Stop Bashing the Obama Administration's Stimulus Spending Policies

Originally posted by Scarcer
Yes, but maybe you should note all the other bills and policies Obama is backing. Is it possible Obama is fueling both end at the same time? Oh no's!

Hm.. insecure borders, giving aliens jobs, taxes taxes taxes which leads to less consumer spending, potholed bailouts.

Oh I forgot though, to support your argument, Obama sure has invigorated the revenue of the sporting good stores! Oh wait, but hes trying to stop that too. Too bad :/

[edit on 7-7-2009 by Scarcer]

Reagan-Laffer's Theory:

High Tax Rates induce people to work for higher disposable post-tax income.

Proven by Ronald Reagan's Administration in 1981 when Arthur Laffer, working for Reagan, suggested increasing tax rates for higher government revenue. Reagan didn't want to, but he had no choice, and when the taxes were raised, an interesting phenomenon was found:

MORE people were going out to work, for longer hours, for less pay.

After a while, Laffer came up with the Laffer curve, which shows that people are more willing to work in situations of higher taxes so as to maintain their standards of living.
This resulted in the AS curve of the economy shifting right (AD-AS diagram, go google it, I'm sorry for the terminology): Basically the supply of labor INCREASED.

With this increase, and corresponding decrease in wage rates, firms could now afford to hire MORE labor, reducing unemployment and increasing economic produce and output because now it cost the firm less to hire workers - allowing them to channel $$ into production for exports (Marshall-Lerner condition: Exports and imports are in high demand in the long run).

Thus that's how rising taxes help, to a certain extent.

However, Obama needs to realize what to do with a PROGRESSIVE tax structure - i.e. the rich gets taxed progressively more because they're in a higher income bracket.

That way middle-class people will still head out to work (see the TIME magazine article weeks back featuring mothers who are re-entering the job market), but do not lose so much disposable income such that they cannot feed themselves and pay bills, the government gets the revenue they need, and the rich lose more money which is ONLY FAIR.

Let's face it, Michael Bay isn't exactly struggling to stay afloat in this economy, is he?

Originally posted by KarlG
Stop Bashing the Obama Administration's Stimulus Spending Policies

NO

- You can't spend your way out of a recession.

- The auto makers should never have been bailed out. In a free market economy you MUST have the fear of bankruptcy otherwise it doesn't work.

- The faux-stimulus isn't stimulating.

Originally posted by mental modulator
my theory is that the NEOCONS purposely destroyed the Economy

Barney Frank, Chris Dodd, and Obama are now a NEOCONs?
Charles Schumer? All those ACORN weenies? All NEOCONS?
Clinton’s HUD Secretary Andrew Cuomo was a NEOCON?

Good to know.

Obama sued Citibank under CRA forcing it to make bad loans

Citizen Wells

Community Reinvestment Act - pushed by the 1977 Congress







[edit on 7/7/2009 by FlyersFan]

whats really funny is you can use economics 101, 202 ,303, 404, 505, on and on, but take a look outside your window? then ask your neighbor how they are fairing, then call all of your family? is obama economics working for them/

highly doubt it. you make a sound case, but my dad always told me beleive nothing what you hear and all of what you see, and its ugly right now.

one last thing you might have a strand of hair to stand on, if obama hadnt renigged on every single campaing promise.

i have a strong feeling you wont get alot of response to your case as most peeps already figured out the obama deception and are tired of talking about it

cheers

Originally posted by DeadFlagBlues
reply to post by KarlG

 

Haha, I'm with whatever way anybody figures they need to roll.

If these banks loaned out 37 times their actual worth, what exactly are we bailing out with real money that we will have to pay at interest, if not just the banks "ghost" money that never even materialized beyond a concept?

We are bailing out with money we don't have, basically.

And in simple terms... THAT IS VERY BAD.

No one has been able to agree on this yet, far as I know, since no one has ever faced an economy this bad since 1929, and back then AIG didn't crash, the stock market did, but bank loans should not be at 37 times their actual worth... in fact, the max threshold should really be in the single digits - because these banks are assuming the people who borrowed, firms, households, etc. have the POWER to pay back the 37 times worth - and as we all know by know, that is NOT possible.

Also, something has to be said about the bailout ITSELF -

It is being used quite wrongly. Since the banks are expected to pay the bailout back WITH interest - thus making up some of the deficit - Obama should not have spent so much money on bailing out banks that do NOT have such abilities. It is clear that some banks will NEVER be able to pay back the millions Obama injected into them, and so to invest millions in them is not viable.

Obama should have nationalized them, buying them over COMPLETELY, such that he could restructure them so that they WOULD be able to earn profits - merge banks, for example.

Originally posted by KarlG
Obama should have nationalized them, buying them over COMPLETELY, such that he could restructure them so that they WOULD be able to earn profits - merge banks, for example.

.. because the government is known to run everything so well and so smoothy and so brilliantly that we could rest easy knowning they own the banks. Right?

Who'd run them? Barney Frank? Chris Dodd? Obama?
Those weenies got us into this mess to begin with.

Sorry, but the government runs everything into the ground.
Just look at social security.

The government that governs least, governs best.

Originally posted by FlyersFan

Originally posted by KarlG
Stop Bashing the Obama Administration's Stimulus Spending Policies

NO

- You can't spend your way out of a recession.

- The auto makers should never have been bailed out. In a free market economy you MUST have the fear of bankruptcy otherwise it doesn't work.

if the automakers hadn't been bailed out, they would have CRASHED.

THUS SENDING THE ECONOMY into WORSE DISARRAY than it ALREADY is at.

Can you imagine? A sudden source of GDP REMOVED from the country? Jobs GONE in an instant? The effects would be like AIG all over again, but MUCH BIGGER since the autoindustry is also a HUGE source of exports for USA - many USA cars go out to other countries.

Obama did the right thing there. the fear of bankruptcy is ALWAYS there - The US govt doesn't have money to bail EVERY flailing firm out, but in the event that the firm IS going to crash, a bailout is needed in order to prevent the entire economy from falling into a large pit that it will take a LONGER time to get out from!

And while I do agree to some extent about the spending issue, you must understand that AE = C + I +G + (X-M) is a trusted Economic principle that has lasted for a very long time, and is proven to be applicable.

Spending DOES boost AE, which in turns boosts growth of the economy. But the issue here is not with spending per se, but WHAT to spend on.

And therein is what I think lies Obama's problem - he spent it on all the wrong things. He should have spent it on sectors that would have allowed the US economy to grow, because they are up-and-coming markets that have potential, but would immediately fold in without proper support.

Case in point, the electronics industry. Apple and Windows have been around for what, 20 years? With only recent popularity in its products since 1995 onward? Plus these goods are LUXURY items - which many people can do without or sell in hard times. By giving these industries R&D grants instead of spending money on pork, other countries will buy our products and boost our economic growth.

As a side point...

Amazon.com is a large source of revenue for the USA - Kindle in itself is a very popular device. But do you know how much it costs to make? And how much it COSTS in the market?! US$359, last I checked!

Who HAS that kind of money?

Amazon.com cannot sustain it in the long run if people run out of interest in it and stop purchasing it - Amazon.com will make an enormous loss.

Originally posted by KarlG
if the automakers hadn't been bailed out, they would have CRASHED.
THUS SENDING THE ECONOMY into WORSE DISARRAY than it ALREADY is at.

If they hadn't been bailed out they would have declared bankruptcy.
They put out a lousy product and ran their companies in a lousy manner.
In a free market they deserve bankruptcy. Then they can restructure.

It may cause difficulties for a while but that is the kind of pain that a free market learns from. Heck, we bailed them out but they are going to declare bankruptcy anyways - which they should have done to begin with.







[edit on 7/7/2009 by FlyersFan]

reply to post by DeadFlagBlues


irregardless makes you want to cut yourself? I say do it for the lulz man. Cut a dollar sign in flames as a protest against obamanomics.

Originally posted by tatersalad
whats really funny is you can use economics 101, 202 ,303, 404, 505, on and on, but take a look outside your window? then ask your neighbor how they are fairing, then call all of your family? is obama economics working for them/

It's not Obama Economics.

He didn't discover nothing...

It's Economics IN GENERAL. Applicable to situations ALL OVER THE WORLD, not just in USA. Although I'm using USA as an example, because, well, its my country, and because its bailout has received the most media attention and criticism out of all in the world, mainly because of its sheer size and because of USA being the cause of all this global recession in the first place.

I'm using my Economics understanding to justify Obama's choices - whether or not it is working is a WHOLE other THREAD... But I am saying WHY he even did so-and-so in the first place... because it IS justified academically and is proven to have worked.

No one would have known the outcomes of all these policies - in fact, if I go out and ask my neighbors, what I would be asking them would be, "Did you see all of this recession coming?"

Chances are, NO. Who would have thought AIG so incompetent (yeah, who...?) and who would have thought Obama's policies wouldn't work? He's just doing everything by the textbook, which is the only way to do things if this situation you're in is UNPRECEDENTED.

But not only that... The multiplier effect takes time to work... At least a year, according to classical economics. And with people saving all the extra income they get, the multiplier is going to falter really easily, because the extra money households get won't go into spending on more goods and services, and wont go into creating more jobs for others.

They'll just save it, and where does that leave the government? No choice, but to spend more. Spending doesn't get an economy out of a recession, PRODUCING does - yes DeadFlagBlues , that IS correct - but without demand, all the extra supply will go nowhere. IN the end the firms would just have wasted tons of $$$ producing all the stuffs no one wants to buy, or CAN buy, and they'll cut back on supply in the next round again... and that basically not only wastes efforts but puts us right back at Square one.

Investments are down, thanks to the banks crashing. Consumer confidence is down, thanks to, well, the recession. Net exports are probably consistent or maybe going downhill too, because other countries are facing recessions as well, which is why it's important to lower the exchange rate and increase export competitiveness, making OUR USA goods attractive to them.

So what's left? Government spending.

It's so easy to blame the government for everything, but those policies as I see them are VERY justified according to the textbook.

[edit on 7-7-2009 by KarlG]

reply to post by DeadFlagBlues


You can borrow your way out of debt... as long as your are responsible ... but when you have the white house oking the FED to PRINT Trillions of dollars your increasing our supply of our currency and then you have all these BRIC and other countries being told by our GOvt to sell off dollars and buy local currency ... that might want to start ringing some bells.... maybe Obama knew exactly what he is doing on the one hand it looks like a good stimulus and on the other it looks like #, creates debate more news time , more time he has us watching his right hand while he sneaks some CAP and TRADE act threw congress...... and even if the the package is working .. what happen to the 7 trillion that is lost , ( my figure might be wrong ) didn't the FED print 9 trillion dollars but only have records of 2 trillion being spent or at least we know who the 2 trillion went to.. what about the difference 7 trillion that has yet to be accounted for....

Originally posted by InterconnecteD
reply to post by DeadFlagBlues

 

You can borrow your way out of debt... as long as your are responsible ... but when you have the white house oking the FED to PRINT Trillions of dollars your increasing our supply of our currency and then you have all these BRIC and other countries being told by our GOvt to sell off dollars and buy local currency ... that might want to start ringing some bells.... maybe Obama knew exactly what he is doing on the one hand it looks like a good stimulus and on the other it looks like #, creates debate more news time , more time he has us watching his right hand while he sneaks some CAP and TRADE act threw congress...... and even if the the package is working .. what happen to the 7 trillion that is lost , ( my figure might be wrong ) didn't the FED print 9 trillion dollars but only have records of 2 trillion being spent or at least we know who the 2 trillion went to.. what about the difference 7 trillion that has yet to be accounted for....

EXACTLY! It WOULD work if we knew WHERE the money was going to. If all 9 trillion dollars are going into the economy - YES! VERY GOOD! It's fantastic that it would stimulate the economy!

BUT THAT IS NOT THE CASE.

The money is vanishing.

Where to?

That, I think, is more of the problem, to me at least. Not the stimulus itself, because that is an economically sound decision, but WHERE the $$ went. For all we know, they went into pork. Federal departments' pay. Maybe just "verbal announcements" that $9 trillion was printed, but less than half of that, in reality, was being used to generate AD.

reply to post by KarlG


It's my opinion that they should have let the faulty system implode on itself. A true repercussion of their actions, with the people who "owe" really only pay them the wealth in capital the bank actually extended to them. That would put all the responsibility on the banks and would have failed the bank without causing a major disruption outside of themselves and would have sent shockwaves to the hedgefund/lending cartels that bad deeds will be punished because of the perpetuation of YOUR wrong doing.

Maybe you could explain to me the implications of letting a bank fail, when out of the 85 billion dollars that we have given AIG to recover, they only ever carried a total of 3 billion dollars of solid capital/equity?

Originally posted by KarlG
The Economic Problem

In a recession, AE, Aggregate Expenditure, or AD, Aggregate Demand, is low. People are not spending, so the economy is not growing, and the jobs are being reduced to lower costs of production to keep companies afloat and to maintain profits.

Obama's Administrations introduces spending stimulus, and immediately people leap to condemn it because it will sink the country further into debt.

This is true on some levels, but Obama's Admin IS doing the right thing.



And what should be done during a depression?

If any one of the above: consumption, investment, government spending or net exports increase, overall AD will increase. And since employment is a derived demand, the increase in AD will lead to less unemployment since companies will want to hire more to match the increase in demand.

For example, the government can inject funds into public works - construction of roads for example. Or it can inject funds into research companies, or universities, or state departments such as police or fire departments. These research firms, universities and state departments/construction firms will hire more, to match the increase in government demand.

The only increase I see is in government spending. I love how my home state had to make all these budgets cuts and such, but in the end the year's budget increased by 17%.
I realize that in many cities firefighters and police officers got to keep their jobs. But I have seen no new jobs anywhere. The highway projects that were cut to bring down the budget were brought back to life under this act, giving some laid-off workers a temporary job, as opposed to their stable long-term jobs, while the workers who were not called back for these projects were replaced by people of other nationalities. The government did away with many low-paying community service projects that put low-income elderly and handicapped to work for way below minimum-wage. I've seen several situations where money that was not even the government's to begin with has been taken and allocated for other government projects, bringing on several lawsuits. People who still have jobs have to take pay-cuts, loss or reduction of benfits, mandatory furloughs, and their work situation has changed drastically. Most state and federal agencies have been in a hiring freeze for at least a year. Many major corps. are in hiring freezes. So many businesses are closing down and cleaning house, replacing f/t employees with p/t ones who make less money and are not eligible for benefits. Most people make more money collecting unemployment benfits than they do working p/t. The stores that are doing well are understaffed and the workers are stressed and over-worked. Many hospitals have lost much government money, in many cases reducing care and having to cut employees. Schools have had to cut teachers. One town where I live lost over 50% of its teachers during the last budget overhaul. Almost every one of the few remaining factories that I know of in these parts has either closed or drastically down-sized. Last month, the major super market downt the street shut its doors.
I went to the State employment job search site to see what was out there, and on first glance there appeared to be many great jobs. However, once you look at the details you see that around 90% of them are VOLUNTEER positions!!! These are state and federal jobs. Accountants for 20 hours per week, IT specialists, lab assistants...NO PAY! VOLUNTEER positions!!!

Where are these jobs???

And no, I'm not unemployed or even much affected by any of this. I live the way I always live. The only thing I notice now is that I am penalized for paying cash. And it is truly a crime that so many people these days have next to no options to make a living.

I'm still trying to figure out how to work this quote stuff properly.

[edit on 7-7-2009 by serendipitynow

[edit on 7-7-2009 by serendipitynow]

reply to post by DeadFlagBlues


I'm not too sure about AIG - insurance isn't what I do. Besides I think AIG is full of idiots, greedy ****heads who lack a discernible brain about acceptable standards and accountability, and that really isn't an economic problem - it's a moral and ethics problem. It's a problem that Bernie Madoff's appropriate punishment should now have sent out a warning for, and it's a problem that maybe the US govt should have nipped in the bud WAY before then.

They could have let AIG just go bankrupt, but I guess that would cause a lot of jobs to be lost globally, and hundreds of thousands of people worldwide to lose their insurance plans - instability at its finest. I don't know what the repercussions of letting an insurance group go bankrupt are, but...

For banks, there are many implications should they just be left to flounder, but the one i can think off the top of my head is that there'll be a lack of loanable funds should banks crash, depleting investments and government expenditure, and pushing interest-rates up sky high.

Firms and governments draw on banks' supply of funds to finance their investments and expenditure respectively. If a bank were to collapse, banks, even, the loanable supply would fall. Firms and govt would be unable to get their funds, limiting their choices and options. Since supply of money has fallen, interest-rates would be elevated extremely high, further reducing investments because no one can finance them, and production would fall greatly.

Granted, these horrible banks can't even pay back a NINTH or ELEVENTH of what they were bailed out with, but a large bank crash would lead to OTHER banks crashing like dominoes, since most banks are linked. I think the government decided to lose money (LOTS of em, apparently, no kidding. Pfft... what a waste) rather than go through all the repercussions of all the connected banks toppling together. They chose the lesser of two evils, to coin a phrase.

So though it's a waste of money, I can't imagine what else could have been done. Between a rock and a hard place, I'd say. Either lose a TON of money, or let the banks hit rock-bottom, go bankrupt, and wipe out most investment prospects for three years or more.

Moral of the story: PREVENTION is WAY BETTER than the CURE. (sometimes there isn't a very good cure at the end of it all)

[edit on 7-7-2009 by KarlG]

Take note of this from another thread:

www.abovetopsecret.com...

"Calls increase to increase government spending"

Read it and try to connect with what has been discussed in this thread so far.... I don't understand where everyone there is coming from... that's what spurred me to start THIS thread.

Originally posted by FlyersFan

Originally posted by KarlG

Originally posted by mental modulator
my theory is that the NEOCONS purposely destroyed the Economy

HA did we forget last summer

so bored with this thread......

here's how things really work....
the economy is complicated and full of ever changing variables, therefor whatever simplistic formula or outdated theory you got out of a text book is most likely completely bogus.

The people in charge are the same people that have been in charge for decades, regardless of party, they have their best interests in mind, not mine, not yours.

it's called common sense, take it from a high school drop out like me, who still lives a sweet lifestyle even in these so called tough times....

we don't manufacture anything tangible anymore so, we fail....doesn't take a high school grad to see that if you dont have something to sell(besides a few iPODS) you wont make money.

the problem I've always had with stuff like this is that it's too complicated, our economy was designed by a bunch of scientists AKA nerds. If no one understands it, it aint gonna work. I know nothing about the economy but I knew the housing market would fail years ago...how? Because everyone was buying houses!! I was a scratching my head thinking, how can everyone afford these things. This aint gonna work.....

LOL

anyways whatever, screw the economy, I'm still makin bank!

reply to post by KarlG



Even then.

Lehman Brothers, Fannie and Freddie, etc...

They were extending credit to people at a 1:30-37 ratio. For every 37,000 dollars they were giving away, they only had 1,000 physical dollars/equity.

Why are we giving these banks more money to recoupe money that never even existed?

I truly don't understand the sense behind this, my man.


[edit on 7-7-2009 by DeadFlagBlues]

People who complain have no idea how the economy works. And with this group, it is always damned if you do, damned if you don't. YOur gonna end up banging your head against the wall trying to explain it to them.

reply to post by jkm1864


The debt after WWII was actually much much higher then it is now. Many countries, including ours several times. Follows this model. It always works.

Fact is, the problem we have right now is nothing. The big scarey debt problem coming? Social security and medicaid for the baby boomer generation. Which is increase our debt beyond belief.

We havne' even hit our debt ceiling yet. Our economy can acutually hold more debt. But when the baby boomer spikes in about oh, two years? It is going to quadruple our max.