other elections around the country voting out Dem's and replacing them with Pub's. All the stimulus did is add to our national debt. Obama by the end of his only term in office, will have raised the national debt by 6 trillion in just 4 yrs. This is higher and faster than any president before him.

You talk about Obama should not have wavered to the right, I remember you Dem's controlled the White House and both houses of Congress and you could pass anything any time you wanted.

Obama is a complete failure.
 
The U.S. economy will continue to experience slower than desired economic growth so long as consumer credit remains below pre-recession levels.
 
Doing the same thing over and over that isn't working now. What's the point of trying to make interest rates lower and lower, even though that will cause it's own problems when there is no desire for this money?

Because the alternative (letting interest rates appreciate) is also not without consequences. Liquidity trap = our monetary policy is pretty much stuck between a rock and a hard place.
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

Low aggregate demand, combined with political uncertainty/instability, along with trying to simultaneously tackle the deficit and the weak economy at the same time.
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

The major problems:

Bank balance sheets are still a mess.

We are in a liquidity trap.

Low demand due to high unemployment, declining middle class wages, and not enough stimulus.
 
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We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

Simple. Consumers aren't spending. Their credit cards are maxed out due to banks putting a clamp on the amount of credit they're willing to extend...their homes are upside down so they can't refinance and continue using their homes like ATM machines.

Unfortunately, our economy thrives only when consumers spend more than they earn. How sick is that?
 
Simple. Consumers aren't spending. Their credit cards are maxed out due to banks putting a clamp on the amount of credit they're willing to extend...their homes are upside down so they can't refinance and continue using their homes like ATM machines.

Unfortunately, our economy thrives only when consumers spend more than they earn. How sick is that?

The root issue is that due to stagnant/declining middle class wages, people don't have as much to spend. We certainly kept the illusion going for a few decades though.
 
The root issue is that due to stagnant/declining middle class wages, people don't have as much to spend. We certainly kept the illusion going for a few decades though.

Well, I agree that nobody's seen much in the way of raises lately, but I really don't think that's the reason. People were refinancing their homes every few years in the early 2000's through, what, 2007?? Banks were willing to appraise property at 125% of worth so anxious were they to loan money. And people were borrowing like drunken sailors. Then, when the real estate market crashed, they couldn't get at their equity -- because it had disappeared. WORSE than that, they were upside-down. That major event combined with the banks finally getting sane with the credit limits they were placing on cards took away consumers' ability to buy on credit. That's my take, at any rate.
 
Well, I agree that nobody's seen much in the way of raises lately, but I really don't think that's the reason. People were refinancing their homes every few years in the early 2000's through, what, 2007?? Banks were willing to appraise property at 125% of worth so anxious were they to loan money. And people were borrowing like drunken sailors. Then, when the real estate market crashed, they couldn't get at their equity -- because it had disappeared. WORSE than that, they were upside-down. That major event combined with the banks finally getting sane with the credit limits they were placing on cards took away consumers' ability to buy on credit. That's my take, at any rate.

The main reason for this, I believe, is that our society is used to an ever growing standard of living, thanks to the way our economic gains are distributed since the 80s, this seems to no longer be the case and now we are beginning to see our culture adjust.
 
I think that $2 trillion sidelined by businesses AFTER the housing bubble burst is probably a factor.

The economy lost a lot of money when the bubble popped, then a couple thousand billion more were pulled out, that CAN'T be helping.
 
Because the alternative (letting interest rates appreciate) is also not without consequences. Liquidity trap = our monetary policy is pretty much stuck between a rock and a hard place.

Indeed there are consequences. People would realize that rates were going up and if they wanted a car, house, expansion, they better get in while rates are low. As rates rise, those who previously depended on this income could again. They could start spending and quit the jobs they had to take to make up for this loss of income allowing others to take these jobs.

Just to start.
 
Our economy is on its last legs. The principles it's based on are unsustainable, and the political will to change them doesn't exist. We're never going to recover to what we had before, or at least not until there are some major changes. The only way to go from here is downhill.
 
Well, I agree that nobody's seen much in the way of raises lately, but I really don't think that's the reason. People were refinancing their homes every few years in the early 2000's through, what, 2007?? Banks were willing to appraise property at 125% of worth so anxious were they to loan money. And people were borrowing like drunken sailors. Then, when the real estate market crashed, they couldn't get at their equity -- because it had disappeared. WORSE than that, they were upside-down. That major event combined with the banks finally getting sane with the credit limits they were placing on cards took away consumers' ability to buy on credit. That's my take, at any rate.

My sense is that you are on to what has been a sick economy for many years. We have been able to "grow" GDP essentially by people using their houses as piggy banks in the first decade of the 21st century. In addition due to lending practices and speculation we were building about 3 million homes per year. Now we are building about 300K annually. We had been selling about 16 million cars/trucks annually which is now down to about 12.5-13 million. A growth sector for the US had been the financial industry which we now want to downsize. BAC recently announced a layoff of about 30K workers, you will see layoffs at all of the major financial organizations. Remember that when we lay off someone in this industry at let's say 100K annual salary, we are adding low paying service sector jobs. So not only do we have a problem of joblessness, but also the loss of income from the job people have to a new lower paying job.

If we continue with globalization there is still a lot of room on the downside for the standard of living for most Americans. Realistically they are competing with people who are willing to work for a small fraction of what an American is willing to work for. So there either needs to be trade protection, not unlike what China does to us or standard of living will come down. My guess is standard of living will come down by the Fed allowing the dollar to depreciate so that we will pay more for things we buy but will not see offsetting pay raises. Unless you are part of the government of course.
 
The major problems:

Bank balance sheets are still a mess.

We are in a liquidity trap.

Low demand due to high unemployment, declining middle class wages, and not enough stimulus.

Housing market still a mess, that's a big one.
 
So what's causing our economy to just slog along?

The plutocracy that runs our country created a system that doesn't have long-term effectiveness, and that system has been artificially supported by means which are now also failing. It started with the privatization of the Federal Reserve and spiralled from there.

Our economy is just doing what it was designed to do.
 
The plutocracy that runs our country created a system that doesn't have long-term effectiveness, and that system has been artificially supported by means which are now also failing. It started with the privatization of the Federal Reserve and spiralled from there.

Our economy is just doing what it was designed to do.

I enjoy how you summarized it so simply. The cartelization of markets, especially the financial market - is dead on! I don't think most of our fellow Americans can distinguish; the corporatist(socialist) from the capitalist.
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

The reason why our economy is slugging along is because we are a first-world nation whose companies have been exporting jobs to second-world nations in order to hire cheaper labor and to ignore labor, environmental, and human rights regulations.
 
The reason why our economy is slugging along is because we are a first-world nation whose companies have been exporting jobs to second-world nations in order to hire cheaper labor and to ignore labor, environmental, and human rights regulations.

They are not ignoring anything(regulations). They are avoiding regulations!
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?

My opinion:

1) A domestic overvaluation of labor, causing entry-level service and manufacturing jobs to be less competitive, driving:
2) Persistent trade deficits with developing countries, which only can be sustained with continued foreign capital influx (read: foreign ownership of domestic debt)
3) Financial instability caused by inefficient and irresponsible deregulation and a lack of industry oversight, combined with financial institutions that have grown so large as to substantially control the fate of the economy by themselves
4) Inefficient and irresponsible government action regarding the financial crisis, as well as the long time taken for stimulus programs to show their benefits
5) Weak foreign currencies driving a reduction in US exports and an increase in imports from long-existing trading partners
6) Over-emphasis on free trade with developing nations; such agreements should be entered into with caution, as developing labor will always outcompete domestic labor
7) Lack of confidence in the government and its ability to regulate the economy, or, really, wipe its own bottom without entering into a 3-month debate about which direction to go from.
 
The reason why our economy is slugging along is because we are a first-world nation whose companies have been exporting jobs to second-world nations in order to hire cheaper labor and to ignore labor, environmental, and human rights regulations.

I'm sorry, but that's a lame excuse...

The first complaint should be pointed at the central bank, and not For-Profit corporations. What is wrong with wealth for thousands of shareholders(silent owners)?

Perhaps, we should look at monetary policy, and fallacious(fraudulent) - credit inflation/deflation.
 
We are clearly not in a Recession as our economy keeps grouping. But unemployment is still way too high & GDP is still way too low.

So what is causing this? Are the banks still not making business loans? Interest rates are at an all-time low.

Taxes have not increased since Bush left office.

So what's causing our economy to just slog along?


That's obvious enough to me.

Suppose you have a good-paying job, and you're living a lifestyle that your income can barely support. Perhaps you're on the edge as it is, borrowing money to live just a bit beyond your income.

Then you lose your job, and end up taking a minimum wage job in its place, making nowhere near the income you were before.

On noticing a decline in your ability to pay your bills, you decide to take drastic action, in the form of going all out and buying a new car, a new flatscreen TV, a new computer, and all sorts of other stuff you don't really need, and probably couldn't have afforded on your previous income.

And now, you're scratching your head, wondering why, your financial situation has become worse rather than better.

That's what Obama and his lackeys did to this nation's economy. At a time when our situation was already in bad shape, they went on an outrageous, irresponsible spending spree, that we couldn't have afforded even before the economy turned downward. So now, the economy is even worse, and those fools who supported him can't figure out why.

The best hope for this nation and its economy is that in 2012, we'll put the nation's checkbook and credit cards back in the hands of grown-ups, who will treat them with some degree or responsibility and restraint.
 
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The economy is lagging due to two main reason:

(i) Uncertainty. Uncertainty is pervasive throughout the economy; businesses are reluctant to hire and invest consumers are reluctant to spend. This uncertainty is primarily stemming from Washington.

(ii) We are applying short-term solutions to a long term problem. We experienced a severe economic catastrophe, but our solution to the problem was short-sighted. While some say that the stimulus plan is an "investment" into our economy, it is not. Investment is the creation of new capital (physical or human capital). Very little of the stimulus bill went towards the creation of new capital. Instead, it was mostly comprised of tax cuts and welfare benefits. Tax cuts and welfare benefits do not necessarily create new capital. When this administration found out that their short-term solutions didn't work, what do they do? The keep passing other measures of tax cuts and welfare benefits. It is insanity.

I also personally think that the market needs to liquidate the malinvestment and let prices drop, especially in housing. However, I am a realist and don't expect Washington and the Federal Reserve to support any deflationary policy, even a mild one. Most economists view deflation as a black hole and have this overwhelming and unnecessary fear it.
 
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