Why this bailout is doomed to fail......

[marmar]

This is an excerpt from a Common Dreams article by Larry Beinhart that I posted earlier:

Because it's addressing the wrong things.

The real problem is that we have moved from a production economy to a consumption economy. Even worse, a consumption economy that supports the production economy in other countries. When we start to consume more than we produce - which we have - we must borrow. That means we're selling off or mortgaging our assets. If we were to do that to create more production which would ultimately pay for the investment, that would be alright. But we're not, we're just consuming more.

You can't borrow your way out of too much debt. At least not without a plan to create more income.

You can't consume your way out of an over-consumption problem.

If we don't address the fundamentals now, we will have to do so later. At that time, they we will be worse. Both by themselves and with the addition of the new $700 billion debt.

The ultimate problem is remaking ourselves into a production economy.

You can read the whole article at: http://www.commondreams.org/view/2008/09/27-0

[panader0]

1. That makes a lot of sense to me.

[dkofos]

2. In the grand scheme of things, it was never anything more than a ruse to rob the treasury.

And maybe to make the dems look bad.

[avaistheone1]

3. Now that it looks like we have the immediate fix - the bandaid, I hope we can move

to push our legislators and government to work the return the U.S. to a production economy.

[gopbuster]

8. Bingo...thanks! We need a 60% majority and we can start moving

that direction

Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches :

* a reduction in interest rates.
* Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.<1>
http://en.wikipedia.org/wiki/Keynesian_economics


Part of statement from Barak Obama today:


“When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration. But this step is necessary. Now Washington has to show the same sense of urgency in dealing with the crisis facing Main Street and the middle class by passing an emergency economic stimulus plan that would create jobs by rebuilding our crumbing roads; shore up flagging state budgets to prevent drastic cuts in education and health care; and extend expiring unemployment insurance benefits for those who've lost their jobs in this downturn and cannot find new ones.

“One final point. If elected President, I will order a thorough review of this plan to make sure that it fully lives up to the principles I've laid out. And I will also move quickly to upgrade our financial regulations for the 21st century, establishing new rules of the road and tougher oversight to ensure that the American taxpayers are never again forced to put their money and their futures at risk because of bad decisions in Washington and on Wall Street.”

[Venceremos]

4. kick

[TxBlue]

5. We have to bring back overshore jobs to US

Obama has addressed this - take tax breaks away from companies going offshore and bring those jobs back home.

This problem started with Clinton but was greatly exacerbated by bushco.

More needs to be done though...New Deal II is needed, reinstate Glass-Steagall Act and rollback the bankruptcy laws. Also, we need to get out of Iraq and stop the money flow there and put that back into rebuilding our infrastructure. In addition, they need to outlaw trying to sell our infrastructure to foreign investors.

[RaleighNCDUer]

6. Exactly what I've been saying.

A bailout, funded by taxpayer dollars, is like putting your overdue credit card payment on another credit card. All it does is move the amount borrowed to a different lender, while adding MORE interest.

Everyone who does that gets started thinking it's just a temporary fluidity problem - the expected income later will, at a slight cost, cover the juggling. And as most who do it discover, unless there is a HUGE influx of real money, it is the road to bankruptcy.

[undergroundpanther]

7. We can't re industrialize because the Earth has been

nearly stripped bare to support the CONSUMER society.

I say get rid of the market and profit system.

[unblock]

9. the falling dollar addresses that.

as the dollar falls, imports and offshoring become more expensive and exports and domestic investment makes more sense.

congress can't do that, though. throwing money at it and regulating things are all they can do, so they will.

and it will help keep things from getting uglier than they need to. but ultimately, the dollar must come down some more and companies must act like this is a permanent thing and rethink their global strategies.