Yes, Uncle Sam is going to continue buying stuff and stimulizing (a new word for the new economy) with money it prints. And -- getting back to pure Yogisms -- it ain't gonna work.
The net decline in wealth -- including the stock market, housing, private equity, etc. -- plus the withdrawal of credit now totals $415 trillion or more. You think $700 billion for concrete and a fat guy holding a "Go Slow" sign is going to help?
Roosevelt calmed people by spending a fortune in and on the Works Progress Administration (WPA) -- great buildings and better murals, but not a lot of long-term economic impact.
We are a bit too advanced for that kind of naïve reaction. Not to mention the government is going to need many more trillions to fix the financial system.
And that's the rub -- even Uncle Sam cannot help too much, long term, as the world kicks its addiction to excess credit. And with that goes a big drop in fundamental demand, from the United States to China.
Be sure to read all 7 reasons the stock market isn't going up any time soon.
Michael Shulman is a contributor to OptionsZone.com.











Reader Comments (Page 1 of 1)
1-23-2009 @ 8:16PM
Michael B. layton said...
Why doesn't the Federal government cut its budget by 50% right now? This includes all expenses especially salaries and wages.
1-23-2009 @ 10:19PM
toogeorge said...
And if you want another one......Take a look at the Dow, inflation adjusted(go in with 'DJIA inflation adjusted' on the search engine); Fred's intelligent bear site is one.........Inflation adjusted charts show about 30-35 year cycles, say 17 years bear and 17 years bull.........In constant value dollars , the Dow peaked in jan 2000.....So that leaves about another 8 years to the bottom....This is not an exact science but the cycles ARE there......And those who forget the lessons of history??
1-24-2009 @ 11:26AM
nick said...
Gentle,bulls and bears. The problem we have is not very simple, nor, complicated, but why you may ask? Jobs. When people are working and there is income coming into the home people will spend a great portion of the money they have left after paying their regular bills. Take for instnce, I'm retired, I do get a pension and social security, yes I know you may say lucky so and so. After I retired I was bored [very much bored ] so, I took a job job for half what i was making, reason, I wanted to work only where I had no stress. After, working astasfull job for 35years, I thought, aless strass would be great. Where I'm going? For the last 8months I have not woeked . So, the extra $35,000 that was coming is no longer coming in as income. what have I done, will, we do not go out for dinner every week, we do not go to the move, I dont play golf five or sixes time per month, or get a hair cut every three weeks as my usual routine. Why may you ask? Simple no extra "JOB" no extra money to spend. Many of our company take jobs oversea, we need to have mfg. understand that jobs need to stay in the U.S.A. Maybe we may have to pay an extra $.50cents or more per item made in USofA, but would that be worthed? I'm lucky that have my pension and ssi. to be able to pay my bills. Which, it remind me my medical insurance is out of site. Well, good luck to all the people who are strugling I know how it feels , for, I have lost my extra job plus over $200,000. in the stock market.
1-24-2009 @ 8:40PM
birdie200 said...
We need to put our economy on the same scale as other economies. The prices we pay for the food and the salaries that we pay for comparable work of other countries and economies is way to high. For example, engineers in India make $7500 per year and they live a comfortable middle class life. We as a country will need to make radical and tough choices to get through this.
The solution is not simple, but we can get back on track but it will require sacrifice by all.
1-25-2009 @ 12:21PM
fgpalm said...
“Roosevelt calmed people by spending a fortune in and on the Works Progress Administration (WPA) -- great buildings and better murals, but not a lot of long-term economic impact.”
Not much of an economic impact you say? Hundreds if not thousands of buildings, schools, roads and bridges where built by the WPA. Many of these projects built by the WPA still employ people today, providing at the very least, stable jobs, and badly needed services in the darkest times since the great depression. Now I don’t know if you’re a concretive or not, but the above quoted statement sounds like the standard concretive “hit job” to me. You can’t seriously deny that the effects of the WPA are still felt to this day. In face I’m almost positive something you need and use in you're town was built by the WPA.
1-25-2009 @ 2:45PM
cc said...
Everyone is just going to have to suck it up and keep it moving forward. Think of all the people who have never lived in a house of their own, been on a vacation, played games for fun, ate at a restaurant, bought new clothes, furniture, shoes, or any luxury items...what are they doing? Your lives could be worse, but thank God for Jesus! Poor people have always been in the world -- who cares for them? God uses people to help other people keep going. That's why we must treat others as we want to be treated. There are a lot of people in the "poverty" line, who have been waiting for a rescue. They have been feeling the pain for years on top of years. Take a number, please!