Universal healthcare, welfare, and lubejobs for all!
Today's Financial News - Posted January 22, 2009
Nothing worse can happen to a consumer economy than a Discretionary Spending Depression. Look at the U.S. economy… and look at Chinese economic growth!
by J. Christoph Amberger
Baltimore—(TFN): Sandeep S. was one of the TFNeNews readers who didn’t take too well to the Healthy Scepticism that tinges our outlook on Hope and Change:
“Remember folks like you created this mess and now that someone has the courage to straighten the mess you cry afoul. Shame you and your friends!”
Yes, ’tis true. You got me here. Me ‘n’ my friends bought homes we could afford, paid off our mortgages early if we could, filed our tax returns on time, diligently contributed to retirement accounts, paid for our kids’ education, drive cars that are paid for, and make sure the doctor is first in line to get paid when the bills come in.
It’s shameful indeed.
We even converted surplus cash into capital… the horror, the horror.
Instead, we should have sued banks for not writing enough shaky loans, cried for higher taxation of anyone making a thousand bucks more than we, and advocated the absorption of as much of the private sector by the state as possible.. banking, mortgage lending, health care, car manufacturing.
Universal healthcare, welfare, and lubejobs for all!
Because, of course, government has a sterling record of doing things right!
Given our own lack of faith, I asked TFNeNews readers yesterday to help spread to good news. Point out the coming attractions of the new era. Spread cheer and optimism… simply by posting your prediction as a Comment on our TFN home page.
But when I checked today, there weren’t a whole lot of suggestions. Reader Thomas Y. said:
“I agree with your assessment. However, if Obama is able to pull this rabbit out of the hat, I will be happy to declare him a genius. The fixes he is proposing didn’t work for FDR and I see no reason to expect them to work now. I know people will claim that FDRs policies got us out of the great depression but I beg to differ. World War II got us out of that mess and I would just as soon not see a repeat of that solution.”
Oh no! Not another Doubting Thomas?
Luckily, Laura Cadden is keeping hope alive: She just posted her new Special Report “Lithium: The one commodity with a profitable future” for your review on the TFN home page today.
Also, don’t miss her Editor’s Pic “The year of Comcast (CMCSA)”.
Her stem cell recommendations are kicking butt… she may be on to something!
*** Nothing worse can happen to a consumer economy than a Discretionary Spending Depression. It takes some effort to destroy a consumer nation’s urge to splurge. But once you succeed, the chain reaction is almost unstoppable. Look at any market sector, and you’ll see the effects of demand destruction in every spreadsheet and every quarterly report.
Not just at home but abroad as well.
Accordingly, China’s supposedly “decoupled” economy expanded at the slowest pace in seven years as demand destruction in the United States evaporated exports.
Fourth-quarter GDP grew by just 6.8%, after a 9% gain in the previous three months.
That still may add up to decent growth for 2008. But for China, growth below 7% is considered catastrophic.
But it’s not just the Chinese social order that soon may creak loudly again under the economic strain. People love to forget that China may run record surpluses with the western consumer economies. But that it is also a major importer of goods and services from other countries.
The drop in demand from China is having a domino effect on other Asian and Pacific Rim countries: Taiwan, South Korea, and Australia are now just steps away from their own recessions. Japan’s export-dependent economy is especially hard hit.
The poor showing of Chinese exports is a warning signal for all dollar bears who jumped through hoops to get yuan-denominated cash and money market accounts. China is almost now certain to devalue the yuan, which it had floated only reluctantly over the past years.
That means one thing for the world economy: Further deflationary pressure on goods and services. And further disincentives to both saving and spending.
Let’s call it the Purchase Procrastination Paradox.
Recommended Reading
“Prestige Brands: The best stock under $10?”
“Lithium: The one commodity with a profitable future”
Next Article: Crude levels: How do we slow the flow?
One Response to “Universal healthcare, welfare, and lubejobs for all!”
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February 7th, 2009 at 8:12 pm
I take issue with the writer making comment re the economic policies of FDR and the representation that there was no relief to the general population as the result. While WWII definitely lubricated the wheels of production, the US was suffering with 25% unemployment and the general population had no benefits such as Unemployment Benefits, Medicare, Medicaid, Major Medical Coverage etc. The programs of the FDR era such as WPA, CCC, NRA etc. were insturmental in putting food on the tables of millions of American workers who were unemployed while President Herbert Hoover ordered .30 cal. machine guns mounted on the White House lawn under the command of Col. Douglas McArthur to deter apple-selling WWI vets from scaling the gates in protest. Some of the FDR programs such as minimum wage, workers compensation, 40 hour week, Social Security plus all of the new structures, trails and maintenance performed in the National Park System were the results of putting Americans to work under federal programs.
Regarding healthcare and possible universal care that I am sure will be proposed during President Obama’s first term is a good thing for America. We cannot continue with 50M plus Americans unable to afford minimal healthcare thereby riskng death as the result of failure to detect life threatening conditions early enough. The US infant mortality is behind that of Cuba and Russia and is shameful and our average life span is lower than many emerging countries and all of Europe and Japan. We spend 16% of GDP on healthcare and deliver less care to fewer people than countries with national healthcare. Europe and Canada spend about 9% of GDP for top quality healthcare and have healthier populaions according to recent studies. The spiraling healthcare premiums and cost of care along with outrgeous pharma prices are driving US businesses to seek alternatives to the private sector which has failed the American people much like our banking system.
Why don’t all of the Free Market advocates declare their support for Free Market forces to cure the utter failures of the banking system, the collapsing healthcare system and 43 states going bust. This is what unbridled, Free Markets does, it destroys the Free Marketplace on its own.