Why most of the experts are wrong on the economy..

[kentuck]

Because they are operating with rules and practices that worked in the past but no longer work. If the economy was going into a slump, just cut the interest rates to bring more investment into the economy. If that didn't work at first, then keep cutting the rates until it did work. Unfortunately, we cannot cut interest rates any further. We have used up that magic bullet.

So the only other magic bullet that is left is for government stimulus. We are presently attempting to use that strategy, with great opposition from the Republicans and some Blue Dog Democrats, with little success thus far. It is impossible for some to gaze outside the box in which they have been locked for the last thirty years.

The same applies to the old mantra about taxcuts. Just cut taxes and let business create more jobs. That is the solution, they argue. However, we tried that in spades with George W Bush in the last eight years and it was an abject failure. Less jobs were created than anytime in modern history, with the largest taxcuts in history. Taxcuts do not work in this economy.

We are in the wake of a different type of collapse. The majority of Americans were living on credit cards and re-financing of mortgages, in order to keep their heads above the water. At least, this has been going on for the last ten or twelve years at full throttle. Employers did not have to raise wages because their employees had found a way to live within the new credit economy.

Unfortunately, the easy credit bubble burst and we can no longer return to that economic model. That is where most of the experts are wrong in their assumptions about recovery and growth. They do not see outside the box.

The major problem with our economy is thirty years of stagnant wages for average working people. Many of them have actually withdrawn most of their savings from their 401K retirements over the last 8 years or so. They cannot re-finance their homes anymore. They cannot pay off their credit cards by getting new credit cards. They cannot pay off their debts with their current 1970 wages. (We recall when Jimmy Carter asked unions not to ask for wage increases because of inflation concerns in the 1970's. Wages have taken a back seat in this economy since that time.)

The solution has to be to create more wealth for more people in our economy. The stimulus will not work but for a short time. For a long-time recovery, we need to change the way we think of profits, stock-holders, and executive compensation. The entire philosophy is geared toward failure.

Instead, we should raise the minimum wage to approximately $10 per hour and the majority of workers now making between $8-$12 per hour should be paid between $12-$16 an hour. This would be money that people could depend on and would spend to bring our economy back. Stockholders and executives will need to sacrifice their old ways of profit-making if we are to get out of this present economic mess.

[ananda]

1. Stiglitz, Reich, Galbraith..

.. they are not wrong.

The ones who know what to do are not part of government.

The ones who pander to Wall Street and big business are.

[Klukie]

2. I couldn't agree more...

I am all for capitalism, however when profits become extreme, the elements that provided for those profits will ultimately suffer which in turn will eventually lead to a collapse in the the whole system. A good balance is what is in order.

[havocmom]

3. Those at the top of the economic heap wanted so much they killed the goose that laid golden eggs

That goose is the working class. The more REAL wages the working class lost (to the every growing hunger for profits at any cost) the sicker the goose got.

Tell the scions of the uber rich they just have to get by with a little less so the goose will live.

Good luck with that. The problem with capitalism is the same problem with any construct involving humans: greed.

[kentuck]

6. Very well said, havocmom.

The golden goose is near death. Labor and productivity have been forgotten.

[seabeyond]

4. i was telling 14 yr old son, we need create ways out, not the same old thinkin

that for years, watching loss of jobs over seas and wages not increasing, nothing we do will help. people dont have the money to spend. if a noby sittin in kitchen with son can figure this out, i am sure the "experts" know this.

[Turbineguy]

5. And then there's a strong contingent

that wants the economy to collapse, somehow to the benefit of the Repubs.

Psychology is a large component of economic direction. If enough people believe the economy will collapse, it will. It's not as simple as that, but like physics, it's based on a few easy to understand principles.

The credit driven economy was never a sustainable model. It was a model that made for a handsome facade while the foundation was being hollowed out. Those who did well under this system, will have to go out and do real work. Opening the mail box to envelopes filled with magic money is over.

[HughBeaumont]

7. Laissez-fail economics worked in the past?

Maybe for a handful of wealthy people.

The Repuke hoi-polloi that thought it did work were merely deluding themselves.

I don't see what would have been the huge flappity deal about simply raising wages over time and keep the FDR-era regulations in place. Of course, that would have interefered with the greed and evil. Did they really think that offering easy credit was a viable substitute for sustainability and common sense?

Wages that haven't risen since 1979; well, that's catastrophic to the needs of a consumer-based economy. They should have known this, or maybe they did and just did not care.

[kentuck]

8. It "worked" to the point that there was not a total collapse...

But the rope they sold in a moment of greed has been discovered to be wrapped tightly around their necks.

[bvar22]

9. Something more radical needs to be done.

Stimulus money spent at WalMart will not stimulate very much.
It will immediately leave the community and become Corporate Profits in one easy step.

In the old days, people actually owned small businesses in the community.
Stimulus Money would stick around for a while and help the community.

The ONLY way to provide REAL stimulus would be a massive building program using only American Made products.

For example, instead of showering $Trillions on a handful of Wall Street Billionaires, a multi-Billion dollar 10-year contract with the auto manufacturing sector to design, re-tool, and build a national High Speed Rail system using ONLY American Made products would have an immediate stimulus effect. Plus, unlike Wall Street Bailouts, Americans will have something useful to show for their money.

Combine those types of programs with some hard nosed Trust Busting and local ownership requirements for business, and there might be a chance for a turn around.




"There are forces within the Democratic Party who want us to sound like kinder, gentler Republicans. I want us to compete for that great mass of voters that want a party that will stand up for working Americans, family farmers, and people who haven't felt the benefits of the economic upturn."---Paul Wellstone

[kentuck]

10. Unfortunately...

Most great reforms in this country have come about from 3rd Party movements, not from the Democratic or Republican Parties.

[FredStembottom]

11. In other words....De-globalize

How that really bad idea became gospel overnight with no stops in between is grist for dozens of investigative books and documentaries.

All that friggin' DIESEL fuel being burned to float unfinished goods around the globe just to take advantage of starving populations and their inescapable need to work for a crust of bread putting it all together.

Why can't Chinese goods be sold to the billions and billions of Chinese!?!? Because they would have to be paid enough to afford them. That step was skipped by selling to the US instead.

Oh..... and how about your state? Here in Minnesota we are just getting started on what?, maybe our 4th totally destructive invasive Asian species that came in on those DAMN cargo ships!

AAAARRRRGH!

[autorank]

12. True words k*r

We've been had by the "long con" manufactured by The Money Party and produced by the imagineers at MSM.

It's all been a pack of lies upon lies. Greenspan was seriously warned off of the housing credit bubble from
2001 on. Yet in 2004, he was telling people to get an ARM, cash out, and invest in the stock market? We know
what that advise was worth.

There's more than enough money for people to do well, all of us. The wage ideas you have are great and they'd be
complimented by a public option, Medicare is my preference. and lets have a national cramdown with the banks and
these absurd loans based on Wall Street fraud. it's all good!