Last login: Tuesday, July 6, 2010
Consumption is not the engine of our economy, what produces wages for consumer is the engine, consumption is a huge factor in it but it's not what drives it, although a cut in this certainly has a very negative effect on it in the short term, but in the long run, less consumption, and more saving, should be part of the healthy economy as well. If you change any piece of the economy in a major way, it will impact the economy in the short term, but you don't get change by continuing the same policies that got you to where you are today.(that reminds me of the a definition of crazy- doing the same thing an expecting a different out come) Consumption based on borrowing more and more in just lessening our standard of living, unless that borrowing is focused on spending that returns something along the lines of earnings, productivity gains, or new innovations. The key to a return to consumer spending is real economic growth, that creates some increase/decrease in the ratio of wages, verse cost of living in favor of the consumer. Fixing our economy means addressing the economy as a whole, not just encouraging consumers to spend more, otherwise you are just shifting the problem elsewhere. For the answer to our economic problems how about looking at "Why Is the American Jobs Machine Broken? This article post on the the "Roubini Global Economics" by Tim Duy Jul 6, 2010 11:41AM should give you some real answers.
The June employment report was decidedly weak, and serves as the latest blow to the V-shapers - if any are even left. It once again left me feeling that something is very, very wrong at the heart of the American economy, something that is much more structural than cyclical. Consider too that US policymakers appear completely unable to adequately address the latter problem, now hampered by fear of deficit spending and the threat of the invisible bond vigilantes. Yet the structural challenges are even more daunting, and I fear that the Washington establishment is simply incapable of the paradigm shift necessary to address these challenges.http://www.roubini.com/us-monitor/259...
I would also point Maureen and all your other NPR reports and listeners to required reading economist Nouriel Roubini, who predicted the housing bubble and ensuing economic disaster. Read his book - Crisis Economics: A Crash Course in the Future of Finance.” If you don't have time to read the book, at least scan this short review by the New York Times book review http://www.nytimes.com/2010/06/27/boo...
I want to point out, as Roubini does, that what we are experiencing isn't some cyclical business cycle down turn, but the predictable out come of bad decisions and as Jeff Duy does that there is something very wrong at the heart of the American economy, something that is much more structural than cyclical.
July 6, 2010 at 10:27 p.m.
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