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The great fiscal stimulus package ... of 1929

marketwatch.com — Herbert Hoover -- only nine months into his presidency -- assembled leaders from the public and private sectors to create an economic-stimulus package. Among the measures, Time magazine reported at the time, was a promise from Congress to offer bipartisan support for a tax-cut package.

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  • rpi22, on 01/28/2008, -8/+133those that do not learn from history are doomed, doomed to repeat it!

    "We learn from history that we do not learn from history." -- Hegel
    • adjustafresh, on 01/28/2008, -10/+23Way to rehash a quote that is NEVER overused...especially on Digg.
      • PeppermintPig, on 01/28/2008, -4/+13But have we learned?

        Few have. A good many more think they have. The rest weren't paying attention because they like shiny things.
        • MikeSD34, on 01/28/2008, -0/+7I am insulted by these accu..... Dude! 12 most awesomely bad ebay auctions! OMG BBL TTYL FYXS KDYEF :LSHJDF
        • wildbillhick, on 01/28/2008, -1/+8If McCain, Huckabee, Clinton, and Obama are our the primary candidates winning, then no we have not learned. (BTW- I am not a Ron Paul supporter.)
    • suzywang3000, on 01/28/2008, -6/+2did you really just quote Hegel?
      • beatbox32, on 01/28/2008, -3/+2Yeah, of course, because that whole worldwide rise of the proletariat worked out well.
    • masterm1nd, on 01/28/2008, -8/+2The only thing the past tells us about the future is that it can't happen again. There may be patterns, but the same occurrence does not happen twice. It doesn't sound as good though...
      • d03boy, on 01/28/2008, -2/+2no
        • masterm1nd, on 01/28/2008, -4/+1I guess that means we will crash and then we will rebound to become number 1 again. Predicting the future is fun.
          • ChaosMotor, on 01/29/2008, -1/+1I predict that no one will ever digg you because almost everything you say is stupid.
      • yodaj007, on 01/29/2008, -1/+2No, there won't be another Adolf Hitler, but eventually someone will rise to power and do things similarly to Hitler. You're right: 1938-1945 will never be repeated exactly like it was. You're right: we won't be reporting on wars in black and white. But unless we learn from the events that led up to WWII, it could very well happen again. The international community learned from their mistakes after WWI. They basically tried to ***** over Germany. This is what led up to WWII. The international community didn't make that mistake again.

        I'm not sure what point you're trying to make. Of course there are patterns. That is why we study history.
    • Xenufield, on 01/28/2008, -2/+2We'll only be repeating history if we get a 'progressive' in office (like we did with FDR), who decides to help the problem by stacking lots of social programs onto the poor, abused camel. Ensuring a more painful and drawn out effect.
  • claughery, on 01/28/2008, -17/+10it is frightening to think about this happening so soon.
    • pyrewyrm, on 01/28/2008, -4/+11Only if you were asleep in econ.
      • PeppermintPig, on 01/28/2008, -3/+9Only if you think econ actually teaches you about economics.
        • sgiffy, on 01/28/2008, -7/+7The only place to truly learn about economics is poorly layout websites ranting and raving about the federal reserve and Zionist bankers. Just like the only place to learn about physics is Timecube.
          • oldhick, on 01/28/2008, -4/+4What is up with the antisemitic ***** on Digg?
        • PeppermintPig, on 01/28/2008, -2/+8If you give conspiracy theorists the time of day, you give them legitimacy. You don't have to go through all that trouble to actually learn something if you stay skeptical and reason things out.

          I'm going to assume you believe the Federal Reserve actually exists, and our difference of opinion lies in whether or not we believe this organization is beneficial. If not, you can correct me.

          Why would the Federal Reserve, a quasi-private organization, never happen to have been audited once? Hell, the CIA is more forthcoming to the public with statements on internal affairs.

          I guess we can just ignore all of these questions and blame banks giving out bad loans??
  • fuhcough, on 01/28/2008, -31/+3When i first saw this I thought it said "The Great Fecal Stimulus Package"... then I read the article and realized that it was just a typo in your title.
    • feckineejit, on 01/28/2008, -2/+3you suck.
    • edd17, on 01/28/2008, -3/+8Do you even know what fiscal means?
    • adooga, on 01/28/2008, -1/+2Do you know what "typo" means?
    • EricAnderton, on 01/28/2008, -0/+1Still, perhaps that's a subconscious slip of sorts. For instance, the article is rather critical of the notion that such a package is a sure-fire way to fix things.

      Also the market crash in 1929 was a "stimulus" of that sort for lots of people.
  • designer, on 01/28/2008, -7/+99This stimulus package is to stimulate votes.
    • Impact0115, on 01/28/2008, -4/+7Stimulate votes for...who?
      • feckineejit, on 01/28/2008, -7/+7the republican party, since clearly the democrat party only wants to tax you and give your money to the institute for the perverted arts.
        • pyrewyrm, on 01/28/2008, -10/+2well... at least that part was true.... since we spend more on illegal immigrants every year than we have the Iraq war or our own senior citizens (through Social Security)
        • odigity, on 01/28/2008, -2/+7The parties are the same. Stop perpetuating the illusion that there's a difference.
          • cranium, on 01/28/2008, -0/+5Some people think that having the government control every aspect of your life is different than having goverment and corporations collude to control every aspect of your life.
      • dood, on 01/28/2008, -1/+3Whoever signs the letters they send out. I think it was Bush last time.
    • rizla420, on 01/28/2008, -3/+14its to keep people pacified and believe in the system. If we believe our elected officials are acting in our interests than we have no need to overthrow the system. Remember, everything is FINE.
    • CrazedLeper, on 01/28/2008, -2/+6The "stimulus package" is to delay the reaction of the common people while the billionaires plunder their 401K plans. While they sell, sell, sell, the private banking cartel, the "Federal" reserve, *could be* throwing money (dollars have no real value to the Fed) in the market to keep key indicators artifically inflated. Then, once all the *important* people have gotten out, the middle class can be left holding the (empty) bag.
    • molecool, on 01/28/2008, -1/+2Nice one - sweet truth packaged in a few words.
    • tgc1, on 01/29/2008, -0/+0And where are they getting the money FOR this stimulus package? Hmmm? From the citizens maybe? The tax dollars you put in? Let me get this straight, they keep taxes high so that they can dick around with your money and then.... give it back to you and try to look like heroes? What the ***** *****. What are we brain dead? *****.
  • swoopdog, on 01/28/2008, -15/+7I can't wait to move into my very own bushervill
    • adjustafresh, on 01/28/2008, -8/+3Hoover was in office for 9 months. The ghettos will be Clinton or Obama-villes.
      • PeppermintPig, on 01/28/2008, -5/+4That's how the media could spin it, but that doesn't mean Clinton was, or Obama would be off the hook for their own policies. Clinton was a big spender. Bush just did it better. More wasteful spending is likely coming. If any of those neocons get into office, I would predict more job loss in the near future, whether the neocon is a Republican or a Democrat.
        • cranium, on 01/28/2008, -1/+3Clinton was essentially forced to balance the budget, he resisted it strongly at first, but later took full credit for it. At any rate, calling him a "big spender" is in no way similar to what Bush has done, it's way out of control.
          • PeppermintPig, on 01/28/2008, -1/+1Clinton grew defense spending. 100+ billion dollars for the Pentagon alone, if these numbers are accurate. I guess numbers at this level are really just too abstract to debate.

            A balanced budget doesn't automatically address the existing debt. Yes, Bush has spent a whole lot more, but it's still spending. OKAY, Clinton was the lesser evil. Feel any better now?

            Why are people defending irresponsibility?
        • kungfoolou, on 01/28/2008, -1/+2HTF was Clinton a big spender? Sure several billion sounds a lot to the rest of us, but under him, the the federal deficit actually stopped increasing for the first time since before FDR (Hoover's successor). Sure the GOP had this whole "Contract with America" which was, like most campaign promises, a load of horse crap, and a balanced budget was on their to-do list. The White House is always responsible for authoring the budget, the house or senate. Yes, Bill made tons of horrible mistakes in office, but his administration's handling of the country's finances had far better results than any of his 5 most recent predecessors, or his successor.

          Check your facts, and think about relativity of you statements.
          • PeppermintPig, on 01/28/2008, -1/+1Arguing the relative merits of two subjects is fine, but you're using these relative judgments to form an absolute conclusion for the purposes of satiating some kind of 'we did our best' ideal standard for government. Sorry, But I expect more from these people!

            Bush is responsible for more deaths, relatively speaking, so Clinton is a saint? I don't agree with that logic.
          • delafere, on 01/28/2008, -0/+1@PeppermintPig:

            Who are you arguing with then? I don't see anyone claiming sainthood for Clinton. You made the relative claim that "Clinton was a big spender." Others rebut and say big compared to whom? (He's been called "the best Republican president we've had since Eisenhower" by several highly-placed observers.) Then you call people out for claiming he's a saint?
          • PeppermintPig, on 01/28/2008, -0/+1@delafere

            Sure, I pointed out that Clinton was a big spender, but I then provided an actual number of how much he spent. At this point, we could debate whether this spending is justified. From the results, I would say no.

            I could be wrong, but being dugg down as I am, I think there's someone out there that would contest what I'm saying. I'm challenging the notion that the lesser evil is somehow not evil. You may be comfortable with Clinton's deeds. I don't know. He's human, of course, but that goes towards the issue of the structure of the government itself.
  • philforhumanity, on 01/28/2008, -35/+6In my blog, I wrote of several ways how we can truly stimulate the economy. Basically create jobs and income, not just $600 cash back to taxpayers. More jobs and better income will mean consumers spending more than the $600 rebate. And lowering interest rates will have a horrible long term effect. Read more about here if you are interested:
    http://www.philforhumanity.com/Recession_Suggestio ...
    • philforhumanity, on 01/28/2008, -15/+4Actually link: http://www.philforhumanity.com/Recession_Suggestio ...
    • pyrewyrm, on 01/28/2008, -3/+5More jobs? we have one of the lowest job rates in our history.... and the Lower of than a mjority of the western nations.... quite frankly, how can we put more people to work? we're reaching the theoretical point of maximum with inefficiencies and stupidity factored in...
      • PeppermintPig, on 01/28/2008, -5/+5Wealth is not a limited commodity. More jobs can come into being if the government stopped taxing and regulating the market to death.
        • Patrikimo, on 01/28/2008, -2/+6Umm in case you haven't been paying attention, lack of regulation (and stupidity) got us into this mess: There was no regulation in the sub-prime mortgage market and so people took out sub-prime mortgages that they either didn't totally understand or were outright lied to about. The sub-prime mortgages defaulted and the economy went belly up. Mind you I am not apologizing for our deficit spending, but the sub-prime mortgage issue is the bigger thing here and the deficit spending just exacerbated the issue.
          • PeppermintPig, on 01/28/2008, -2/+1What is the interest rate but a regulator on the dollar, which all of these people taking out these debts were using. The government stimulated the incentive of these banks to set frail agreements. The banks want to make money. That's not an attack though, since the vast majority of people want to increase their wealth. My point being that they thought they saw a profit margin there, and then the government went on its merry way spending money it doesn't have, because there's no commodity they need to stay in check with.

            I understand you're not apologizing for deficit spending, but it's important to mention it. And I am not apologizing for the fact that some of these people who took out the loans may have had bad spending habits. But that doesn't explain why so many are living on a paycheck. For that, I still place fault in the government and its attempts to regulate the market to the point that it can barely eke out a gain. One thing is for sure, government intends to grow itself, and greater disparity appears for the citizens.
    • PeppermintPig, on 01/28/2008, -5/+7I am create mor jawbs!! Poof!!!

      It's not that simple, but thanks for playing.
    • netant, on 01/28/2008, -3/+3Dug down for blog-spamming. Dig me down for wasting my time to read it.

      Your suggestions are the same as any knee-jerk Keynesian. Yes, the US should be developing an aggressive energy independence program. But that doesn't really benefit the US if its going to keep invading other countries where some collection of jackasses see fit. It also makes the presumption that alternate energy production is a reality that only needs gov't intervention, like the Hoover Dam. The reality is that it could be the collective lies of a bunch of shills looking to make money by conning it out of the public. Much smarter is to arrange for loans & tax credits that subsidize investment into such ventures, rather than gov't make/work programs. If they work, capitalists will be all over it, like bees to honey. If not, you won't have sucked the life out of the taxpayer to fund make/work programs that fail to break even on investment.

      Desalinization plants are an ecological nightmare that cannot even produce drinking water without burning a chunk of dinosaur. Hell, Saudi Arabia is surrounded on two sides by water, with tons of available sun, and even they can't make it pay off! If you want to be a successful farmer, don't grow produce in droughtland! Stop ravaging the ecosystem so some jerk can make a buck selling soybeans in his patch of desert.

      Gov't investment in research is just pissing away money. Research only produces benefits if the research is well grounded. Otherwise, it is NO different than what happened when venture capitalists threw money at internet startups (which were supposed to make money or build equity) from 1998 to 2001. At a certain point, all the good talent is bought up; you don't make money throwing it at weak talent. Also, most academic programs are already either bought by industry, or the universities try to lock up the research in patents. And investing in basic research only means the Chinese, Japanese, and Europeans have saved some money enjoying the fruit the US toiled to produce. It doesn't build the internal economy. The system needs fixing, before you can believe that throwing money on research programs will have a payoff.

      While I wildly agree that the quick removal of US troops from Iraq will be good for our longterm economic survival, its should never be considered "the solution". The reality is that once the Middle East becomes a free-for-all (which is as substantiated possibility as your wishful thinking), we'll have to spend a lot of money dragging our asses back there to fight, in a disadvantageous position.

      Yes, wild investors and flagrant credit has got us to our crappy economic situation, but you have suggested nothing to fix it. Obviously, new laws have to be put into place to restrict SIVs and CDOs, so banks cannot further speculate beyond their already overextended reserves. Obviously, the law breakers have to be hung, and the stupid speculators have to face the music. (No pain, no gain.) At least after all the Tyco, Worldcom, Adelphia, and Enron fiascos (and dammit, I know I missed one), Sarbanes-Oxley was passed. No one is doing anything legislatively right now for this subprime mortgage fiasco. But note, you have suggested nothing that significantly corrects the way the financial systems operates.

      Everything you suggest is damn near pointless. Even if they would work in the manner you prescribed (which they can't), they are long term solutions, and will do nothing to reverse the current recessionist trend (that's 2008). The Fed Reserve will HAVE to keep pumping more credit, in the precisely harmful way you attribute it to be, because its the ONLY available short term tool to avert a market panic. The sad reality is that the tax rebate is not the worst idea to come out of George Bush Jr.'s mouth. When it passes in January, people will be conned into thinking its enough, the Fed will keep dropping the rate and will be able to stop dropping it in the fall, when the spending stimulus kicks in.

      Phil, stop being an intellectual narcissist. You're closer to moron than bright. You take a bunch of superficial facts, make a bunch on weakly supported conclusions, roll out a bunch of weak, flawed solutions, and now think you can save the US. The problems this country is confronted with right now are apparently much too complex for your limited mental capacity. You can't fix the US economy with the invention of the warp drive, like a freaking Star Trek episode. Star Trek, nor NASA, reflects reality. Stop wasting your time writing in your crappy temple-to-your-ego block, and spend your time learning. Then test out your ideas on people that actually know something, and at least you won't waste the Internet's time anymore.
      • oldhick, on 01/28/2008, -1/+1I only dugg you down because you read that guys BS blog...
  • farnk, on 01/28/2008, -6/+98Every economist will tell you, that the Stimulus Package wont do anything. It should be called a Political Package. Who knows if a package would even exists if it wasn't an election year.
    • TubaTechno, on 01/28/2008, -8/+3Techically it did, they're called tax cuts. It's funny that the dems are now wanting to go with repubs to quickly cut taxes or give "refunds" to "stimulate the economy". They don't they do that anyway? With record government tax revenue, and the lowest unemployment rate in a long time, I'd say the 2-4% tax cuts the middle class got worked rather well.
      • PeppermintPig, on 01/28/2008, -3/+6Not if people cannot keep pace with the rate of inflation.
      • netant, on 01/28/2008, -3/+3They aren't tax cuts. The money you get in 2008, you will have to pay back in the following year.

        A tax cut can only be a positive economic stimulus if it is accompanied by an equivalent revocation of Federal spending to account for it. Otherwise, it is not a tax cut, its a taxpayer subsidized money giveaway. What spending has been cut in 2009?

        The reason why a tax rebate makes sense NOW, is that it is the only tool available to gov't which can avert an economic recession, which cannot happen when the economy is working properly. I guess those tax cuts in 2002-4 didn't really fix any problems, or we wouldn't be seeing a recession today. The problem is you think that cake tastes good, and you can keep stuffing your face with cake, and think all problems can be solved by eating cake, and that you're not a fat, stupid, Republican toad.
        • oldhick, on 01/28/2008, -0/+2The Dems are pushing the stimulus package too my dear friend.
          • netant, on 01/29/2008, -0/+1And they should. The stimulus package is currently not tax cuts. Tax cuts are permanent reductions of revenue collection. Its also NOT a tax cut if there isn't commensurate reduction in gov't spending.

            Its Republican dogma to laud tax cuts as the solution to all economic problems, but they never appear responsible enough to eliminate gov't spending before awarding the tax cut.
    • Matteos, on 01/28/2008, -0/+10Very true. The great government sponsored HDTV buying program of 2008 would not exist if it weren't an election year.
      • ferrofluid, on 01/29/2008, -0/+1Gonna do wonders for the stock prices of WW, BB et al. and keep their shareholders happy.
      • tgc1, on 01/29/2008, -0/+0HDTV buying program!? Are you serious? I've gotta look this up...
        • ferrofluid, on 01/29/2008, -0/+12009 they turn off the analog TV signals, so a good time for people to go buy a shiny new flat panel HDTV
    • samstiles, on 01/28/2008, -1/+3What, you mean like Milton Friedman?

      Whoops! Turns out he'd tell you that it might. But it's not to directly stimulate the economy... it's to avoid a liquidity trap and it's called "helicopter money".

      http://en.wikipedia.org/wiki/Liquidity_trap

      A "stimulus package" is actually a gross misrepresentation of the actual purpose of it.
    • oldhick, on 01/28/2008, -2/+1Actually, most economist would say it will help. I think what you meant to say is that its not a long term solution. Stimulus packages have been effective for many economies in the short term.
      • 1gunners4, on 01/28/2008, -0/+4Yes, this is why The Economist gave the literary equivalent to an eye-roll when opining on the subject.
    • licoricewhip, on 01/28/2008, -0/+1And then what happens when economic woes hit? Blame it on the government, right? So, what to do?
  • heaintheavy, on 01/28/2008, -27/+32The day after the November elections, no matter who wins the presidency, the global markets will go up.
    Bush fiddled while the middle class burned.
    I still want to know what happened in Cheney's "Secret" Energy Task Force meeting.
    Average price at the pump before Bush took office: $1.46
    Now: $3.02
    Well, actually, we do know what happened, don't we?
    • Firehed, on 01/28/2008, -5/+27Rest of the world: ~$8.00+/gal (for quite some time). If gas prices are the only thing that worry you, you should really consider selling your second hummer.
      • defektiv, on 01/28/2008, -3/+8you're not even taking several factors into account. what about consumption? big oil NEVER passes the savings on to the pump. speculation pushes the price of gas (and other petroleum byproducts) up but there is never a compensation down when these speculations turn out to be false or product of a market paranoia.

        i swear sometimes, big oil plays us like idiots.. and some of us validate to them that they are right. it leaves the rest of us with our face in our palms.

        ps. OPEC screws us ALL.
        • netant, on 01/28/2008, -2/+1OPEC is not the problem. OPEC is an ineffective cartel of "light, sweet crude".

          The problem is multinational oil corporations, mostly owned by Americans. Americans are the problem.

          Its not speculation that has been pushing up the price of gas. Its the fact that third-world nations are consuming more oil, yet the oil conglomerates have conveniently decided not to increase refinery capacity, creating an artificial scarcity of usable product.

          So stop being a bigot Arab hater, go look in the mirror, and start hating the real cause of this stupid energy policy.
        • Xenufield, on 01/28/2008, -0/+0"you're not even taking several factors into account. what about consumption? big oil NEVER passes the savings on to the pump."

          Why would they? If I was part of an oligopoly, and the supply would still have such a high demand even at greater prices, I'd be a fiscal moron to not take advantage of it.

          Companies do not exist to help people. they exist to make money by providing goods and services to others at a price determined by factors such as supply and demand. Given that we pay $0.50 or so per gallon of gas as a tax to the government for transit funds, much of which is taken and used outside of its intended area, and that congress wants to raise said tax, I'm not going to sit and point the finger at just big oil.

          How about we tap our billions of barrels of shale oil that would end up at about $70 a barrel on the market? Or ANWAR, offshore, and the gulf of mexico which would be even cheaper oil prices? Then we build some refineries, something we haven't done in over 20 years, and start upping our supply. Who knows, maybe we'll see more companies come into existance, increasing competition, and lowering prices.

          Also, Ask anyone who owns a gas station, and they will tell you that gas prices are mandated. They cannot change the price higher or lower otherwise they risk fines. This also results in much of their profit going to the larger companies, forcing them to rely on other means to make good money, hence the abundance of mini-marts and mechanics at gas stations.
      • TubaTechno, on 01/28/2008, -7/+4Ahh yes. "Big Oil". Their record profits HAS to mean they're ripping us off. There is NO other explanation.

        Haven't taken a finance class yet have you?
      • l00s3r, on 01/28/2008, -1/+4Um, most of that is taxes. What is your point?
      • wattersm, on 01/28/2008, -0/+5Why is gas $3 a gallon? Because people will pay it. Oil prices follow the laws of supply and demand just like everything else, until there's an alternative it's an inelastic demand unfortunately.
      • tgc1, on 01/29/2008, -0/+0This argument again? Oh *****... don't be so ignorant. You know ***** well why it's 3 dollars in the states and why it's 8 dollars in certain other countries.
    • thcobbs, on 01/28/2008, -11/+10** puts on Digg(TM) Conspiracy Theory Hat **

      PEAK OIL!!!!!!!!!
    • rizla420, on 01/28/2008, -2/+2Sure it may rise again after a new pres comes in, but the underlying causes of the problems we face in the financial sector and the greater economy at large will still need to be addressed. If the new pres doesnt do some serious work, they will have a bigger problem to deal with. Sadly, whoever inherits the thrown (Ron Paul as well) will have their work cut out for them. If a recession/depression lasts long enough in their term they're almost gauranteed to not be reelected. If a Dem gets elected, the 2012 election will got to a REP running on a fiscally reponsible platform. All taking into account no further terrorist strikes, etc.
  • arichard, on 01/28/2008, -2/+17"The proposal called for $160 million in tax relief -- only about $22 billion if adjusted against the gross domestic product at the time, and therefore much smaller than the plan under consideration here in 2008."

    Just saying...
    • aigulf, on 01/28/2008, -10/+9that this depression will be even worse?
      • PeppermintPig, on 01/28/2008, -4/+6You are correct. The money they intend to create out of thin air and inject into this economy will overshadow any 'beneficial' effects like lower interest rates or tax cuts. The scale of this stimulus will follow the financial hardship to come.

        Then if a Democrat gets into office, they'll open their playbook to Minimum Wage, and that will put those who are barely surviving on the streets, which will in turn give such a president the incentive to say "See, these people need our leadership, they're suffering. More welfare is needed, and the rich need to account for their debt to society".
        • Xenufield, on 01/28/2008, -0/+0I love the whole 'rich need to do this or that'. It completely ignores that said rich people are the source of jobs, and countless millions of dollars of revenue from everything business to pleasure related.

          A tax cut doesn't simply inject money out of thin air. It takes money that people have earned, and gives it back to them to use as they see fit, rather than steal for government planned use. People often fail to see that tax cuts lead to greater economic strength AND revenue for the government due to increases in payroll tax (businesses can hire more people, and invest in expansion), to increased sales tax. It's not some magical coincidence that Bush's tax cuts have brought us record lows for unemployment, and record highs for tax revenue.

          Oh, and those same tax cuts raised the tax burden % on the richest to its highest in US history. 39% I believe. That means under the Bush tax cuts, which directly helped us in the middle class, the rich pay more of the bill than they did under Clinton's crippling taxes.
    • cambob76, on 01/28/2008, -1/+12More money won't matter if the fundamentals aren't there. It's like throwing a bucket of water on the Hindenburg.
      • netant, on 01/28/2008, -1/+1You're right, the fundamentals are f**ked.

        But stop being so pessimistic. Averting a precipitous crash is not a bad thing, if there are also measures to repair the fundamentals.

        Goddamn, I may as well leap to my death now...
        • ferrofluid, on 01/29/2008, -0/+1Down at the bottom of the social heap, its always boom bust and scraping to make ends meet, seeing the middle classes share some pain is quite amusing actually.
    • Cxan, on 01/28/2008, -0/+5There is also a LOT more people and business now. I wonder what it would be per capita.
    • one2gamble, on 01/28/2008, -0/+2it should be listed as a % of total GDP, the post inflation numbers dont tell you anything of use.
  • thefirelane, on 01/28/2008, -15/+48This is how insanely stupid the stimulus package is:
    Picture the economy is an out of control Train. We all see up ahead that the tracks are ending.
    Bush is a guy that gets up and yells: "I've figure out a way to make the tracks 600 feet longer!"
    • Firehed, on 01/28/2008, -6/+25And in all likelihood actually ends up shortening the tracks by that much.
      • CrazedLeper, on 01/28/2008, -2/+1Good point. The very fact that such a huge liar as bushie has proven to be, the very fact that he's publicly admitting there's a problem probably means he knows it's already too late.
    • datatribe, on 01/28/2008, -0/+6Precisely. (and I voted for him)

      It's not a shortage of money in the hands of consumers or a shortage of jobs - we have so many of those we have Mexicans scarfing up the leftovers.

      It's rooted in a couple of things. 1) The dollar is worthless due to an overabundance. It requires a currency correction to some degree - maybe go back to a precious metal standard or some other commodity. If not that, at the very least the supply problem needs to be addressed - there are way too many fictitious (dollars backed by NOTHING) dollars in circulation. Buying back securities on a planned schedule to gradually increase the value of the dollar might be a better thing for the Fed to do than pump out more nonexistent currency.

      2) people need to have a different attitude about jobs and work. We all have this thought that we need to be plugged into a corporate job (or many of us do) and a large portion of that is driven by the need to pay mortgages and property takes or rent. If the value of the dollar was corrected, oil would be back down to $20 a barrel or so. That would make it once again conceivable to live on $25,000 a year for a small family.

      3) people need to get credit smart. Stop using credit cards for crying out loud. Stop taking loans. Save money till you have what you need to buy what you NEED. Get over the unrequited consumer mentality and stuffitis and this world will be such a better place.

      4) real estate is over priced and always has been. The price of a home should never be more than the value of the materials to construct it. Homes are in a constant state of decay - it makes no earthly sense that they should appreciate in value unless materially upgraded and maintained.

      • Sabarok, on 01/28/2008, -0/+31) This would cause an instant devaluation of the dollar as there isn't enough Gold to maintain their current value. This would be a solution to implement later. There are too many dollars in circulation.
        2) That's really a summary of inflation, and not work attitude. As the price of oil goes up, people need to make more money to buy it. This is inflation. As people lose their jobs and don't have money to buy stuff, the price plummets. This is recession.
        3) Absolutely, and it'll also hurt the economy, but it's a needed hurt. This will greatly reduce spending, which reduces the income that companies make, which leads to layoffs, and so on. The hole has been dug, and the only way out is up.
        4) Location, location, location. People aren't buying a home, they're buying the location. The closer to conveniences, the more valuable the house is. Value is all about what people will pay, and there is a greater demand for better locations. This won't change in a capitalist economy.
  • poopz, on 01/28/2008, -10/+18The point of this article? That the government is powerless to stop our economic decline and we are doomed?

    Yes, that stimulus package was a failure. But does that mean any special economic plan the government lays out is also doomed to failure? It may be worse to just let the economy spiral downwards than do something about it, despite what happened in this particular situation..
    • magoghm, on 01/28/2008, -8/+18Somebody has at least suggested what might be a real recovery plan: http://www.ronpaul2008.com/Prosperity
      • mooseontheloose, on 01/28/2008, -9/+5haha what a kook that guy is hes crazy ok im going back to the obama rally to yell "yes we can" 30 times in a row now thats a real president!
        • magoghm, on 01/28/2008, -2/+3Does Obama have a recovery plan for the economy?
          • mooseontheloose, on 01/28/2008, -6/+5yeah hes for economic change the only one who will make changes. he wants to change the economy for hope
          • magoghm, on 01/28/2008, -2/+6Do you really believe that saying "we'll achieve great things together" is an economic recovery plan?
          • jjmckay, on 01/28/2008, -2/+8LOL nice. :) Magoqhm didn't get your humor but I did! RP2008!!
          • magoghm, on 01/28/2008, -0/+7I wasn't sure if it was humour or for real, so I decided to answer :)
          • known, on 01/28/2008, -1/+21. Stop all imports (for e.g. Chinese products & Indian H1B services) to America (except crude oil ...)
            2. Spend all your cash
            3. Impose fine on people refusing to spend their cash...
            This is a DRAFT. Please do not quote.
        • d03boy, on 01/28/2008, -1/+2Some people are not good at sensing sarcasm... :)
      • NinjaBoy, on 01/28/2008, -7/+2Man i hate to ***** on your parade but he isnt going to get elected.
        • magoghm, on 01/28/2008, -0/+6And what do you think about his recovery plan?
          • Patrikimo, on 01/28/2008, -7/+1It's not realistic. You're not gonna disappear that many jobs and not hurt the economy. Furthermore, reducing tax revenue or gutting the monetary system for one that people stopped believing in 50+ years ago, in a time when we are the least economically sure we have ever been is just going to make things 100 times worse.
          • magoghm, on 01/28/2008, -0/+4I agree that disappearing that many jobs is a problem. On the other hand, reducing tax revenue is an excellent way to increase overall wealth.
          • jeffiek, on 01/28/2008, -0/+2Re: gutting jobs. They had that worry at the end of WWII.

            Proved not to be a problem.
    • rizla420, on 01/28/2008, -2/+3Also note, that they are doing this to prevent a recession. When the numbers come in Q2 we will be "officially" in a recession. These packages and rate cuts take time to trickle down and out. At best, if this is successful (HIGHLY DOUBT), the effects wont be seen until end of 09/beginning of '10
      • netant, on 01/28/2008, -0/+1No, they are doing this to prevent a worldwide market CRASH, which will initiate deflationary cycle.

        Assets drop more in value when the market goes into a tailspin, and drop less when its a prolonged landing. Once the subprime crisis sorts itself out, the world will be able to move out of recession. Its the uncertainty that is shutting down the economy. Once investor can figure out the hit from the subprime defaults, and realize (hopefully) the banking system won't collapse, the losers will go home crying, the US will be rightfully screwed, and economic activity will increase.
    • seadeus, on 01/28/2008, -5/+10It is the government's outsourcing the management of the money supply that has caused the problem, so "just let the economy spiral downwards" ignores the causes and the government's role in those causes. Eliminate the Federal Reserve, that is the only real solution. Ron Paul 2008
      • Sporky023, on 01/28/2008, -3/+5Agreed. The Fed is the most evil thing I have ever heard of in history. It's essentially slaveholding all over again, except there are no whips and chains so no one even knows they're a slave. By the way, the market crash of '29 was deliberately caused by bank owners calling in massive numbers of stock loans, ensuring that the owners would have to all sell on that day.
        • vuke69, on 01/28/2008, -0/+2Hyper-inflate
          Crash the market
          Buy the country at pennies on the dollar

          Synopsis of the Fed playbook.
    • eryximachus, on 01/28/2008, -3/+4Actually, it wasn't a failure. Hoover's programs were virtually identical to those implemented by Roosevelt. Most historians today have something of a favorable opinion of the man.

    • PeppermintPig, on 01/28/2008, -1/+10The problem is that the government IS doing something about it. That's why it's spiraling downward. They've been there the whole time, influencing and nurturing this financial bubble.
    • eyespypro, on 01/28/2008, -0/+2Until Ron Paul eliminates the Fed, and the government backs money with real gold, instead of hot air, this crap will continue. ELIMINATE THE FEDERAL RESERVE, IT'S A PRIVATE BANK DESIGNED TO SUCK OUT THE LIFE OUT OF OUR REPUBLIC. WTF are we doing having them run our money??? Now do you see why we need Paul as president?
  • RP08, on 01/28/2008, -17/+25Five months ago, I was a conspiracy theorist and I didn't know anything about economics when I said, "Hey, the market's collapsing."
    • Daedalus81, on 01/28/2008, -4/+11So, what's the moral of your story?
    • mike17032, on 01/28/2008, -20/+7Good to know some things have not changed.

      LOL, paultards.
      • yodaj007, on 01/29/2008, -0/+1He didn't even say anything about RP. Logical fallacies, much?
    • santaliqueur, on 01/28/2008, -5/+8So? Nobody believed you back then, and nobody does now, because it was a total guess, you admitted not knowing anything.
      • tman84, on 01/28/2008, -0/+5I don't think he was admitting to anything. The general consensus was he didn't know anything for saying the market was gonna crash.
      • kreneskyp, on 01/28/2008, -0/+1it wasn't a total guess. The economic indicators were saying we were in for trouble for a long time. Housing bubble, high inflation, high gas prices, trade deficit, budget deficit, drop in real wages, etc, etc. Didn't take a genius to realize we weren't really doing well.

        Everyone who said the economy was doing well before was using a top-down measurement. The rich were still getting rich even though the middle class and poor were starting to get fcked. The rich are always the last to suffer, thats why you measure from the bottom-up.
    • sgiffy, on 01/28/2008, -7/+1You still are.
    • Patrikimo, on 01/28/2008, -6/+2You'd have to be a moron to not see the sub-prime collapse 5 years ago. That doesn't make you a fortune teller. Claiming X is gonna end if you don't do exactly Y does, however make it look like you wear a tin foil hat though. It's not collapsing, it's recessing and the gold standard won't fix it, sorry.
      • kreneskyp, on 01/28/2008, -0/+1he didn't say anything about the gold standard or any other solution. And i would qualify a recession as collapsing, more specifically the beginning of the collapse. The only real difference between a depression and recession is how far the economy falls. The economy is still going down and we don't know how bad it will get.

        Inflation is still very bad. Gas prices are still rising, and are expected to hit $4 by the summer. Unlike our last recession there will be no cheap gas (less than 1 dollar a gallon when we got out of the recession in the 80s) to help us out this time. China and india will buy up any oil that we don't preventing oil prices from dropping. In the 80's the US was the only big consumer of oil so our demand, or lack thereof, set the market.
    • CrazedLeper, on 01/28/2008, -1/+1I feel your pain. I have vowed to proudly wear my tin foil helmet wherever I go because it seems to keep the stupidity out. All the "sane" people seem to be the same one's who get marched into unjustified wars, crises and deception after deception and never realize how it keeps happening.
    • d03boy, on 01/28/2008, -1/+6Why does everyone suck at detecting sarcasm? He's trying to say he's not a conspiracy theorist and you guys are dumb for calling him one. This is a real problem and you need to stop being ignorant.
    • Xenufield, on 01/28/2008, -0/+05 months ago Glenn Beck had been giving irrefutable evidence of economic problems for several months, if not longer.

      See: Menu of Pain
  • alwshiloh, on 01/28/2008, -8/+1"Michael Kitchen is a copy editor for MarketWatch and is based in New York."
  • zacharytelschow, on 01/28/2008, -18/+42I hate to be the one to break it to you, but the sky isn't falling. The economy isn't in super shape right now, and I think we all know that, but drawing parallels to 1929 is foolish. There will be a moderate slowdown for the next 6-12 months, and anyone making predictions after that is looking into a crystal ball. Have some confidence in what capitalism has done for our country, and write your congressmen to make sure the government doesn't meddle and make things worse.
    • magoghm, on 01/28/2008, -6/+15Don't be an ostrich and stick your head in the sand. Have you seen the price of gold? Take a look: http://goldprice.org/
      Last tuesday, gold was at $860 USD. Right now it is at $926 USD.
      • Locke2053, on 01/28/2008, -2/+1Great. After the housing bubble comes the Gold Bubble. At least you can live in a house when the value drops. Gold doesn't do crap.

        Once everyday suckers start making astute observations like magoghm's, such as "gold went up recently so obviously it will keep going up for-ev-ah!" then you know the bubble will come to an end soon.
        • magoghm, on 01/28/2008, -1/+3I find it hard to believe someone can make such a stupid comment. Gold went up because people expect the dollar to go down with the Fed's increase of the money supply. Do you realize that all those who bought gold last tuesday have earned almost 8% (in dollars) on their investment in less than a week?
          While the President's Working Group on Financial Markets (the Plunge Protection Team) keeps trying to "save" Wall Street, gold will stay and excellent investment.
          • Locke2053, on 01/28/2008, -1/+1If you use recent price action to justify investment, you have no business investing. That exact same strategy can be used to justify buying into every bubble in history. Do you plan to sell when the price comes down 8%? Did you buy tech stocks when they went up 8% in a week?

            Also, no currency falls forever. The exchange rates fluctuate. If your investment plan assumes such a trend will continue indefinitely, you are going to eventually learn a lesson in investing the hard way.
          • magoghm, on 01/28/2008, -0/+1"If you use recent price action to justify investment, you have no business investing. "
            Did you read this thread? My initial comment about the price of gold wasn't "you should buy gold". It's meaning was: people are expecting the value of the dollar to drop.
          • Locke2053, on 01/29/2008, -0/+2Apologies if I misinterpreted you. Digg is overrun with the Pualistinian Gold Bugs and sometimes coherent thought gets lost in their noise.
      • magoghm, on 01/28/2008, -0/+2Right now, gold is at 927.88 dollars, and 627.63 euros. That gives you an exchange rate of 927.88/627.63 = 1.478 dollars for one euro. But today, gold has gone up 7.38 dollars and only 0.42 euros. Do you understand what that means? That's a rate of 17.57 dollars for one euro! It means that the dollar is falling very fast against the euro, and that's very bad news, especially if you take into account that the euro hasn't been doing very well lately.
      • magoghm, on 01/28/2008, -0/+1"Great. After the housing bubble comes the Gold Bubble. At least you can live in a house when the value drops. Gold doesn't do crap." Investment-wise, gold is much easier to exchange for cash. Furthermore, if you need the cash right away you're going to take a huge hit when you sell the house (and it will still take much longer than just exchanging the gold for cash).
      • Hangly, on 01/29/2008, -0/+1I sold my gold at $360/oz. back in 2000 and felt like a really clever fellow.
    • rizla420, on 01/28/2008, -3/+4I agree with you, what we're seeing now is not the inevitable downfall of the US system, but it is a harbinger of what is to come if we do not take a SERIOUS concerted and often painful look at the state of our economy and financial institutions. Tough decisions will HAVE to be made to rectify the problems. Specifically we have to either RAISE taxes to offset some of our federal debt or CUT spending specifically to our welfare/social programs that includes heavy subsidies of corporate interests.

      Lastly, to fundamentally fix one of the biggest problems facing the US we need to impose some sort of tarriffs in order to revive our manufacturing industries. Big Biz will shun this because they will complain about profits, but in order to strenghten the well beign of the nation EVERYONE has to make sacrifices. Ultimately that is what will be the biggest thing we need to do. We have not seen, in my lifetime (im 27), the cost of true sacrifice. We've been living it up for quite some time and its given us this pseudo sense of prosperity. THe bill will be due soon and its going to require prudence.
      • magoghm, on 01/28/2008, -3/+4Raising taxes takes wealth away from the economic system. It doesn't go to the government, it just disappears. Check any introductory text book on economics, for instance http://www.amazon.com/exec/obidos/ASIN/0030259517/ ...
      • rizla420, on 01/28/2008, -0/+1I agree with you, but overall if the system worked properly taxes would be beneficial to paying down our deficit. Alas, higher taxes dont usually yield better results. I, in no way advocate raising taxes. Its just one of side of the coin when it comes to making tough decisions
      • rroeserr, on 01/28/2008, -0/+1Protective tariffs are one of the major reasons for the Great Depression. Smoot-Hawley Tariff Act created tariffs and it led to a international trade war.
      • rizla420, on 01/28/2008, -0/+1How else do we stem the flow of manufacturing jobs over seas? dont say educating the population to do higher skilled jobs, becuase as we all know education is f'ed right now. You'd basically have to start now and then wait 18+ years before the newly educated youngins could have a chance. No Child left behind is only making it worse.
      • netant, on 01/28/2008, -0/+1Ever hear of Smoot-Hawley, dumbass?
    • PeppermintPig, on 01/28/2008, -1/+6Government will do what it can to prolong the visibility of market sign moments of a breaking point that would cause a depression. Their policies are the cause.
    • suzywang3000, on 01/28/2008, -0/+5"The economy isn't in super shape right now, and I think we all know that, but drawing parallels to 1929 is foolish."

      ***********

      "We can thus conclude that the banking system is far from being in healthy shape as suggested by Greenspan, but on the contrary it is very vulnerable to a sudden weakening in economic activity.

      Also, contrary to Greenspan's view, the banking system is not well positioned to expand credit since there is very little savings left. Any further bank credit expansion means an expansion of credit out of thin air. Obviously, this type of credit expansion will only further undermine the health of the economy and ultimately the bank's own health.

      In fact, since a large chunk of credit was created out of "thin air" there is high likelihood that it will evaporate back into "thin air." It seems to us that against the background of rapidly deteriorating real fundamentals the Fed will be forced in the not too distant future to reverse its stance, thus setting in motion the inevitable liquidation of various artificial forms of life that currently comprise bank balance sheets."

      http://www.mises.org/article.aspx?Id=1480

      you create new account now, k?

      • zacharytelschow, on 01/28/2008, -4/+1Its really quite amazing that you believe citing a quote from an article which constitutes nothing more than an opinion proves some irrefutable point. Its also kind of funny that the only original content you created isn't a complete sentence.
        • suzywang3000, on 01/28/2008, -0/+2here is another "opinion" for you:

          Question 9: In Chapter 9 you state that “The over-indebted American economy has entered a recession that is likely to be as extreme and prolonged as the economic boom that preceded it.” These are very strong words. Do you really feel that a strong recession is inevitable and if so why?

          Answer: Economic cycles generally exhibit a considerable degree of symmetry. Big booms are generally followed by big busts. The excesses of the 1980s and 1990s were unlike anything witnessed since The Roaring Twenties. The savings rate of the public has fallen to the lowest levels every recorded. A rapidly inflating property bubble has enabled American consumers to extract huge amounts of equity from their homes so that they can continue living beyond their means. When interest rates bottom, home prices will stop rising, equity extraction will cease, consumption will fall and the second phase of the New Paradigm Recession will begin.

          http://www.business-in-asia.com/books/dollar_crisi ...
        • praxisseizure, on 01/29/2008, -0/+1Yeah man, suzy's got it. There need not be much investigation into the forex markets to see overall, this country's overvalued wealth is evaporating just as quickly as it was created out of thin air. Suggesting more thin air money will stop evaporation of ... thin air, is pretty ludicrous. Also insulting one's unimpeccable grammar and sentence structure has become popular only to those with no point or rebuttal to an argument.
          • zacharytelschow, on 01/29/2008, -0/+1Suzy cited someone's opinion without also citing the facts that led up to that conclusion. I happen to disagree. Yes, homes are overvalued and the stock market is probably too high, but the massive crash that continues to be predicted is very unlikely.
    • Hangly, on 01/29/2008, -0/+3The sky wasn't falling in 1929 either. Even if there is ever 30% unemployment again the sky will remain intact.
  • hokie47, on 01/28/2008, -6/+71I can't wait to blow my $600 on Destiny at my local strip club.
    • santaliqueur, on 01/28/2008, -0/+10Fitting name for that dancer.
    • NJank, on 01/28/2008, -1/+13While your enjoying your lapdance, just be sure to ask her to buy something instead of paying down debt or putting it in the bank. need to generate some churn in the economy. none of this personal fiscal responsibility nonsense!
      • hmmmok, on 01/28/2008, -0/+4Where have you been -- she's saving up for college... They all are.
      • userperson, on 01/29/2008, -0/+1He wants to generate some churn alright!
    • active1x0, on 01/28/2008, -1/+18Pouring that money back into the economy like a real man. I'm going to buy an immigrant worker with my $600.
    • Sporky023, on 01/28/2008, -0/+2I'm glad everyone else will be shouldering the responsibility of spending their $600. I'm going to pay down one of my credit cards with mine, effectively lowering the GDP of this country. A special thanks to those who keep this country running by purchasing junk, so I don't have to
    • lhbaker, on 01/28/2008, -0/+6I think I'll buy a good generator.
      • kreneskyp, on 01/28/2008, -0/+4and then take out a mortgage to pay for the gas to keep it going.

        unless you meant wind generator, then by all means carry on.
    • MysticSavage, on 01/28/2008, -0/+9For $600, Destiny better blow you.
      • vuke69, on 01/28/2008, -0/+7For $600 she better suck so hard it makes your ears pop.
    • Namakemono, on 01/28/2008, -0/+6Wait, who's doing the blowing? You or Destiny?
    • GreenGrassyNoel, on 01/28/2008, -1/+4Who will in turn buy stuff made in china.
    • CrazedLeper, on 01/28/2008, -6/+2Only a true loser would invest money in a woman who only teases him. Maybe if you stop doing that, women you can touch without being punched in the face, will start letting you near them again.
      • mugicha, on 01/28/2008, -0/+3You've obviously never had a good lap dance.
      • userperson, on 01/29/2008, -0/+2At least it's an honest 'relationship'.
  • Aidenf77, on 01/28/2008, -2/+25This tax "relief" is only going to further exacerbate our already wildly out of control monetary system. Sure, that, along with lower interest rates, might make it easier for those who got themselves in over their heads to get along for another few weeks/months... but the inevitable is coming. Interest rates HAVE to increase to offset the inflation caused by so many unbacked dollars being literally produced out of thin air, and $600 barely scrapes the surface of my monthly bills. Don't get me wrong, any unanticipated tax breaks or extra money in my account is a good thing, but it's only a temporary band-aid fix that isn't addressing the real underlying issues.
    • Sporky023, on 01/28/2008, -0/+9agreed. It's like giving a gram of coke to a coke addict. You relieve his suffering for exactly one day.
      • NinjaBoy, on 01/28/2008, -0/+5for a day? ***** a gram would only last me a few hours...

        /Thinks government should sell coke to fix the economy
        • vuke69, on 01/28/2008, -0/+5"/Thinks government should sell coke to fix the economy"

          The CIA hates competition.
    • BESTenemy, on 01/28/2008, -0/+10Light the man a fire and he'll be warm for the night. Light the man on fire and he'll be warm for the rest of his life.
    • simg, on 01/28/2008, -0/+1How do you address the underlying issues ?
      • Aidenf77, on 01/28/2008, -0/+2Monetary reform for one, which should include a more limited government authority over the monetary systems of this country. A return to the Gold Standard might be impractical, but something along those lines which would actually force accountability and make those in control who would hyper-inflate for their own benefit more responsible and grounded. Then there's the issue of irresponsible consumers who don't understand that you can't just buy everything today on tomorrow's dollar without doing some damage to tomorrow's economy. The list could go on and on...
    • Hangly, on 01/29/2008, -0/+1What exactly will lowering interest rates do at this point? I really don't think the public is capable of borrowing much more than it has already.
  • Joomal, on 01/28/2008, -11/+16Bush. The American people voted him in, the American people will feel his wrath. This time you just can't blame Canada!
  • sizzzzlerz, on 01/28/2008, -12/+21Remember from your American history class, how the shanty towns that sprung up during the depression were called Hoovervilles? I plan to copyright the term Bushville for today's version.

    Oh, wait, that name has already been used. Its called New Orleans.
    • pyrewyrm, on 01/28/2008, -8/+10No... New Orleans was a crap hole... all the hurricane did was spread the crap around.
      • Aidenf77, on 01/28/2008, -3/+2Yeah, because building part of the city several feet below sea-level on a seaboard that is especially prone to hurricanes was pure brilliance in city planning and infrastructure right? Now that's crap!
        • reddikilowatt, on 01/28/2008, -2/+3That's the kind of thinking that comes from the government. Just build levees with public money, put poor/low middle class housing in the bowl and watch what happens.

          Imagine if the people who put the houses in the bowl had to pay for the levee construction, instead of spreading it around the country? Only the rich could afford to build there, and they won't bother, instead moving inland. Same thing with flood insurance.
    • lhbaker, on 01/28/2008, -0/+5Why not Georgetown?
    • Xenufield, on 01/28/2008, -2/+0So how is it Bush's fault that the Leeves broke, and that the NO mayor is an incompetent putz that not only waited too long to order an evacutation, but left dozens, if not hundreds of buses unused for said evacuation?

      Please get your BDS checked out before it becomes more severe.
  • magoghm, on 01/28/2008, -11/+15The Federal Reserve is like a firefighter that has two tools to control a fire to save the people in a building that's on fire: he can remove all the air and stop the fire (and kill everybody in the building at the same time), or he can pour gasoline on the fire. Right now it has chosen to pour more gasoline on the fire.
    On top of that, it is a firefighter that likes to keep secret what it is going to do right until the last minute. So the people in the burning building can't make an informed decision on what would be their best strategy to get out of there alive.
  • smacksaw, on 01/28/2008, -11/+5Well there's your problem right there, son. Relying on the captains of industry, bankers and politicians to fix the economy.

    Why do we let these people run the economy again? If they let things go into the crapper they know they aren't going to get control back from the people. That's why I don't think there will be a crash and mass unemployment.
    • pyrewyrm, on 01/28/2008, -7/+0What captains of industry? The Oil CEOs? What robber barons are in charge now? WHY can't you people realize that this is a largely FREE market and it will go up.... and Down. the fed can't stop that entirely and the constant consumer pessimism only makes the cycles more pronounced...
      • silikon2, on 01/28/2008, -4/+1>WHY can't you people realize that this is a largely FREE market
        Because paranoia makes people feel so much more important than being a tiny cog in a massive populace/economy?
      • PeppermintPig, on 01/28/2008, -1/+2Politicians, and to a lesser extent bankers, unless we're talking about the Federal Reserve, which is right up there with politicians in terms of corruption and general scummyness, may rightfully be blamed for their part in this situation. smacksaw appears to have a chip on his shoulder about business owners, however, and seems to suggest that there is some other group of people that we could possibly rely on to fix this situation. Well, in a sense he is correct, but I'm not sure he's thought it all out.

        As for your suggestion that this is a free market, I have to argue that point. This is only a free market to the extent that people can operate free from regulation and taxation. FRN's only compound the problem since they're mandated to be accepted for debts and do not have a reliable value. Saving your money in a bank is not enough to beat out inflation in order to grow your wealth.

        They say we don't actually own the FRN dollars, we just possess them... so how is it legal to force people to take on the debt of others?
      • reddikilowatt, on 01/28/2008, -0/+1The new "captains of industry" are the wall st. guys running your 401(k). If they don't get 20% return, they kill the company by drying up the capital. The main reason they want a 20% return is because you can move your money around so easily. Since we look at our investment portfolio like sausage (don't look at how it's made, just buy and enjoy it), we are just as much to blame for this mess
    • rizla420, on 01/28/2008, -0/+1Agreed, they do not care (for the most part, not all) for the common joe. They see a person lot in life as their fault for not making better decisions and are thusly reaping what they failed to have sowed. I partially agree with it, but theres more to it than that.
    • Sporky023, on 01/28/2008, -0/+3@smacksaw: Wrong. If you make the people you are ruling unemployed and broke, you remove their ability to do anything against you. Shall I remind you that money is power?
    • COinOR, on 01/28/2008, -0/+1you mean, as opposed to the "government" running the economy?
  • dupswapdrop, on 01/28/2008, -9/+5A market collapse is just what the big boys want! The republicans have been trying for many years to bring back the great depression of the 30's, this way their money and assets are worth more and labor and commodities are worth less. Remember to buy guns and butter today!
    • slvrbullet87, on 01/28/2008, -4/+1What an amazing theory. My guess is your in the paint eating business.
  • active1x0, on 01/28/2008, -12/+24How exactly does our economy crash when the GDP is still rising and unemployment is 5%? Apparently economics is just a fad, the market will do whatever the media tells it to, right?
    • pyrewyrm, on 01/28/2008, -8/+6A-fscking-men.
    • sgiffy, on 01/28/2008, -5/+1Exactly. We are probably going have slow down as consumer spending trials off as people pay down debt and credit becomes harder to get. Many states and the federal government will likely have to cut some spending and people will probably suffer a bit.

      But like most recessions it won't be too bad and we will recover. Thats actually the beauty of inflation when it comes to debt, it makes it less onerous as time goes on.
    • provost, on 01/28/2008, -4/+13because you aren't able to see the greater dynamics of the economy beyond econ 101.

      The US is not a production economy anymore it is a service economy which will put us into a 3rd world status eventually even though technically we already are. Have you seen the number of foreclosures this year? have you seen the stats for next year? Have you seen the credit debt to income ratio of the average household recently? Have you seen the negative savings rate recently?
      These and more add up to travesty over time... and that time is almost at hand. Whether you like it or not, the middle class is the backbone of this country and when they are feeling the crunch, regardless of how larger corporations and stockholders are doing, then the economy will begin to fail.
      Having a lot of fiat money doesn't do ***** for inflation and the real value of the dollar. The country's debt is virtually beyond repair. We are in trouble.
      • tgc1, on 01/29/2008, -0/+3Couldn't have said it better myself. Well said.
      • dupswapdrop, on 01/29/2008, -0/+1What ever you do don't sell that cow! That's the last line in a service economy!
    • jjmckay, on 01/28/2008, -2/+9IMO, the economy is going to crash because of the weak dollar and unprecedented federal govt debt levels. Both of these are caused by a failed foreign policy that dates back decades all the way to the 1940s. The recession is caused by government action in the first place, and now they are trying to patch it with a band aid. It's no real fix.
      • zeromous, on 01/28/2008, -0/+3Im not sure if you realize but the lower dollar is what will allow exports to rise.

        This happened in Canada through the 90s and while everyone was up in arms over a 60c USD Canadian Dollar, we survived and even got to make some cars in the process for you crazy americans.
        • provost, on 01/28/2008, -1/+5exports to rise? what exports? you mean the systematic strip mining of the country? This country went from the largest debtor in the world and the largest importer of raw materials in the world before reagan, to now the largest borrower in the world and the largest exporter of raw materials.

          This means that we went from bringing in materials and shipping out products to borrowing money to stay afloat while at the same time selling off all of our natural resources

          this is the definition of a third world country. This can only last until it costs more to extract resources than we get back from selling them. Then what.. ? stay tuned.
          • zeromous, on 01/29/2008, -0/+1No, Canada's manufacturing sector died in the 80s, and was resurrected by a 63c dollar. Now its suffering again!!!!! WIden your perspective and look at how transient manufacturing really is.

            It means once again you will be able to compete with workers globally, unfortunately it does result in some pains. No one died, profitable small businesses survived or thrived and bad business fails.

            A low dollar isn't the end of the world. All I'm saying is Canada has been there, done that, and we are doing relatively great!
          • zeromous, on 01/29/2008, -0/+1Oh and where do you get the US is now the biggest exporter of raw materials (or even a larger one)?

            Canada and Russia are. you import our shale, oil, logs and WATER. I watched the lake at my cottage get drained so one of your stupid corporations could have WATER.

            You are so factually incorrect I can't believe you are +5 diggs.
        • davidlow, on 01/28/2008, -0/+4Exports will only rise if we have something to export. I'm in the manufacturing business and my company actually makes things and then exports them, but there's very little of that left.

          Think of your friends and what they do. Think of only your non-business acquaintances to keep it less biased. How many of them will benefit from exporting?

          My own friends include a physical therapist, a guy who imports hammocks, a girl who works for Google, a wholesale baker (whose ingredients are almost definitely made domestically with government subsidies instead of a healthy and competitive industry), a doorman, a banker, a politician, a restaurateur (see my comment about the baker), a music promoter, a college P.R. man, a graphic designer, a fashion designer, a landlord, etc.

          These are the people we're talking about, not some hypothetically competitive car manufacturer or furniture company.

          The things that you buy, which are made overseas, are paid for with money that you make working for a company that provides a service to people who also provide a service to other people. Can you visualize the stream of cash flying eastward over our heads and across the ocean?
        • PeppermintPig, on 01/28/2008, -1/+2Well, know that when we have inflation, the price of goods tends to rise in relation to the cost of production... there's a lag time, but it doesn't take too long for various markets to react. There's very little about a weak dollar that would actually improve the chance of exporting goods.
          • zeromous, on 01/29/2008, -0/+1Hey Im just talking about hat happened in Canada over the past 20 years.
      • Locke2053, on 01/28/2008, -1/+1A big debt from fixed-coupon bonds + inflation = less debt.

        Learn math.
        • davidlow, on 01/28/2008, -0/+2A big debt from an INCREASING NUMBER of fixed-coupon bonds + inflation = a bigger debt.
      • tgc1, on 01/29/2008, -0/+1Better to pull out then and stop pissing away your money trying to hold up other countries? Ah who am I kidding. Nobody has that kind of common sense.
    • molecool, on 01/28/2008, -0/+5The GDP numbers are tweaked, that's why. Also, another reason why the GDP and the stock market are rising is because the dollar keeps losing value, thus prices/cost/revenue goes up. Remember, it doesn't matter how many dollars you have - what matters is what each of those dollars buys you.
    • dupswapdrop, on 01/28/2008, -0/+2If you believe the GDP numbers I have a condo in Fla. with your name on it!
  • krnldmp, on 01/28/2008, -2/+9Dow Jones owns Marketwatch, and Newscorp owns Dow Jones. This article suggests nothing in the end, but speech writers for high level politicians and Fox news commentators are reading your responses and readying some thoughts for you.
  • pyrewyrm, on 01/28/2008, -2/+7Wow.... what is being offered today, the level of taxes, the job rate, the stock market position..... Well pretty much the whole D*mn situation is SO VERY DIFFERENT..... did anybody here buying into this crap stay awake through one decent history class? I mean really... Did you? And I expect more from the 'tard who wrote this but let's face it, the pressure is one him to sell copies of his publication or adspace... not to be an accurate forecaster.

    How about reading alittle more about history... maybe studying the works of John Kenneth Galbraith would be a good place to start... assuming you didn't also sleep through economics.
  • republicker, on 01/28/2008, -13/+12Borrow money from china, give it to Americans to purchase Chinese products. LOL We're bankrupt, plain and simple. America is a dying whore.
    • provost, on 01/28/2008, -3/+2you had me until you called my country a whore, you *****. Just because a few generations sold the economy out for their own gain, doesn't mean America is to blame.
  • Shivetya, on 01/28/2008, -9/+10Any real stimulus package would have included tax cuts, let alone making the temporary ones we have now permanent.

    this is just a feel good vote buying scheme... nothing more.
    • Sporky023, on 01/28/2008, -5/+3Shivetya, did you know the US government is more likely to buy domestic goods than the average American consumer? Did you know the government spends the money it has? Are you able to infer from these two facts that tax cuts ensure more of our currency gets spent on imports? Go to an intro econ book and look up the term "multiplier effect", decide whether what you read there makes sense, and then revise your beliefs accordingly please.
  • peticsu, on 01/28/2008, -9/+2I love seeing the people bashing politicians and everyone in close contact with the economy but no one on here has any clue on how to prevent this. Makes me feel like you are waiting for this to happen just to use this as a political gain over the current administration. This is supposed to be temporary, lasting for a couple of weeks until the previous rate cuts start to come in. It takes a good 2-3 months from the cut-rates to trickle down...

    you are all reacting to the situation, not trying to prevent it.
    • magoghm, on 01/28/2008, -0/+2Do you realize that in the same time frame there's going to be inflation?
      • peticsu, on 01/28/2008, -3/+0do you realize you will have money in your pocket to spend?

        I know this is the internet and Ron Paul reigns supreme but he wont "save America" if you have this attitude towards the economy.
        Keep demoralizing everyone about the economy...thats what you want, everyone to suffer because you want a political gain out of it.
        • magoghm, on 01/28/2008, -0/+2No. I just believe it is unwise to have anybody fooling around so easily with the money supply.
    • PinkTacoDigger, on 01/28/2008, -0/+5A stimulus package is crap to begin with. Ever heard of the phrase "Don't piss on me and tell me it's raining."? That trickle you feel isn't the wealth flowing down form the rich, it's piss.
    • NJank, on 01/28/2008, -0/+2the government doesn't run the economy. The package cannot fix the economy. The governments only job is to apply a little pressure (unfortunately a system inefficiency) to dampen (or slow down) the swings that are bound to happen. Because of all the upswings over the past few decades, the government has loosened their restraints to allow the upswing to carry as far as it can. Unfortunately, that also loosened the restraint on any downswings, one of which we are plowing headlong into. Now it has momentum, any application of restraint will be slow to act and has to work against this momentum, thus making it less effective than it could have been.

      The government cannot change the economic picture. It can try to effect it, and trends over time can influence it, but nothing they do will change where we're going in the next 12 months.
  • jmpeagle, on 01/28/2008, -16/+14you know who else cut taxes....Hitler...just saying
    • slvrbullet87, on 01/28/2008, -1/+11You know who else was big on tax cuts? The founding fathers, in fact they faught a war over taxes
      • PeppermintPig, on 01/28/2008, -0/+3To put it simply, it is the difference between opposing all taxes and supporting less taxes. If you support less taxes, you still support taxes.

        Founding fathers weren't living with the income tax. They opposed what they considered to be unfair taxes and had the means to overthrow their masters. If only we had such a luxury of good timing and support for liberty.
    • strafefire, on 01/28/2008, -3/+2Why are you being dugg down? You are right.
    • userperson, on 01/29/2008, -0/+1Excellent Chewbaca Defense!
  • magoghm, on 01/28/2008, -5/+12Don't worry. John McCain will fix the problem. He will bomb the rest of the world, which will improve the weather over the United States and provide some sunshine :)
    • freezeout, on 01/28/2008, -1/+2no, he will bomb certain parts of the world and take their oil, making us very rich in the process (at least in theory, these things don't always work out)
  • Narrator, on 01/28/2008, -5/+7This won't be like the great depression because, thanks to the wonders of mortgage securitization, it's all the foreign banks and hedge funds who have all the bad debts. We did a royal screw job on the rest o' the world's financial system. What's puzzling is that the domestic banks are still lending even though securitization is dead which means they must be drinking their own kool-aid to put all that junk on the books. Yeah it's not sub-prime anymore but RE is still way overvalued IMHO. That, and we're not stupid enough to raise import tariffs after what happened when we did that last time.
    • seadeus, on 01/28/2008, -0/+3The U.S. relied on import tariffs for vast majority of our history to fund the federal government. Any suggestion it cannot work is nothing more than "sky is falling" chicken little material. Governments do not cause trade wars when their funding is determined by trade. That is a historical fact. Do facts matter anymore?
      • sgiffy, on 01/28/2008, -0/+1The vast majority of our history was mostly agrarian.
    • netant, on 01/28/2008, -0/+1No, its also domestic pension plans and 401k mutual funds.

      And even if it were only foreigners and the greedy, it will still trigger an economic shutdown when they scream bloody murder.
  • PinkTacoDigger, on 01/28/2008, -3/+3Ahh.. like Bush, Cheney and everyone else with their kind of money really gives a crap. This won't really affect them, they'll still have money and will be warm asleep if people go unemployed. The Bush twins are "unemployed", have never held a real job and are better off than 99% of most Americans. The only thing the rich learned from the Great Depression was how to better hide their money from the masses. I don't see why so many proclaimed Republicans have stood by so idly while the country goes further into debt.
    • pyrewyrm, on 01/28/2008, -2/+4Boo hoo hoo.... their grand daddies were hard working people would made alot of money and passed it on to their kids so now their grand kids are living high and its not fair! waaaaaaa!
      Grow up and cut the class warfare crap..
      • PeppermintPig, on 01/28/2008, -0/+1One could argue theirs is illegitimate wealth. Whatever the case, class warfare is *****, victim mentality whining. That doesn't mean there isn't a problem with retiring boomers losing their shirts due to inflation. Is there disparity? Of course. The question is whether or not people are going bankrupt due to their own bad decisions, or the actions of unaccountable bureaucrats and politicians who sit pretty and don't respond to market forces like normal people.
      • netant, on 01/28/2008, -0/+1Stop being the porch negro. "Oh, massa knows best." "Oh, I could own this plantation if I only wasn't a shifless negro..."
    • slvrbullet87, on 01/28/2008, -0/+3And what exactly does Chelsea Clinton do for money?

      Please say blowjobs
      • SigmundDali, on 01/28/2008, -0/+1Actually... (Unfortunately?)

        She works at Avenue Capital, a hedge fund... So while you tried to take a cheap shot at Chelsea for her perceived lack of activity, she's actually a hard working professional who probably earns three times what you do in a year. I just wish it wasn't working for a hedge fund, as she now has partial responsibility for our current crisis.

        Jackass.
  • TTURabble, on 01/28/2008, -5/+3***** that, they need to "stimulate" the economy more often and give me more of my Tax Money back. You can say it won't fix anything all you want but thats still money in the bank for me, but I guess if you really don't want the money you can send me your check.

    Honestly I don't see what the big deal is, markets will correct themselves, every up has its down. When there is more money at stake the gains are greater, but so are the losses. I think part of the whole "MARKETS ARE COLLAPSING OMGROFLCOPTERBBQ" ***** the media is feeding us is made up just for headlines. But, if you really believe that your dollars are going to be worthless in 2 weeks I would advise you to take the hit and convert your paycheck to euros. Whats that? you aren't going to do that? well then sit down and shutup.

    If the government collapses, good great grand, I thought half you people hated America anyway...the solution, of course, is to move to mexico and stand outside the "Casa Depósito" looking for day laborer work. Why not start today?
    • PeppermintPig, on 01/28/2008, -0/+1Less taxes. Stop taxing the poor. These things would be more efficient for the money.
    • netant, on 01/28/2008, -0/+1Because Mexico won't let you move in and take jobs away from the local laborers. Mexico enforces its national sovereignty and immigration policies..
  • Treoinmypocket, on 01/28/2008, -2/+21Wow. Did this author get paid for writing that?

    Summary - in 1929 there was a stimulus package. I'm not going to bother to tell you the details except to say there were tax cuts (ppppst that's what Republicans are talking about!!) and well I'll sweep all the public-works projects & wage raising details under the rug (because that's what the Democrats are proposing and I don't want you to think they could be wrong).

    Oh yeah...and the fundamentals of the American economy don't look anything like they did in 1929.

    But yeah. We've tried stimulus and TAX CUTS before and it DIDN'T WORK!!

    What a useless article.

    Anybody with a brain knows the stimulus package is ***** and will only put us further in debt. And if Bush was a true conservative Republican he would never suggest it. If it got to his desk anyway he would veto it.

    But Bush is neither Republican nor conservative.
    • slvrbullet87, on 01/28/2008, -1/+2Bush's last tax cuts did alot of good. They helped the middle class, hence the housing boom. Does anybody remember abou 16 months ago when we had the best housing market on record? Obiously it had to come back down, it isnt a crash it is just a downturn.
      • Treoinmypocket, on 01/28/2008, -0/+3The tax cut was the only thing Bush has done in his Presidency that was even remotely conservative.
    • chicofaraby, on 01/28/2008, -2/+1"Bush is neither Republican nor conservative"

      He was both in 2004. What happened?
      • Treoinmypocket, on 01/28/2008, -1/+1I'd like to know.
        • chicofaraby, on 01/29/2008, -0/+1What happened is his results arrived and they suck. Just like Reagan's numbers. At the end of the day, the right wing philosophy of giving the national treasury away to the rich and corporate fails AGAIN. It always has. It always will. 1893, 1929, 1987, 2008.... The philosophy of greed is crap.
    • Richandler, on 01/30/2008, -0/+1Actually the last tax cuts worked well. However, someone forgot to cut spending and as a result inflation is having fun with our econom. And the economy is still fundementally the same as it was in 1929. Economics doesn't just change because years have passed the system is still the same except for all the new regulation put in place that were supposed to safeguard things but ultimately have don't nothing but piss people off.
  • theskyman, on 01/28/2008, -2/+19A summary of what caused the Great Depression.

    Mass speculation went on throughout the late 1920's. In 1929 alone, a record volume of 1,124,800,410 shares were traded on the New York Stock Exchange. From early 1928 to September 1929 the Dow Jones Industrial Average rose from 191 to 381. This sort of profit was irresistible to investors. Company earnings became of little interest; as long as stock prices continued to rise huge profits could be made. One such example is RCA corporation, whose stock price leapt from 85 to 420 during 1928, even though it had not yet paid a single dividend. Even these returns of over 100% were no measure of the possibility for investors of the time. Through the miracle of buying stocks on margin, one could buy stocks without the money to purchase them. Buying stocks on margin functioned much the same way as buying a car on credit. Using the example of RCA, a Mr. John Doe could buy 1 share of the company by putting up $10 of his own, and borrowing $75 from his broker. If he sold the stock at $420 a year later he would have turned his original investment of just $10 into $341.25 ($420 minus the $75 and 5% interest owed to the broker). That makes a return of over 3400%! Investors' craze over the proposition of profits like this drove the market to absurdly high levels. By mid 1929 the total of outstanding brokers' loans was over $7 billion; in the next three months that number would reach $8.5 billion. Interest rates for brokers loans were reaching the sky, going as high as 20% in March 1929. The speculative boom in the stock market was based upon confidence. In the same way, the huge market crashes of 1929 were based on fear.

    Prices had been drifting downward since September 3, but generally people where optimistic. Speculators continued to flock to the market. Then, on Monday October 21 prices started to fall quickly. The volume was so great that the ticker fell behind. Investors became fearful. Knowing that prices were falling, but not by how much, they started selling quickly. This caused the collapse to happen faster. Prices stabilized a little on Tuesday and Wednesday, but then on Black Thursday, October 24, everything fell apart again. By this time most major investors had lost confidence in the market. Once enough investors had decided the boom was over, it was over. Partial recovery was achieved on Friday and Saturday when a group of leading bankers stepped in to try to stop the crash. But then on Monday the 28th prices started dropping again. By the end of the day the market had fallen 13%. The next day, Black Tuesday an unprecedented 16.4 million shares changed hands. Stocks fell so much, that at many times during the day no buyers were available at any price.
    • magoghm, on 01/28/2008, -2/+9Most economist now acknowledge that the great depression was caused by the Federal Reserve:
      Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively. On Milton Friedman's ninetieth birthday, Nov. 8, 2002, he stated: "Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
      You can check the references at http://en.wikipedia.org/wiki/Ben_Bernanke
      • jasqwerty, on 01/28/2008, -5/+1LOL, oh rontards, I know you guys are socially inept but wow...

        The man made a joke, jeez

        >>Bernanke is particularly interested in the economic and political causes of the Great Depression, on which he has written extensively.

        And have you actually read any of it? HINT: You should
        • magoghm, on 01/28/2008, -1/+4You believe that Bernanke was making fun of Milton Friedman on his birthday? And you believe that Milton Friedman was wrong?
          • jasqwerty, on 01/28/2008, -5/+1>>LOL, oh rontards, I know you guys are socially inept but wow...
        • magoghm, on 01/28/2008, -1/+3Have you read what Milton Friedman wrote?
    • 1gunners4, on 01/28/2008, -0/+6You, Sir, need to read Friedman's "Monetary History of the United States." It is probably the most tedious book ever written, but it explains perfectly our economical history and goes into great depth as to what caused the Great Depression.

      Basically, the stock market was not it.
    • netant, on 01/28/2008, -0/+4The Great Depression was caused by more than a "mere" stock market crash. It was able to rally, and the crap didn't really hit the fan until two years later.

      The outstanding loans killed many banks, causing "bank runs". Banks that did not keep a proper level of reserves and cautious lending went bankrupt. No banks, no credit, no economic activity. At the same time, Hoover & Congress was raising tariffs and cutting gov't programs. That shutdown the world economy and cut gov't economic stimulus. The Fed was not injecting the proper level of liquidity where needed. Finally, decade-long droughts shutdown agriculture in much of the midwest, killing a lot of small farms (and the banks that loaned them money for seed).

      Come 2008: There has been a big speculative bubble in the housing market and stock market (the P/Es don't lie). The investment banks have over 10% reserves on paper, but also putout a ton of SIVs, which if they get successfully sued, could potentially take out the banks (bank run). TPTB won't be making the same deflationary mistakes as the 1930's. But now we have no real market lock on any manufactured product, and the manufacturing industry has gone overseas. We have a fully fiat currency. So instead of deflation, perhaps we'll see hyperinflation instead.

      The point is, history doesn't repeat itself exactly, but you can't draw the proper conclusions and remedies, if you labor under mistaken analysis (that the GD could have been avoided if the stock market didn't crash).
    • pyrewyrm, on 01/29/2008, -0/+1netant is right.... the warren of holding companies... the shoddy bank system... the pockets of poverty, especially agriculture..... much more to it.
  • jahurt, on 01/28/2008, -2/+18“We can't solve problems by using the same kind of thinking we used when we created them.”

    Albert Einstein
    • PeppermintPig, on 01/28/2008, -0/+3Beautiful. Let's continue:

      "A problem that can be solved with money is not a problem."

      If you know who said that, please attribute, since I'm not sure myself!
  • Aliwalla, on 01/28/2008, -5/+3The great depression was caused by aggressive protectionist trade policies and a contraction of the money supply by the federal reserve. Neither of these are happening, in fact Bernake is aiming to expand the money supply. So this comparison is moot.
    • seadeus, on 01/28/2008, -1/+2The falling dollar is caused by....expanding the money supply. The federal reserve had only very limited control over the money supply in 1929. The federal gov