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August 2010 - Posts

  • Helping to Save the Economy

    Gloria: I have become a pessimist, I just kind of, lost hope. When I think about the European debt the mediocre economic growth we have attained, high unemployment here and around the world, a weak Real Estate and construction and market and the slow down in manufacturing production I can’t help but to believe in a gloomy future for our economy.

    Mary: Right things don’t look too good.

    Gloria: At least our industrial sector is making a great deal of money.  I wonder how they do that.

    Mary: By laying off workers and making the rest of them work longer hours. Eventually that technique will backfire since the unemployed workers have no longer purchasing power and therefore cannot stimulate the economy or contribute with their taxes to the well being of everyone else. Also those working harder, as it is already known, often develop physical or mental illness due to stress.

    Gloria: Aha, That’s it! The large salary increases made by management and stock owners as a result of increase corporate earnings become mostly idle capital instead of being reinvested in productive ways, back into the economy, thereby creating more jobs and helping move the economy ahead.

    Mary: As you probably already know there is something else that can improve to help our economy and that is top management decision making. They should invest in long term projects that are worthwhile instead of only looking only for short term profit investments.

    Gloria: Right, furthermore we ought to increase investments in basic research and innovation. Banks should lend more money to creative projects that offer innovation and make us more competitive.

    Mary: Also government should invest more in roads, bridges, schools and education. We need among other things more hospitals, airports and better transportation like the new fast trains built in Europe and China. Besides all that spend in infrastructure will create more jobs and help lift the economy.

    I wonder why we don’t use all the knowledge we got from other previous recessions instead of letting greed control our behavior.
    Posted Aug 18 2010, 05:34 PM by cartoon with no comments
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  • Paul the Octopus Explains the Future of the Economy

    Arthur: On August 3, 2010 Timothy Geithner wrote an article in the NYT titled “welcome to the recovery.” In this article although Geithner recognized how devastating the economic crisis has been and that it will take a long time until full recovery is achieved he also said he felt positive about the results attained so far and optimist about the future.

    What do you have to say about that?  
    Paul the Octopus: I think he is way too optimistic; In order to have a decent future we have large problems to solve first, among which we have: the jobs we have lost and continue to lose because they are send abroad. Let me explain what I mean.
    In a NYT article of August 1, 2010 “Four Deformations of the Apocalypse” David Slockman mentioned:
    “Having lived beyond our means for decades by borrowing heavily from abroad, we have steadily sent jobs and production offshore. In the past decade, the number of high-value jobs in goods production and in service categories like trade, transportation, information technology and the professions has shrunk by 12 percent, to 68 million from 77 million. The only reason we have not experienced a severe reduction in non-farm payrolls since 2000 is that there has been a gain in low-paying, often part-time positions in places like bars, hotels and nursing homes. It is not surprising, then, that during the last bubble (from 2002 to 2006) the top 1 percent of Americans — paid mainly from the Wall Street casino — received two-thirds of the gain in national income, while the bottom 90 percent — mainly dependent on Main Street’s shrinking economy — got only 12 percent. This growing wealth gap is not the market’s fault. It’s the decaying fruit of bad economic policy.”
    Arthur: It seems then that you think we are not doing that well.

    Do you think we should use another stimulus package in spite of the present large deficit to get the economy moving forward?
    Paul the Octopus: I will answer your question with a paragraph from a recent August 1 2010 editorial from the NYT “What they are not telling you”:

    “We agree the situation is unsustainable. But cutting spending right now on relief and recovery efforts would worsen the economic slowdown and the suffering of millions of Americans, while making only a tiny dent in future deficits.”
    Arthur: I understand but don’t you think that government’s economic experts and experienced politicians are aware of what’s going on and hence will fix and straiten the economy before unemployment and poverty gets worse?
    Paul the Octopus: In a NYT article “defining prosperity down” dated August 2, 2010, Paul Krugman mentioned:

    “I’m starting to have a sick feeling about prospects for American workers — but not, or not entirely, for the reasons you might think.
    Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That’s bad. But what’s worse is the growing evidence that our governing elite just doesn’t care — that a once-unthinkable level of economic distress is in the process of becoming the new normal.

    And I worry that those in power, rather than taking responsibility for job creation, will soon declare that high unemployment is “structural,” a permanent part of the economic landscape — and that by condemning large numbers of Americans to long-term joblessness, they’ll turn that excuse into dismal reality.”
    Arthur: Fine, I get it. You made your point; I see that you rely on economists that write in the NYT to explain what you think and therefore predict the future.
    Paul the Octopus: Right and they do a very good job don’t they; so good in fact that we can predict the future from what they say don’t you think?
    Posted Aug 16 2010, 05:51 PM by cartoon with no comments
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