Spend more to help ‘dire’ job market: IMF

www.theglobeandmail.com...

Says long-term unemployment costlier than extra stimulus

You know, they did these programs, like cash for clunkers and whatnot...it worked for a few minutes...blip on the screen.
I don't see the logic in constantly shoveling money at people when often its either abused or simply ineffective. Why not instead of giving money away, give resources away...

You realize how many new construction sites would go up overnight if you gave a rebate or write off for things like cement, building blocks, etc...everyone whom has been even slightly considering launching a new pet project would do so with a significant reduction in materials cost...

Time to think outside of the box...the only thing throwing money into a money pit accomplishes is a few extra weeks of failed practices to continue on...its not about bailing water out of the sinking ship eternally, its about creating a new ship.

Of course it is. But there is no way to get people spending when they are all fearful of losing their jobs, have already lost their jobs or have had their hours cut-back. People are in 'bunker-mode' right now. Everyone is waiting for the other shoe to drop so they are going to do whatever they can to reduce their debt service, cut-back on non-essentials and save money. Google around. People are raiding their 401k's and other investments at an unprecedented rate. People are saving at rates that havn't been seen in decades. None of this is good for the consumer economy and consequently not good for the job market.

The only way the federal government knows how to 'stimulate' the economy is top-end. Pour money into roads, bridges, airports, etc. Who benefits? Mostly large contracting firms and their employees. So what does that contitute? BLS statistics suggest less than 10% of the workforce. So where does that leave the rest of us?

What NEEDS to happen is the government needs to help from the bottom up. People need to have their spending power increased. How? Instead of pouring billions into large construction firms and banks they need to reduce the overhead of the middle class in order to free-up their ability to spend. Devise a program to reduce people's most significant expenditures: rent, mortgage, utilties, taxes, transportation so there is more money left to spend elsewhere.

The problem with this approach is that it bites the hand holding government's leash: big business.

Originally posted by jtma508
What NEEDS to happen is the government needs to help from the bottom up. People need to have their spending power increased. How? Instead of pouring billions into large construction firms and banks they need to reduce the overhead of the middle class in order to free-up their ability to spend. Devise a program to reduce people's most significant expenditures: rent, mortgage, utilties, taxes, transportation so there is more money left to spend elsewhere.

By your own admission though and given the current economic scenario, wouldn't people with more money simply tuck that away, just in case. I would if I were in a lower income bracket. Also doesn't the US generally have one of the lower tax burdens as compared to other G8 countries. I think their personal income tax might be marginally higher but taxes on good/services are considerably less. Add to that the cost of things like fuel as compared with the US/UK and there are big differences. If the US wants to start clawing out of this hole wouldn't more taxes be applicable then ? I should run for office

brill

The IMF ain't talking to me... or other Vets... or the other 30 million that are jobless because of
any combintion of illegals, outsorcing, offshoring or even moving plants to Mexico.


The
IMF had better use a louder bullhorn to intice/demand the millions of Banking Executives at all levels that have goosed the system of 100s of Billion$ in excessive compen$ation, plus the (In-Your-Face-Taxpayer) Bonuses they slinked away with for the last TWO years!

Similar information here, only a more sensational headline...
IMF fears 'social explosion' from world jobs crisis

America and Europe face the worst jobs crisis since the 1930s and risk "an explosion of social unrest" unless they tread carefully, the International Monetary Fund has warned.

www.telegraph.co.uk...

reply to post by brill


I understand your point, brill, but where we fall relative to other countries makes no practical difference. People need to 'feel' more secure and they will spend IF they have the spending power. They're not measuring themselves againt fuel prices in western europe or taxes in Brazil. It's all about where was I in 2004 and where am I now. You can't simply can't huge numbers of jobs out of thin air with no demand driving them. Sure, we could build another hoover dam, a cross-continet railroad or a Panama Canal but that won't help the majority of Americans.

Fundamentally, the government has to be FORCED to stop acting on behalf of business and start working for The People again. You want to be a multi-national corporation and farm jobs to India? No problem. The IRS will have a 55gal drum of lubricant on hand just for you. You want to start a company that hires people here and keeps jobs in the US? Excellent. Favorable tax treatment coming your way. But getting spending power in people's hands is key.

Originally posted by jtma508

Those are good points and I agree. The damage though in terms of off-shoring jobs is drastic and given the labor costs it doesn't appear that this will recover, at least for a very very long time. Why build in the US when you have to confront unions or the high cost of labor when for a fraction of that the same product, arguably, can be produced for next to nothing and little head-ache. That's rather obvious though and I think an even bigger issue is US consumer debt:

Consumer borrowing in the U.S. declined for a sixth straight month in July, indicating Americans are reluctant to take on more debt without faster job growth.
...
Borrowing that’s increased twice since the end of 2008 shows consumer spending, which accounts for about 70 percent of the economy, will be restrained as people pay down debt.

src

That's great that people are becoming more financially responsible but it it costly for the US economy which relies so heavy on it, that's why I personally think higher tax rates on goods/services are inevitable. Even with added jobs the level of fear runs deep. With this particular round of economic problems I think the average joe has really sat down and taken a good look at his surroundings, and they are browning their shorts. We are heading into heavy deflation it would seem and the job market will sadly just get worse.

brill

Just to add one more point. I think the US needs to scale down their image and no not on an obvious level like big banks. The too big to fail mantra is unsustainable on a personal level. People need to live within their means and, unfortunately, this economic crisis is teaching that lesson to many in a very hard manner. Going forward I don't foresee the glory days, unless your a major sports athlete or some putz in hollywood, on a big spending binge, it won't work, especially if rates rise. I can't help but think of this the other day while waiting in line and watching someone in front of me with food stamps blabbing away on their precious smartphone. Absolutely no priorities in some cases and, from my perspective, hard to be sympathetic.

brill

The money isn't in the pockets of the consumer. Us spending more won't do a damned thing.

it is in the pockets of the wealthy, and they aren't spending (including the corporations and banks sitting on massive amounts of cash).

The market has been siphoned dry.

Nobody has stopped spending around here. Everyone is fixing up their homes. Replacing windows, insulating, building new garages, installing solar panels, and getting new appliances. They want that Tax Credit for Energy Efficiency.

Saving the economy is easy

-Pull the troops out, and spend that money on internal infrastructure.
-Restrict bankers.

Those two steps alone would save the US economy.

Unfortunately, its the military and the bankers that control the economy, and thus America is finished.

How many tax dollars are drained from the economy for every stimulus dollar? So far politicians have made extremely poor investment decisions. The only way government influences the economy is by adjusting how much of a burden government imposes on the economy.

It's far more stimulating to the economy to cut taxes than to spend money. Businesses are opportunistic, and will invest in growth which requires resources (people).

I myself believe we are in a time of extreme change , and until these changes occurr we will continue to have these problems.
In ten year those that are still around will see a extrem amount of building and work, right now things are being held back, but when things get going again, we will have evolved into a entirely new creator, so to speak.

Hey, I know. Why not raise taxes so more people are laid off from their jobs instead of not cutting spending on stupid # like war? It makes perfect logical sense. I should be president!

And here we go:

Taxes must rise while fiscal stimulus needs to be wound down in order to reduce the U.S. budget deficit and allow private investment to expand, said former Chairman of the Federal Reserve Alan Greenspan on Wednesday.

"I am in favor for the first time in my memory of raising taxes," Greenspan told an audience at the Council on Foreign Relations in New York

src

The ol geezer, like this administration, is running out of options. Irrespective of your thoughts on Greenspan tax increase or reform seems inevitable otherwise better stock up on more ink for the printing presses.

brill