Posted on 10/01/2011 5:55:26 PM PDT by blam
HERE'S WHAT'S WRONG WITH THE ECONOMY... (And How To Fix It)
Henry Blodget
Oct. 1, 2011, 11:14 AM
The United States is in a very tough spot, economically and politically.
The 25-year debt-fueled boom of 1982-2007 has ended, and it has left the country with a stagnant economy, massive debts, high unemployment, huge wealth inequality, an enormous budget deficit, and a sense of entitlement engendered by a half-century of prosperity.
After decades of instant gratification, Americans have also come to believe that all problems can be solved instantly, if only the right leaders are put in charge and the right decisions are made. And so our government has devolved into a permanent election campaign, in which incumbents blame each other for the current mess, and challengers promise change.
The trouble is that our current problems cannot be solved with a simple fix. They also cannot be solved quickly. It took 25 years for us to get to this point, and it will likely take us at least a decade or two to work our way out of it, even if we make the right decisions.
So it is time that we began to face reality.
THE PROBLEM: TOO MUCH DEBT
The biggest debt binge in US history, by a mile. Four years ago, when the debt-fueled boom ended and the economy plunged into recession, most economists and politicians misdiagnosed the problem.
They thought we were having just another post-War recession—a serious recession, yes, but a cyclical one, a recession that easy money, government stimulus, and a return of "confidence" could fix.
A handful of economists, meanwhile, argued that the recession was actually fundamentally different—a "balance sheet" recession resulting from a quarter-century-long debt-binge, one that would take a decade or more to fix.
(snip)
(Excerpt) Read more at businessinsider.com ...
The Fordney–McCumber Tariff of 1922 had even higher rates than much of Smoot Hawley. The Roaring 20s must be a great mystery to you.
To summarize -— Free trade is for losers and morons. The Chinese, Koreans, Japanese, Taiwanese don’t fall for such garbage
Not in the least. Correlation is not causation. Tariffs do not work.
China may be an exception — but, if you're going to launch a trade war, you have to be careful about collateral damage and blow-back.
Looks like a good list to me, although I’d have the welfare folks in the cities cleaning up the place, too. (maybe there wouldn’t be such a big mess made if someone there had to clean it up).
There will be no recovery with energy prices at this level among other things.
Natural gas prices are a third of what they were a few years ago
Doubling energy cost in just two years was as sure a recipe for disaster as I have ever seen.
The one sure, quick fix is to open the North Slope and the gulf to drilling, then change EPA rules that make it Impossible to open refineries. Once we have the refineries we will be refining the worlds oil and producing all our own, think $1.50 gas. That would mean new spending without borrowing. Consumer borrowing had nothing to do with the current recession it was government spending 40% more than they took in and then trying to cover bad housing debt that they forced on banks.
“Not in the least. Correlation is not causation. Tariffs do not work.”
The second bill passed by the First Congress of the United States- Hamilton’s Tariff of 1789.
How’d the US fare after that was passed? Did the infant industries all fade away because “tariffs do not work”? Did the US economy fall behind the rest of the world? Or did America prosper?
And how did the US raise the revenue to operate before 1913? Was it tariffs? The kind that “do not work”?
I’d suggest tariffs equal to the VAT the other country charges on American products sold there. Most countries rebate their own VATs to their producers when they export the product. That creates an slanted playing field for American products sold in their country and for their products sold in America.
Please tell me this idiocy did not sound reasonable to you.
I’ve been saying that for decades. As long as there is a welfare system, every city street should be as well-kept as Disneyworld.
I like your list.
As far as taxation goes, the thing to remember is that nobody likes to pay taxes and therefor tax rates should be low enough in any one “decision point” to avoid tempting people into evasion. This is the biggest flaw in the Fair Tax: added to state sales taxes, it would mean adding almost 40% to the “price” of an item and a huge temptation to evade or avoid it. Even Herman Cain’s 9% sales tax rate means a 17% combined sales tax in most places.
I’d go with a 9% flat income tax with no corporate tax, a 4% sales tax on all goods and services, and a 9% employer-paid tax on all employee compensation and imports (since they embody labor costs). This would be three small taxes over the widest possible bases, none temptingly large enough to engender widespread evasion. I would encourage states to reduce their own sales tax rates by broadening their bases to include all retail goods and services, so the combined Fed and State sales tax would not tempt evasion.
These three Fed taxes would raise $2.6T using the 2010 numbers. If government spending were reduced to inflation-adjusted FY2000 levels, $2.6T revenue would leave us a surplus, even though it represents only 17% of GDP.
Some of his commentary occasionally makes sense, but he's out to lunch on 'infrastructure' spending for its own sake. If it were tied to real energy development, as in giant oil and gas fields in the US, sure, it would be a good thing.
Two much common sense there for a lot of people to understand.
thanks much coming from you..... I know you are a tough grader :)
thanks much coming from you..... I know you are a tough grader :)
“Natural gas prices are a third of what they were a few years ago”
Spare me, you know exactly what I am talking about.
You're kidding right!?! ONLY a Walnut from Kalifornia would make the comment. Hmmm, maybe it is right that the country would be better off when Kalifornia, and it's...'residents', are returned to Mexico.
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