Monday, October 24, 2011

America maybe heading for an economic down grade by years end

Big trouble maybe a head...

Mohamed El-Erian, co-chief investment officer at Pacific Investment
Management Co, said that “The global system must now adjust to the many
implications and uncertainties of the once-unthinkable loss of America’s
AAA”.Well, only three months later, Merrill Lynch warns that another
is not only a significant blow to the current slow recovery
but a
fact if the
Congress does not agree on a credible long-term
to reduce
the country’s
deficit.Ethan Harris, economist
Lynch North
America, explains: “The
credit rating
have strongly
suggested that
further rating cuts are
likely if
Congress does not come
up with a credible
plan”. In fact,
Merrill expects either
Moody’s or Fitch to reduce
U.S.’ rating in
late November
or early

The thing is that if congress could you know come together with each side giving on someting we could get out this mess easy but right not we are so divide no one wants to set at the table and get what needs to be done...done. Which honest will be some cuts as well as some tax increases.

Sunday, October 9, 2011

Is the occupy wall street movement just the free market in action?

Is the occupy wall street movement just the free market in action? An interesting question may seem odd to some because many of the people protesting are against the free market or at least calling for regulation of business and because of that fact the first reaction to that question is no of course the occupy wall street protestor have nothing to do with the free market. But that view would be wrong.

Often the rebuttal to the ideal of regulations is that ultimately it’s not needed because in the end the invisible hand of the free market will regulate the actors in the economy. Examples of this would be things like the ideal that we don’t need something like the FDA or the USDA because if any of the food we eat turns out to be unsafe then people will stop eating it. This ideal moves out to anything else that is or can be regulated, there is no need for the regulating because consumers will reject bad actors in the economy.

In this cause the invisible hand of the free market isn’t acting against a company that is putting out a shoddy product and people refusing to buy it. This time the invisible hand is being moved by the masses who have not been enjoying the fruits of this economy, the people who weren’t allowed to get capital in this capitalist economy. The recent (and not so recent) college grad who can’t find a job. The person who has been working hard at a company for decades only to have their job shipped over seas, etc, etc.

The current economic system is not working for them, in fact some of them are actually being harmed by it. Just as people would stop buying a product they found out is no good or even dangerous, people will also rise up against systems that have turned out to be no good or dangerous to them. History is littered with rulers and nations being over turned by the people because they didn’t feel like they where being treated fairly.

Looking at history there seems to be a breaking point for a certain level of inequality. It’s not that people don’t expect there to be those that are doing better then others in fact I think people find that to be the norm. The problem isn’t that there are the rich and poor, it’s when it comes to a point when people feel that the rich are taking from them (to the point they are getting poorer) to get richer. That’s the point many in America feel today and that is point when people feel the economic system isn’t working for them and rebel against it.

As I see it there are basically two paths that the rich can take when the market gets like this. They can keep going along the same path and take the risk that the people rebelling win and in the act of fixing things to work better for them make the rich suffer or the rich can make some changes and allow the non-rich to earn a decent living and the rich can continue to be wealthy. Logically I think people would go with the later path but right now it seems that people are set to keep on the same path as before, but it’s early and that may change. I believe the reason the later path often doesn’t get chosen is that people either don’t believe they are going to be over turned by the masses or think it’s worth the risk because even thought they will be making money on both paths they will be making more in the first then the second one. Or maybe it’s just a case of those people knowing how to work the current economic system but fear they won’t be able work what comes next and still be wealthy.

Though I guess there are those who really believe in the free market principle and the market means let the people get so angry that they try to change the system let them because that’s is what the market it wants.

Friday, August 26, 2011

Irene an economic stimulus that I hope we can avoid

I like I assume everyone else is looking at the news about hurricane Irene with a bit of fear. Even though I don’t live on the east cost I have family that does and hope for their safety and I dread the thought that of so many people that maybe killed or their lives ruined because of this hurricane.

But as I have these worries I can’t help but also think about the fact that if Hurricane Irene is bad as they say it might be then we are going to need a massive recovery. A lot of money will need to be poured in to rebuild these towns and cities. Which would be good for the economy. In a time when many business are holding onto their money instead of using it to grow (both their business and the economy) this could force them to spend that money to rebuild buildings they may lose during this storm.

I know this reads like I’m cold and the truth is I feel a little odd writing this, and as the tittle of this article points I rather this not happen, but the truth is if it does then we will have a bump in the GDP as people have to pay for rebuilding.

Sunday, August 7, 2011

Down Grading America and what maybe the start of the Tea party depression

It is a great understatement to say that we are living in interesting times. America has just avoided default last week as Congress finally reached a deal to reach the debt ceiling. Most people thought that this would be enough to avoided all the bad prediction on what will happen to the economy if that ceiling isn’t raised and at first that is what seemed to have happened. Moodies has kept our AAA rating, the pundits where happy since it seemed that catastrophe was narrowly avoided. Sadly this may not be the cause for the last few days the stock market has been having a huge sell off, Standards, and Poors as down graded the USA from a AAA rating to an AA rating.
The reason this is happening is because faith in American government has been shaking by they way politicians have been handling things. Not just due to the childish drama we went through just to get the debt ceiling raised, but also because the deal reached has lead to many to wonder how well America be able to get it self out of the recession it is in. That’s right people don’t have hope that cutting spending will get us out of a recession and for good reason, when you think about the fact that these takes cuts will put millions of people out of work. Giving that we already have unemployment around 9% (or depending on how you count the unemployed nearly double that) it makes since that people aren’t at ease with job killing government spending cuts. Some also worry that the deal will tie the governments hand when it comes to rolling out any stimulus plans that could jump start the economy.
I am sure faith in America can be restored but people need to act wisely. Sadly we have many in office who seemed to refuse to act in any manner that can be confused with wisdom. The debt ceiling was an issue only because it was made an issue when the tea party refused to raise it unless they had the cuts they wanted. The thing is a clean raising of the debt ceiling was something that was routine. It is true that fault lays not only with the Republicans but the Democrats as well. The issue of the debt ceiling could have been avoided if Obama let the Bush tax cuts expire instead of listing to the Republicans who demanded that it was extended in return for extending unemployment. To get out of this mess we most remember that economic policies are like steering a car. Just as one can’t say I refused to turn my steering wheel to the left or right, one can only hold onto one policy in ever situation. Some times you have to raise taxes, sometimes it’s better to cut them, sometimes spending cuts need to be down right now and others times it’s actually wiser to increase spending. The fact that we have people in government that refuse to see this is the problem and that wont change unless they change their ways or they are voted out of office.

Thursday, April 28, 2011

1954 to 1963 richest americans paid 91% tax rate

1954 to 1963 richest americans paid 91% tax rate

today they only pay 35%

with all the talk about the budget and debit this nation is facing it makes you really think could the problems we are facing economic be linked to are low tax rate.

Tuesday, January 4, 2011

Macolm Gladwell writer of the tipping point talks about higher taxes on the rich are they good or bad?