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.