Economy

[tw]

No matter how the administration spins it, this economy is not really seeing the growth they would claim. With interest rates at near zero and after years of tax cuts, according to administration rhetoric of three years ago, we should be in a boom economy.

Back when we were discussing tax cuts, others cited the Kennedy tax cut as an example. Back then I noted that tax cuts result in a quick recovery followed by an equal or more severe downturn. Where are all these jobs created by tax cuts? Profits are higher where the richest people get their income from. But where is all this booming economy for the middle class?

The stock market reflects same. After 4 years, the Dow Jones Industrial Average is slightly down and the Standard and Poors 500 is down 20%. Where is the growth?

Numerous companies from Intel to GM to airlines to drug companies are announcing they will not meet profit projections for this year and probably not meet those of 1st quarter next year. Why? George Jr told us we have turned the corner? The economy is now growing again. Then why are US Air, United, Delta, and American all probably going back in bankruptcy after George Jr gave them how many tens of $billions - with no strings attached? That right. George Jr gave then $billions of government money as a bailout. And so again they must go into bankruptcy?

Remember only last year when GM was hyping that they had changed and would be making a comeback? Now we see the comeback. Without a profitable Opel in Europe to cover up their losses, GM is going down again.

Furthermore, price increases from $53 per barrel oil has not yet appeared in the US. Expect gasoline that was selling at $1.79 per gallon to rise to maybe as much as $2.30 per gallon. Then we really start seeing a recession. Those decreases profits don't yet reflect the rising costs of oil.

The government has already hit another massive debt ceiling of something around $700 billion. Congress must authorize more treasury bonds, et al - so that countries like Japan can get rich again on all the American tax increases that must be imposed in the future to pay for that high interest rate debt. Don't worry. The recessionary effects of that debt will not appear for some years. Or as Cheney says, "Regan proved that deficit don't matter." Government can spend like a drunken sailor. This year, estimates suggest that government spending under George Jr has increased 23% to 28%. Why do all Republicans run the US into so much debt? Why do they spend as if it was not their money to bail out corporate friends such as the airlines - and massive tax breaks to Oldsmobile dealers?

The Congress under George Jr let companies fund their pension funds under some stupid new number that assumes pension funds will earn 9% on their investments. Therefore to pretend they were making profits (make George look better), companies such as GM could could legally underfund their pension funds. Then when they owe $billions to that fund (because they did not put enough money in many years previously), those companies will claim the Japanese have unfair advantage because the Japanese don't have large pension obligations. Funny. Big companies such as United would not be in this mess if George Jr did not raise that assumed 9% 'return on investment' number. But then even in the Cellar, those whose business is finance said nothing. Don't bite the hand that feeds you.

Not only do we have recession problems, but now we have many companies who instead claimed profits in George's 1st years - and now owe $billions to their pension funds. It is believed that retired United Airline employees will either lose their pensions OR the US government will assume those costs. More corporate welfare to all airlines - for the third time under George Jr.

The Fed did eerything possible make the economy boom while George Jr undermined the effort with corporate welfare that made defective companies look profitable. Now they have no choice. Time to pay up for the binge. Interest rates must rise. Would have been no problem had the economy recovered. But it did not. America's wealthy are raking in massive profits in reduced taxed dividends and other tax games that require lawyers. George Jr saw to it that only those with expensive tax lawyers really cash in on these tax cuts.

Then it gets more interesting. When is anyone from Enron, Global Crossing, Tyco International, Waste Management, Arthur Andersen, Xerox, MCI, etc going to jail for stealing $billions? George Jr assumes you have forgotten about all those bandits. Remember Enron was his #5 largest campaign contributor. Arthur Andersen was his #11. Remember 1st Energy - the company that created the blackout and kept a defetive Davis Besse nuclear reactor running after the NRC called for an immediate shutdown? They too arranged a $450,000 campiagn fund raiser for Bush-Cheney. Notice how many corrupt companies got protected? Did you forget about them?

Where is the growth and the resulting jobs? Too many negative factors in this economy mostly because George Jr played numbers games like an MBA rather than act like a partriot. Underfunded pension funds, airline bailouts, massive government debts, unfair trade embargos to protection the anti-American steel industry and others (that costs between 20,000 and 40,000 American jobs), massive agricultural subsidies, a tax cut that no one in responsible positions said would work, $200billion in debts so far in this Iraq war and George will not go to Congress to authorize the missing $113billion (because you might not vote for him and might learn about the second $200 billion still to be spent), no job creation, falling American exports, rising oil prices with no energy innovations having been encouraged three+ years ago, rising interest rates, etc. Where is this growth when so many other factors say recession? Again, the stock market under George Jr's reign is down after a mythical four years of growth. Notice the steady decline over the past four months that is expected to worsen with rising oil prices and so many corporate profit warnings. Currently the Dow Jones is again under 10,000 - and dropping:

[jaguar]

The treasury bonds issue is more one of fixed-rate asian currencies holding down their own currencies, if you get down to it they're basically lending america money to buy their exports with, it's quite amusing really. Pity being it's making debt dangerously cheap, it can't last forever and things will be ugly they the honeymoon breaks. Watch the UK housing market for the first serious crack.

[Catwoman]

So you are alive. Welcome back. How's London?

[jaguar]

Cold, wet, expensive, much as I expected

[Kitsune]

I've been under the impression, perhaps falsely, that our current economy is a total sham. Growth and investment for the last fifteen to twenty years have been based entirely on hype and very little on substance. And while I wouldn't look to stock market numbers as an indicator of overall economic health, I do think the numbers tend to point more towards stagnation rather than growth.

We, as a country, produce nothing for physical export other than cheap food. And while many people argue that we are now a "service-based industry", I don't see it. Where the hell does our economic power come from?