Saturday, December 6, 2008

Economic Crisis?

Hello, followers and friends.

I apologize for not updating this blog for the last several months. I have been extremely busy in my personal life. I will try to post here semi-regularly again, but I can make no promises.

So what's brought me back here again?

It's the economy, stupid.

I'm afraid that our economy is a disaster.

Will the stimulus/bailout packages work? Can the government be the solution? I don't know, but I do have my doubts.

What ails our economy?

We have too much debt, individually and collectively. We're broke. The United States is broke.

So what do we do? We keep spending and spending and spending...but we're still broke.

When FDR launched his New Deal programs, the United States of America was a creditor nation. Now we are a debtor nation. We just don't have the same leverage anymore that we once did. Saudi Arabia, Japan, China, and India essentially own us right now.

So we keep spending more money...that we don't possess. When you're in a hole, isn't it generally a good idea to first stop digging?

I recommend that we cut the size of government. I recommend that we quit bailing out failed institutions. It is a painful remedy indeed but I see no valid alternative.

The solution to our debt problem is more savings and more production, and less consumption. Of course this is going to make the recession worse. But our current course of action is going to make the recession even worse in the long run. By continually spending money that we don't have, we compound the damage which has already occurred. We must stop.

I'm afraid that we'll have to let this recession continue...because there's nothing we can do to stop it.


Matt said...

I couldn't agree more.

Our economy needs a bitter pill...not another band-aid.

Anonymous said...

I agree with you also, however, the repercussions of one or all of these companies failing will affect ALL of us. And not just that relative who has a pension from Chrysler, but everyone in his life from his grocery store to his doctor. Without health insurance, he's not getting his cholesterol medicine refilled or maybe he's taking it every other day. He's not going out to dinner at Outback anymore.

To quote Friedman in Sunday's NYT, we cannot let one or all of these companies fail to make a point. The stakes are too high.

Now I'm not being a pansy about this becaues I'm so mad at the auto industry I could spit tacks. They have been warned since the 1970s and they did nothing.

Why can't our new President force them to retool, quickly like they did after Pearl Harbor, and make wind turbines or solar panels or something green to support the new world? Maybe bridge trusses? Something we need.

I have such mixed feelings on this because I don't want to see two million jobs go down, but I also feel these American companies do not have a product Americans will buy. Go to any college parking lot and count the number of foreign cars. It will not be a high percentage. --TRL

Alex said...

I don't agree with my own blog post anymore. I disavow almost everything I said back in 2009 about the economy. I was badly mislead.

Is the debt a problem? Eventually, yes, it is. However, the economy being terrible was a worse problem, which should have been addressed first, and far more fully and comprehensively than it has been so far. A worse economy over the long-term also decreases government revenues, thus exacerbating the budget deficits.

I did not understand those arguments in 2009, but that's okay. It's better to keep an open mind and learn than it is to pretend that one always knows everything.

Alex said...