Ok so the strategy is to print dollars to get out of this mess...but...
- Thread starter Nofear777
- Start date
http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=home
$7.7 Trillion
If they had cured mortgages back in 2007 by reducing rates, extending terms, extending IO where necessary we could have let time and inflation take care of 95% of this mess. Mortgages were the string that unraveled the whole. Then they could have taken $1 or even $2 trillion and pumped it in to sectors of the economy that create growth and high paying jobs and still have had another $1 trillion to throw at infrastructure and keeping the grunts employed.
The sad fact is that all this money has done very little. Essentially what has happened is that as leverage has disappeared the government has stepped in and met those margin calls and as every trader knows, if you do that your opportunity cost is extremely high as you no longer have that money to deploy where it can help you make a decent return. In this case it is money that we now don't have available to do the ONLY thing that will solve our economic problems long term and that is invest in and incentivize areas of the economy that will produce growth. Unfortunately the plan Obama is talking about will not do that, improve roads and bridges does not produce the kind of high rate growth we need (didn't for FDR nor for Japan), the money needs to be pumped in to the life sciences, material sciences, renewable energy, biotech, hi tech etc. These are the areas that will produce the only type of growth that will save the US economy and create the jobs we need, we can still do it if the politicians and the economists who advise them would just use a bit of common sense, but unfortunately now we do it $8 trillion more in the hole than we were before.
Think about it another way, we are going to have to ask the rest of the world to help us pay for all this crap by having them buy our long term debt. Well guess what, the rest of the world also has a dearth of roads and bridges and general infrastructure, they may just decide that if the US is fucked and no longer able to buy their exports they may as well deploy their resources domestically on their own infrastructure. On the other hand if they think they are lending to a country that is revitalizing it is high growth indistries (the technology then trickles down also meaning they are also getting subsidized US R&D for their money) and creating high paying jobs that will boost global consumption and secure demand for their exports then buying US debt actually looks more attractive than deploying those re4sources domestically. The big stimulous in China recently is perhaps the 1st step toward the gloabl realization that pumping money in the US debt may no longer work to fuel the global growth engine because the US is no longer doing anything with that money that is producing the necessary drivers for growth.
$7.7 Trillion
If they had cured mortgages back in 2007 by reducing rates, extending terms, extending IO where necessary we could have let time and inflation take care of 95% of this mess. Mortgages were the string that unraveled the whole. Then they could have taken $1 or even $2 trillion and pumped it in to sectors of the economy that create growth and high paying jobs and still have had another $1 trillion to throw at infrastructure and keeping the grunts employed.
The sad fact is that all this money has done very little. Essentially what has happened is that as leverage has disappeared the government has stepped in and met those margin calls and as every trader knows, if you do that your opportunity cost is extremely high as you no longer have that money to deploy where it can help you make a decent return. In this case it is money that we now don't have available to do the ONLY thing that will solve our economic problems long term and that is invest in and incentivize areas of the economy that will produce growth. Unfortunately the plan Obama is talking about will not do that, improve roads and bridges does not produce the kind of high rate growth we need (didn't for FDR nor for Japan), the money needs to be pumped in to the life sciences, material sciences, renewable energy, biotech, hi tech etc. These are the areas that will produce the only type of growth that will save the US economy and create the jobs we need, we can still do it if the politicians and the economists who advise them would just use a bit of common sense, but unfortunately now we do it $8 trillion more in the hole than we were before.
Think about it another way, we are going to have to ask the rest of the world to help us pay for all this crap by having them buy our long term debt. Well guess what, the rest of the world also has a dearth of roads and bridges and general infrastructure, they may just decide that if the US is fucked and no longer able to buy their exports they may as well deploy their resources domestically on their own infrastructure. On the other hand if they think they are lending to a country that is revitalizing it is high growth indistries (the technology then trickles down also meaning they are also getting subsidized US R&D for their money) and creating high paying jobs that will boost global consumption and secure demand for their exports then buying US debt actually looks more attractive than deploying those re4sources domestically. The big stimulous in China recently is perhaps the 1st step toward the gloabl realization that pumping money in the US debt may no longer work to fuel the global growth engine because the US is no longer doing anything with that money that is producing the necessary drivers for growth.
Good points, but we haven't even gotten to Hussein's stimulus package yet, that's another $600B in the spring.
Desperate politicians not wanting to be the ones in power when we crash, yet we have come down about 3000 in the Dow since the bailouts began. Bush's stimulus did absolutely nothing- zilch, yet they propose more of the same. They can't let people get foreclosed on homes which they had no business buying, yadayada...
Well it's all been said by now and better people seem powerless against the tide of leftist control. In the short term this is a survival boat, in the longer term we are screwed. I gotta get back to my survival plan...
Desperate politicians not wanting to be the ones in power when we crash, yet we have come down about 3000 in the Dow since the bailouts began. Bush's stimulus did absolutely nothing- zilch, yet they propose more of the same. They can't let people get foreclosed on homes which they had no business buying, yadayada...
Well it's all been said by now and better people seem powerless against the tide of leftist control. In the short term this is a survival boat, in the longer term we are screwed. I gotta get back to my survival plan...
I love it when these Einsteins blame the "other" party. However, they are somehow very comfortable being prison f*cked by their party. That goes for both of your stupid sides. When you accept only those two choices for solutions, and you think one side will fix things, you get exactly what you deserve. This country is getting exactly what it deserves.