Friday, January 11, 2008

Will the Real Recession please stand up!

Hillary Clinton wants a $70 billion stimulus package, which Republicans scream is ‘reckless’, thinking it is far better to have Tax Cuts which will not elementally change anything either; while Wholesaler stockpiles increase, all because Consumers have no more discretionary Income to distribute. Do either the Democrats or the Republicans seem realistic? The Machine is not broken, and We will come out of the non-Recession by Spring, in spite of both Parties attempting, each in their own way, to destroy the proper Correction. I would favor a far more radical approach which will never be adopted: An earmarked 10% Surtax on all Federal taxes for 3 years, the tax revenues going solely to paying down the National Debt. The reverted taxes would pay off an estimated $1.3 trillion of Debt, and raise the value of the American Dollar by about 13%. The enhanced position of the American Consumer would potentially lower Consumer Prices by 2%, while lowering Governmental expenses by an estimated 7%. Now how do We get rid of Congressmen and Senators who insist on running Budget deficits?

Here is where the major opposition to such as the above Plan resides. Many Economists are enamored with Exports, and claim a weak Dollar and higher foreign Sales remain the Solution to American economic woes. My first Contention states that North America, and the EU, are the major Import consumption nations, they being the only nations altering their internal Consumption patterns to absorption of foreign Consumer Goods. A reduction of this Consumption will reduce foreign demand for American Exports far faster than a weak Dollar will increase that foreign demand. A weakening Dollar which loses an additional 30% of value against other Currencies will reduce American Imports by an estimated 11%, while at the same time, reduce foreign demand for American Products by almost 28%. All estimates provided are my own, and subject to wide debate. I can assert positively that weakening the Dollar is not a solution, but an additional economic restraint which American Standards of Living cannot accept.

I have come to the conclusion that We have been in a Recession since last July, the traditional Index evaluators failing to register the Drop due to the weakening Dollar, advance of Exports, and increased Price of Imports. I am reinforced in this idea by the increase of Consumer Debt over the Period, a rapidity of advance rarely seen in an expanding economy. I am also certain that We are coming out of this Recession, not entering one. Any stimulus package will actually be introduced into a re-expanding economy, and will only act as Inflation pressure. I have often been wrong, but I am sure on this one! lgl

1 comment:

spencer said...

The article on wholesale inventories is very poorly done.

If you read the entire article you find that the I/S ratio was at an all time record low.

There is no inventory problem