I'm only noting that behavior, which is reasonable in times of great risk, can have an overall drag on the economy. The principle of the Paradox of Thrift, what is good for the individual (saving), may not be good for the economy (lack of consumption) in the short-term.
The seeds of the ongoing recession were planted by households, the private sector, and government. No single sector is to blame.
You did not let the private sector to have a chance to take responsibilty and suffer the consquinces.
I am afraid you are biased, economy is for the customer, but not the customer for economy, the customer and the producer make economy, but not the opposite.
When you said that the private sector (households) is hoarding cash out of fear, I reminded you that the fear was incited by the gov-nt.
I already made a post to you where I outlined how the gov-nt, including F. Mac an F.Mae, lured households to the mentality that the households could afford debt vs. affording goods and services, it was the mentality incited on the households by the gov-nt, like later it was the fear incited on the households by the gov-nt. Along with the incitement, the gov-nt undertook a whole number of mad actions. On other hand indeed the households do not deserve any sympathy, in the end of all the households elected Obama and still want to be fooled. I will not remind you that you still defend Obama, though you say that indeed he makes huge errors one after another.
Right now in the cash for clunkers program consumers sign debts on new cars. They have been assured by the gov-nt that they can afford the debts, - are we all to pay for them again?
With respect to government policy, real risks persist. I've noted in the past and will do so again, that the only bailouts that were justified were those associated with systemic risk to prevent the collapse of the nation's financial system.
It was a drama, an apocalyptic prediction - the collapse of the nation's financial system. No, Don, it is true that due to the lack of education I cannot even draw the financial system, but I cannot imagine a collapse to happen or be bad, provided the gov-nt introduces some just regulations leveling the field for the players. Again, look at the result, the unprecedented number of banks fails after the announcement and them implementation of the bailout. Could it a similar number without bailout? I hardly imagine it could be such a big number. But the worst is that too big to fail have been bailed out and they are taking over the smaller ones which did not get bailout.
http://www.debatepolitics.com/break...ors-close-colonial-bank-assets-sold-bb-t.html The nation's financial system has collapsed as the matter of the fact. And as the only expected result from the collapse the new system is growing out of the collapsed one, this time it is imposed by the gov-nt; and it is not American, - you can call it state capitalism, I call it national socialism, other call it fascism. I spoke to an old man who started his business over 50 years ago, - he says he has not seen anything like this year. The thing Don is that I have all reason to conclude that it wouldn’t be worse without bailouts.
The auto companies should not have been bailed out and homeowners should not be bailed out. The bailed out financial institutions should have been resolved or be in the process of being resolved. Instead, funds have been provided, but very little resolution has been done e.g., AIG still maintains substantial derivatives positions that should have been unwound by now with the profitable sectors of the company sold off to stronger firms; the GSEs have not been cleansed of their toxic assets, broken into smaller pieces, and reprivatized, etc. As a result, there is the risk that U.S. timidity on resolving the bailed out financial institutions could mark a repetition of some of the errors that had been made in Japan's early efforts to confront the problems associated with the collapse of its twin stock market and real estate bubbles.
It is all true, Don, it is all true, it is clear and simple and I was pointing to that BEFORE it was done. You and I have a full agreement that you are all correct. Then, even if you were correct about the apocalyptic predictions, the stimulus IS a total failure. It will not result a repetition of some of the errors that had been made in Japan's early efforts, it will not result in repetition of China’s success, because we are not Japan and we are not China,- it will result in us turning into Japanese-Chinese America. We will be no America anymore.
Furthermore, once the economy is on a sustainable growth path, the U.S. will need to undertake a credible fiscal consolidation program to eliminate its budget deficits and reduce its debt……..
Don, again the thing is that these requirements or plans about things that will need to be done should had to be drawn before the stimulus and had to be put into practice almost along with the stimulus, like the stimulus had to be accompanied by dissolving the zombie institution. (That is if to except that you are right and I am wrong that without stimulus it couldn’t be worse)
Creating a new health care program(s) that is not budget-neutral and does not
address the expenditures imbalance, will only undermine any credible fiscal consolidation effort.
Let’s go on the health reform debate and talk about the reform, as the debate is clogged with Obama supporter’s who are so sure that there is such a thing as a free lunch.
The private sector is and, and I believe, needs to remain the largest contributor to economic growth, job creation, and rising living standards. No other growth model can compare in terms of outcomes.
Profit is the key incentive for private enterprise and federal policy should not seek to dramatically reduce long-term economic profits. Otherwise, such policies would inflict material damage on the economy and the nation's ability to continue to improve its standard of living.
The idea of the private sector consists in the simple notion that it is private. When the gov-nt jumps into it with a wagon of money and changes the rules of the game and starts “competing’’ all for the sake of grabbing and holding onto power, when it does what Obama does, one hardly can say that the sector has any reasonable privacy.