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The "Plan" - Does the government really have a plan to restore our jobs?
I don't believe they have a plan at all. What do you think?
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I belive there is a plan on two levels.
The "meta-plan" I think is: Keep trying things until something works. I'm pretty sure the President has even said that explicitly.
Then there is the specific plan for what they're trying out right now, which includes the stimulus package and the financial rescue plan, aka the "bank bailout". The latter isn't all that well detailed at the moment, which is one thing that spooked the markets when some of the announcements were made.
However, whether you think the plans will work, or whether the plans are detailed enough, there are definitely plans. They're probably at least as good plans as any that any of us make for our personal futures.
Also, don't under-estimate how much has been learned from previous crises all over the world. While this isn't hard science like physics, it's not like reading entrails either. We know what worked in South Korea in 1997, and what didn't work in Japan throughout the 1990s.
Another thing that may be spooking the markets is that we may be constrained by politics from doing what would work. For example, South Korea spent 13% of its GDP on organising a fast bank rescue.
But it may be politically unworkable to spend that much money that fast on an unpopular cause in the US. So we may end up with the kind of half-measures that didn't do the job in Japan.
Anyway, good or bad, detailed enough or not, big enough or not, there is undoubtedly a plan.
The "meta-plan" I think is: Keep trying things until something works. I'm pretty sure the President has even said that explicitly.
Then there is the specific plan for what they're trying out right now, which includes the stimulus package and the financial rescue plan, aka the "bank bailout". The latter isn't all that well detailed at the moment, which is one thing that spooked the markets when some of the announcements were made.
However, whether you think the plans will work, or whether the plans are detailed enough, there are definitely plans. They're probably at least as good plans as any that any of us make for our personal futures.
Also, don't under-estimate how much has been learned from previous crises all over the world. While this isn't hard science like physics, it's not like reading entrails either. We know what worked in South Korea in 1997, and what didn't work in Japan throughout the 1990s.
Another thing that may be spooking the markets is that we may be constrained by politics from doing what would work. For example, South Korea spent 13% of its GDP on organising a fast bank rescue.
But it may be politically unworkable to spend that much money that fast on an unpopular cause in the US. So we may end up with the kind of half-measures that didn't do the job in Japan.
Anyway, good or bad, detailed enough or not, big enough or not, there is undoubtedly a plan.
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This was a really tough decision.
There were three answers that had real merit.
There were three answers that had real merit.
Yes, we do know what didn't work in Japan. And we are doing the same thing. Keep the banks open but don't fix them. Dumping in capital to cover losses does nothing to fix the problem of the "toxic" assets that remain on their books and which makes everyone afraid to do business with them.
Tip williamwaco for this comment
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Don't underestimate the political difficulty. As the article I linked to says, the financial rescue plan might need to run to $4tn. They may even know that's where they'll need to go, but don't think they could get that through just yet. One thing I'm sure of, the likes of Geithner, Bernanke and Summers know far more about the story of all of those crises than you and I do.
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I don't believe they have any plans, or have any way to do something that will change the economy. They can say they have plans, but the government alone can't change the economy or restore jobs, it has to go beyond the government, and work its way out to the people. The government can only change the laws, and that can have an affect on the way people do things, and increase consumer confidence, which will increase consumer spending. The government can only try to help the people think that they will change things, which will also change our levels of confidence in the economy. It starts with you! If you don't change, how is the government going to change your life, or the economy? If you adds up everyone in a country, then the you really means something. The government is not here to get you a job, or to change the way you do things in your life.
Likewise, the government does not regulate the economy, the Federal Reserve Bank of the United States is mostly responsible for regulating the economy. The Fed can increase money supply, and the more money that circulates, the more economic activity there will be.
The Fed regulates the economy in 3 ways:
1. Open market operations: It buys and sells bonds on the open market to increase money in the economy.
2. Direct control over the Fed Funds rate. It controls the rate the banks borrow from the Fed when capital is low. This will affect the prime rate when borrowing funds.
3. The Required Reserve Ratio is the last and most powerful tool. If you lower this ratio, there will be more money supply in circulation, which will create a stronger economy.
Likewise, the government does not regulate the economy, the Federal Reserve Bank of the United States is mostly responsible for regulating the economy. The Fed can increase money supply, and the more money that circulates, the more economic activity there will be.
The Fed regulates the economy in 3 ways:
1. Open market operations: It buys and sells bonds on the open market to increase money in the economy.
2. Direct control over the Fed Funds rate. It controls the rate the banks borrow from the Fed when capital is low. This will affect the prime rate when borrowing funds.
3. The Required Reserve Ratio is the last and most powerful tool. If you lower this ratio, there will be more money supply in circulation, which will create a stronger economy.
Easyboy! The government does not regulate the economy? Yikes.
Government regulations are directly responsible for the current financial crises. They started in the '70s with the Community Reinvestment Act which forced them to make loans in areas and to people that were known to be unworkable. These loans were uncollectable when they were made.
Then for the next 30 years almost every session of congress and every president was pushing "The American Dream" of home ownership. They consistently reduced the qualifications required to get a loan and increased the the loan to value ratios. 30 years ago lenders were making loans up to 75 to 80 percent of the value of the homes. in the '90s they were loaning as much as 100 to 105% of the value of the home plus all closing costs. These loans were under water when they were booked. The home equity loans legislated by the government raised that to 125% of the value of the home.
This is just insane, and the government is totally responsible for those laws.
I am not saying that greed had no part. The loan origination system pays only for loans closed. The people who originate loans do not care if they ever get paid. They simply get a fee for originating them. They have a very large incentive to find a way to "make a loan look good" even if they know it is not.
The regulators have been telling the financial institutions that they can buy all the AAA grade paper they want and it will never be questioned as to quality. ( personal experience) The rating agencies were never regulated ( failure of US Government )
etc, etc, etc. I could go on for hours about how the US Government has trashed our financial system.
Government regulations are directly responsible for the current financial crises. They started in the '70s with the Community Reinvestment Act which forced them to make loans in areas and to people that were known to be unworkable. These loans were uncollectable when they were made.
Then for the next 30 years almost every session of congress and every president was pushing "The American Dream" of home ownership. They consistently reduced the qualifications required to get a loan and increased the the loan to value ratios. 30 years ago lenders were making loans up to 75 to 80 percent of the value of the homes. in the '90s they were loaning as much as 100 to 105% of the value of the home plus all closing costs. These loans were under water when they were booked. The home equity loans legislated by the government raised that to 125% of the value of the home.
This is just insane, and the government is totally responsible for those laws.
I am not saying that greed had no part. The loan origination system pays only for loans closed. The people who originate loans do not care if they ever get paid. They simply get a fee for originating them. They have a very large incentive to find a way to "make a loan look good" even if they know it is not.
The regulators have been telling the financial institutions that they can buy all the AAA grade paper they want and it will never be questioned as to quality. ( personal experience) The rating agencies were never regulated ( failure of US Government )
etc, etc, etc. I could go on for hours about how the US Government has trashed our financial system.
The most important part of the plan is really the psychological aspect. If it looks like the government is planning to fix things, consumer confidence goes up. If consumer confidence goes up, more stuff is bought.
That's what economic stimulus packages are. Basically the thought process is, give them money, and they'll buy stuff.
Because, really, one of the things that makes a recession worse is the destruction of confidence in the market, causing people to essentially hide their money under their mattress, instead of spending and investing, which would help put the country in better shape.
That's what economic stimulus packages are. Basically the thought process is, give them money, and they'll buy stuff.
Because, really, one of the things that makes a recession worse is the destruction of confidence in the market, causing people to essentially hide their money under their mattress, instead of spending and investing, which would help put the country in better shape.
Apparently it doesn't "looks like the government is planning to fix things" because there is certainly on increase in consumer confidence.
Does the government really have a plan to restore our jobs? I think not. Look at the package and how the money is being spent. Then ask yourself WHAT jobs are being created and will they be filled by people losing their jobs now. The answer would be no.
They have a plan to make sure to get money back to their buddies - it's all earmarks and marketing propoganda.
Not much more to say. I have no confidence that any of this is "stimulus". To me stimulate means to do something to encourage someone else to do it for themselves - when I stimulate my kids to go clean their room I don't go in there and do it for them and then tell them good job.
I don't spend more money to be able to pay off my credit card bills and get my family on a stronger financial footing.
This whole thing is a boondoggle.
There will be alot of money flying around out there but not sure it will empower or stimulate anyone or anything.
This is just my opinion though - and I do love conspiracy theories and kookyideas.
Not much more to say. I have no confidence that any of this is "stimulus". To me stimulate means to do something to encourage someone else to do it for themselves - when I stimulate my kids to go clean their room I don't go in there and do it for them and then tell them good job.
I don't spend more money to be able to pay off my credit card bills and get my family on a stronger financial footing.
This whole thing is a boondoggle.
There will be alot of money flying around out there but not sure it will empower or stimulate anyone or anything.
This is just my opinion though - and I do love conspiracy theories and kookyideas.
source(s):
http://www.Kookyideas.com (the federal reserve conspiracy)
UFOs, JFK, and Elvis: Conspiracies You Don't Have to Be Crazy to Believe
http://www.Kookyideas.com (the federal reserve conspiracy)
UFOs, JFK, and Elvis: Conspiracies You Don't Have to Be Crazy to Believe
I believe what the president tells me I believe.
And frankly that is/was the plan all along.
_
Personal Note: That is my personal note.
Sorry when it comes to politicians I am going to give a answer from the heart.
EDIT:
Perhaps to be sincere to the asker I definitely should and will elaborate on my answer.
You see politicians main job I believe is to show control, They need their constituents to remain calm at all times.
They need their constituents to believe that they will always have a answer for them at all times. No matter what the situation.
Now allot of people keep talking about the "recession" well what people fail to realize is that the USA is A country that has been built FOR recession. The USA is not a irresponsible country.
They have not put all their eggs in one basket.
We have many allies.
We have many friends.
And believe me, A good planner always keeps a couple aces up their sleeves.
Very Sincere Regards,
XDS
And frankly that is/was the plan all along.
_
Personal Note: That is my personal note.
Sorry when it comes to politicians I am going to give a answer from the heart.
EDIT:
Perhaps to be sincere to the asker I definitely should and will elaborate on my answer.
You see politicians main job I believe is to show control, They need their constituents to remain calm at all times.
They need their constituents to believe that they will always have a answer for them at all times. No matter what the situation.
Now allot of people keep talking about the "recession" well what people fail to realize is that the USA is A country that has been built FOR recession. The USA is not a irresponsible country.
They have not put all their eggs in one basket.
We have many allies.
We have many friends.
And believe me, A good planner always keeps a couple aces up their sleeves.
Very Sincere Regards,
XDS
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