Monday, March 08, 2010

Name of the Problem

I almost get a feeling of disappointment when I agree with Paul Krugman as I do here; this is not to say that he is not a great economist. It is simply that We approach economics in two separate ways, with separate sets of value attached to our assessments; still, along about Midnight, We have to reach the same place when We have the same desire which is the viability of the economy. It is a fact that Unemployment benefits, on one level, contains the only true Stimulus operating in the economy; it is all wrapped within the fact that Stimulus must actually impact Demand to be truly Stimulus. Business Tax Breaks only protect Business from drops in Consumer Demand; not quite the same thing as Stimulus. Business seems to desire to fulfill the Demand of a more well-heeled Consumer, though they commonly share the sentiment that this should not come from an increase in Wage Cost. I don’t see How they can expect this Effect, when foreign competition on the Product level supplied is rapidly approaching equality with almost all American Products. There will come a Day when American Business is again going to need American Consumers; they should not anger those Consumers too seriously, as the later Group could also think about foreign Suppliers.

James Hamilton takes a look at a new Index; one which expresses a great deal more pessimism than most of these Indexes. It is again one of those things where the more inclusive that you make the data, the more the economic problems appear on the radar. I happen to agree with the data presented, and stare for a long moment at the graph that Hamilton provides to the Reader. We currently find Ourselves at the end of the line, in more ways than one. I hope that it does not make you feel warm and fuzzy. The sustained deterioration is still present, and economic conditions are still worsening; a factor which should really be a Worry, as TARP is proving to be a massive failure as Stimulus. We need a program which actually gets households back to Spending, but at a sustainable level.

One should read this article, if you expect that these Recessions ever go away. We always think that Systems again Power Up when Good Times return to the economy. The reality is that the economy only changes direction, and Sectors are left behind to smolder in defeat as the economy bounds forward once more. When Growth slows in the new Sectors, the problems existent in the older Sectors again come to the fore; worsening the resulting Recession. We must get into the Problem-Solving mode if We ever want sustainable Growth. lgl

1 comment:

Media Mentions said...

When it comes to Paul Krugman, hers is one of the rare times where I too agree on a couple of points: