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U.S. stocks notched new 52-week highs again on Monday, thanks to corporate America showing better-than-expected profits.

In an ominous sign for the economy, much of the profit is being eked out through cost cuts. Executives say they are hesitant to reinvest such profits into their businesses. With large portions of their factories, fleets and warehouses sitting idle, some say they probably won't see reason to do so for a year or more.

This sounds terrible, and it is. But it's also an extra-ordinary opportunity for Obama.

Already, the economy is being starved of investment it needs to nurture growth. Net private investment, which includes spending on everything from machine tools to new houses, minus depreciation, fell to 0.1% of gross domestic product in the second quarter of 2009, according to the latest government data. That's the lowest level since at least 1947.

(Update: graph now included, thanks to Melanchthon. Link to eurotrib original story where it is also visible here)

The recession can be said to have "ended" because corporate profits are doing better than expected, and the stock market can celebrate that thanks to the oodles of cash injected into the financial economy by the Fed. But this is like losing weigth by starving oneself...

Read that again: there is NO net new investment in the economy by the private sector, right now, it's barely keeping what exists in condition. This is unprecedented since at least WW2.

If this doesn't point to the urgent, desperate, need for more public sector investment to plug the unprecedented gap in the private sector, I don't know what will.

And if that doesn't point to the incredible opportunity for Obama (and governments elsewhere) to shape the economy for the next 50 years by putting in place new collective infrastructure (energy, transport, healthcare, education, etc) I don't know what will.

The main argument against government spending and borrowing is that it will "crowd out" investment in the private sector (ie prevent it from happening) and increase interest rates. Well, private sector investmetn is already not happening, and interest rates can basically not be any lower.

The other, more reasonable argument is that debt should not be used to fund consumption - thus the focus on public investment - and the beauty is that the needs are huge and perfectly well identified. To name just a few: investment in house energy efficiency (this will additionally help the construction sector); investment in public transport and high speed rail; rebuilding, strengthening and smartening the power grid; new investment in education opportunities and healthcare for all, not to mention the industrial facilities behind each of these, if appropriate.

It's the perfect time to show that government can plan for the future, and help solve the problems of the present at the same time. It's a once-in-a-lifetime opportunity to prove (yet again) that government is the solution, not the problem, to many of our collective woes.

Instead, we get the "government has grown too big already" pollyannas choking off any alternative voice. The right (and the neolib or bank-affiliated "left" like Summers and Geithner) have already succeeded in limiting the stimulus, and blaming its insufficient results on its being too big, rather than too small. Right now, we have runaway debt and no real recovery plan, ie the worst of all worlds. Time to do somethign about it, and be bold!

Originally posted to Jerome a Paris on Tue Oct 13, 2009 at 05:16 AM PDT.

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  •  Tip Jar (346+ / 0-)
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  •  No investment from the private sector (3+ / 0-)

    This to me sounds like the business elite (majority of whom are Republicans) are trying to sabotage the president.

    Conservatives are not necessarily stupid, but most stupid people are conservatives. John Stuart Mill

    by Micheline on Tue Oct 13, 2009 at 05:32:02 AM PDT

    •  Not really (46+ / 0-)

      it's a rational response by individual economic actors who have no capcity of macro-economic influence: the economy is doing bad, so you don't invest because you wouldn't sell the additional goods or services.

      But that's exactly why we need government to step in, and act in a way that makes sense for all economic players, and modifies their behavior, by generating direct demand to them, and by generating expectations of future demand.

      •  Today you sound a lot like Paul Krugman (23+ / 0-)

        who has been calling for more public investment since the first stimulus package was put on Congress's plate and promptly watered down by a play for "bipartisanship."

        Krugman said back in February that if the first stimulus package wasn't big enough that coming back and asking for further government investment would be difficult if not impossible.  And here we are.

        The way the administration handled the bank bailout led to banks' unwillingness to lend - hoarding money they were given by the fed and treasury is the only way bankers can now feel comfortable (i.e., assure their balance sheets make them look prosperous), and they're loathe to let go any of that money by lending it.

        "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

        by SueDe on Tue Oct 13, 2009 at 06:01:59 AM PDT

        [ Parent ]

      •  why cant we use principles of social entrepreneur (1+ / 0-)
        Recommended by:
        Doug in Virginia

        ship and microfinance within the US?

        "And the dream lives on" Edward M. Kennedy

        by boatsie on Tue Oct 13, 2009 at 06:36:21 AM PDT

        [ Parent ]

        •  I think Kiva is now offering loans (1+ / 0-)
          Recommended by:
          Losty

          in the US.  

          •  ahhh, you shld follow me on twitter (3+ / 0-)
            Recommended by:
            JanetT in MD, BYw, Losty

            @boatsie.... im doing some major research on social entrepreneurship .... planning on a ecojustice diary in a month or so. after my global fund for women. wait ....

            "And the dream lives on" Edward M. Kennedy

            by boatsie on Tue Oct 13, 2009 at 07:11:47 AM PDT

            [ Parent ]

            •  here; from my ecojustice diary last monday ... (4+ / 0-)
              Recommended by:
              whataboutbob, JanetT in MD, BYw, Losty

              David Green who came up thru Seva is now working on HCare for US ... here's the link to the diary where you can find links about Green... He is really one to follow on this .... a genius

              One more call lauding the extraordinary work of another social entrepreneur,  MacArthur Fellowship recipient David Green. Green's lifework is about providing affordable, accessible and financially self-sustaining health care and medical technology throughout the developing world. Through the Seva Foundation, he partnered with India’s Aurolab to develop an affordable intraocular lens for cataract patients. Aurolab provides intraocular lenses to poor cataract patients at a cost of $4 - $6. (In contract, US manufactures lenses at a cost of $100-$150.) His most recent project, Conversion Sound,is based upon three concepts:  wealthy clients pay higer prices to subsidize the lower price of hearing aids to poorer clients; battery prices are lowered through use of a solar or crank-powered battery charger; and non-medical personnel are trained to fit hearing aids in a little over an hour. Additionally, custom molds are manufactured on site utilizing an instant mold making process.

              Green says what motivates him is analogous to Chinese acupunture: the redirection of energy from where it is most focused to where it is most needed. He says he doesn't work with companies; rather, he works with individuals who possess technical competence and deep rooted integrity. Green is currently addressing the  application of his well-tested concepts of social capitalism in the design of a "bottom of the pyramid approach to healthcare delivery to develop financially self sustaining paradigms for health services. He recently spoke at a forum in San Francisco discussing this extraordinary paradigm. See Pioneering Ideas:A Model for Equity in Specialty Care: Introduction.

              "And the dream lives on" Edward M. Kennedy

              by boatsie on Tue Oct 13, 2009 at 07:16:26 AM PDT

              [ Parent ]

        •  Agree on that... (3+ / 0-)
          Recommended by:
          shaharazade, mochajava13, BYw

          We hear too much about money in the millions and billions going to companies "too big to fail..." -- when thousands of small businesses and families are failing, but could be saved with (comparatively speaking) MUCH smaller bridge loans or financial assistance/guidance packages -- thousands of homeowners who could continue to pay their mortgages if they could only refinance to a reasonable rate -- thousands of jobs that could be saved or created if small businesses  could get short-term assistance until the effects of bigger, long-term recovery plans come into play at the local level.

          I'd like to see more of those ideas!  (and I just saw Michael Moore's new film, which also touched on inventing new ways of doing business, besides the big corporation model, which should definitely be explored -- and it wouldn't take that much in terms of federal funding to start a few balls rolling there, either.)

      •  I am afraid it's an "irrational" (3+ / 0-)

        response fraught with future danger to the American economy. The British private sector behaved the same way in the late 80s, refusing to invest in the future and they got tanked by the Japanese. When the chips came tumbling down Britain found even their way of packaging things was way backwards as the Germans who had invested in their industrial infrastructure and put money on R and D were using flexible manufacturing systems and the Japanese were unleashing industrtial robots to change manufacturing forever. I don't say it's an irrational response lightly. It's a stupid response to a recession by industrialists who ought to know better. You invest in order to be ready to ride the wave when the recovery comes especially if you are making profits. When the recovery comes and you didn't position yourself to exploit it international competition comes in and sweeps you aside. America's Japan will be China this time.
        Why would the investors be doing this? In my mind I more inclined to think they think they are playing politics like the British industry were doing to try and kill the Unions and they got Margaret Thatcher who indeed broke the Unions but turned Britain into a second rate industrial power after France and Germany at the same time.
        So yes I am more inclined to think there is an element of sabotage, of hoping that they could strike their lone blow to the Obama Presidency and also preserving their wealth while doing it but it will backfire coz wealth is not money but capacity.

        So i respect the economics explanation but there are times when individual economic actors can be influanced by class and ideological warfare and in such situations the traditional methods of stimulating the economy through macroeconomic tools like interest rates and Keynesian interventions have been known to fail.  If the current massive stimulus bill does not do the trick then in my view any further government intervention will not succeed as well due to the high deficits. The Scandinavians always believed in deficit funding until they got crushed themselves in the eighties and nineties and learnt that fiscal discipline is necessary and governments are not Gods with limitless powers.

        •  Underinvestment (4+ / 0-)

          Capital in Britain started to flow offshore right after world war II.  I think we are seeing a similar thing in the US.  If you are a large corporation, you do not really care about the US.  The question is how you can make the most money.  If you are a CEO of a major company, the question is how you can make the most money in the short run, because you will want to get out if things go bad.  Thatcher hated unions, the working class, public transportation, etc.  Like Reagan, she wanted to beat the hell out of the unions so this was a factor in the 80's.  In the US the Republicans step on the working class while using divisive social issues to get them to vote against their own financial interest.  The democrats do little better because the unregulated trade policies that the Clinton administration pursued and congressional democrats collectively endorsed have served to push down manufacturing wages in this country.

          •  Excellent comment (1+ / 0-)
            Recommended by:
            factPlusContextAlmostTruth

            Bill Clinton said he sided with people who worked hard and played by the rules, but those were the ones who got handed the shit end of the stick with Clinton's trade policy, and with the preferential tax structure. Many don't know that Clinton's cuts in Capital Gains and Dividends taxes (that overwhelmingly favor the wealthy) were EVEN BIGGER than the notorious tax cuts Duhbya Bush gave those two wealth laden categories.

            'We risk consigning future generations to an irreversible catastrophe' -Barack Obama on Global Warming

            by Lefty Coaster on Tue Oct 13, 2009 at 05:39:24 PM PDT

            [ Parent ]

      •  Agree, but I still think that this is a factor. (1+ / 0-)
        Recommended by:
        Jerome a Paris

        Conservatives are not necessarily stupid, but most stupid people are conservatives. John Stuart Mill

        by Micheline on Tue Oct 13, 2009 at 09:33:43 AM PDT

        [ Parent ]

  •  I am waiting to see (13+ / 0-)

    what this administration does next.  One of the my expectations has been this kind of investment in the future of this country.  Revamping the economy by going to high speed rail and new energy seems to me to be the only way out of the mess.  I am hoping Obama is waiting for the right time to get the plan going and I also hope it will be soon.  My fear is that things have to get worse before he can overcome the monied to get what he said he wants.

  •  Also, lets give him a chance, it will (3+ / 0-)
    Recommended by:
    DBunn, Habitat Vic, OHeyeO

    take some time.  He will do it, but it might take time.  Boxers helping with her statement that climate change bill will pass before 2010. That is a job maker and a reform maker.  It is implemented immediately.  

    •  we've yet to see the opposition to climate change (4+ / 0-)
      Recommended by:
      lzachary, mochajava13, BYw, OHeyeO

      I share your hope for Obama to get things done (in time), but as to Boxer's contention that a climate change bill - cap & trade, alternative energy, whatever - will pass in the next two months?  Not a chance in hell. Not if its got any teeth in it.

      Climate change legislation likely means going against the energy companies. Big oil & gas, big coal.  They have even more money to spend than Big Pharma (and with fewer dissenting groups and man-in-the-street obvious problems that need fixing).  We're talking Senators and Congresspersons from states like Texas, Lousiana, Kentucky, Wyoming, Colorado, etc. Lobbyists galore with money to spend. All the idiots at Fox, WSJ, and the rest of conservative media.

      I'm four-square behind the need to change.  I'll contribute money and time - make calls and send letters.  That said, I think this is going to be a hell of a fight, and will take a lot of time.

      •  An op-ed in the NYT on Sunday (6+ / 0-)

        written by John Kerry and Lindsay Graham offered a preview of the negotiations already going on in congress over climate change legislation.  The Democrats are going to have to swallow hard to accept the compromises that the Republicans are demanding and the Democrats are considering giving.

        Never once in the op-ed was "reliance on fossil fuel" mentioned - it was always "reliance on foreign oil."  Clean coal (an oxymoron if there ever was one) was considered a viable way of meeting future energy needs, and the compromise pushes for large subsidies for the coal industry to implement this still-nonexistent technology.

        There's much more - and Democrats may not be able to swallow it all.  Probably we'll gag on a great deal of it.

        "In this world of sin and sorrow there is always something to be thankful for; as for me, I rejoice that I am not a Republican." - H. L. Mencken

        by SueDe on Tue Oct 13, 2009 at 07:11:40 AM PDT

        [ Parent ]

      •  Opposition depends on speed of diversification (5+ / 0-)

        Example: British Petroleum changed to BP (Beyond Petroleum)

        The amount of opposition will depend upon how much the oil/gas companies have diversified into other money-making sectors. Remember that the lawsuits against the tobacco companies were only successful AFTER they diversified into Kraft Foods and such. Change will happen when these ugly monsters make sure their bottom line is where they want it to be.

        The good sign is that now some corporations are beginning to jump on the bandwagon of climate change and energy diversification. Witness a couple of slaps at the US Chamber of Commerce. Obama's job is to keep this moving at the appropriate pace, whatever that may be.

        There has never been a protracted war from which a country has benefited. The supreme art of war is to subdue the enemy without fighting. - Sun Tzu

        by OHeyeO on Tue Oct 13, 2009 at 07:15:24 AM PDT

        [ Parent ]

      •  one thing that michael moore said in his movie (3+ / 0-)
        Recommended by:
        tmo, Eric Blair, Only Needs a Beat

        was the compaies still are afraid of our VOTES>  lets put them on noitce in congress if they do not adhere to our request for climate change bill, financial regualtion, eduaction reform, etc!

      •  I am ready to fight (0+ / 0-)

        but who do we follow into battle?  Harry Reid?

  •  Public and private investment aren't fungible (2+ / 0-)
    Recommended by:
    cheforacle, papicek

    ...except in some narrow job-creation sense.  Public investment is for physical and social infrastructure, not for the production of goods and services (outside of "public services" traditionally defined).  We should spend more on those things, as stimulus and (to a greater extent) because they're necessary and useful in themselves, but that wouldn't "remake the economy" in a good way.

    Al que no le guste el caldo, le dan dos tazas.

    by Rich in PA on Tue Oct 13, 2009 at 05:42:33 AM PDT

    •  there is the monetary issue (9+ / 0-)

      Investment can only come from savings - yours, or, by international borrowing, that of foreigners.

      Unless you can expand debt endlessly, there is a limit to how much can be invested altogether, and that limit applies jointly to government and the private sector.

      Now the government may stretch that limit by being able to borrow from foreigners more easily, but the general point still stands.

      •  Not really. Money can simply be created. (12+ / 0-)

        The best example is how Abraham Lincoln financed the Civil War: by issuing money directly through the Treasury as payment for the contracts performed in building the urban rail transit systems (or whatever else new infrastructure gets built). There's not really any need to borrow a single cent -- once we get past the bugaboo of the usurers' ideology of economic "neo-liberalism."

        A conservative is a scab for the oligarchy.

        by NBBooks on Tue Oct 13, 2009 at 06:02:15 AM PDT

        [ Parent ]

        •  Nationalize the Central Bank (0+ / 0-)

          Would direct payments from the treasury be the same as nationalizing the central banks?  I read your link, but I don't have enough depth in economics to feel comfortable accepting or rejecting its premise.  Even if newly printed money were only used to build new projects, as opposed to pay off debt, I don't understand how inflation would be held in check.  There would still be a lot of new money out there, and unless these new projects actually produced new goods, it seems that you have a recipe for inflation, i.e., the supply of money rising faster than the supply of goods.

          •  You hit the point exactly (2+ / 0-)
            Recommended by:
            Jerome a Paris, Eric Blair

            Inflation is held in check only by proper management of the national economy that ensures the new money created goes only for producing new goods and services. Not for mergers and acquisitions. Not for new luxury jets and country club memberships. Not for intensified lobbying efforts in Versailles.

            What we have now with the financial bailout is exactly what you fear - literally trillions of dollars of guarantees and promises have been made, which have been monetized by the banks as an increase in asset prices - the rise of the stock market prices, especially their own share prices, as well as underpinning the price of generally all securities denominated in U.S. dollars - but what new goods and services have been created?

            A conservative is a scab for the oligarchy.

            by NBBooks on Tue Oct 13, 2009 at 08:35:22 AM PDT

            [ Parent ]

            •  So, nationalising the Fed does not necessarily (1+ / 0-)
              Recommended by:
              Eric Blair

              get the job accomplished. There has to be a widespread understanding that the economic paradigm of "neo-liberal" economics that has reigned for over three decades - the belief in unrestrained free trade and free markets - has been a terrible and costly mistake.

              As William Black observed, when asked why President Obama has basically continued the Bush regime's approach to the financial crash, in the Q&A at around the 38 minute mark in the Hyman Minsky Conference on Meeting the Challenges of Financial Crisis in April,

              Because Obama’s primary economic advice comes from people who helped create the crises. And as long as you get your advice from people that don’t want to admit that they were wrong about essentially everything they did in their professional lives and that they have no useful skills, because all they know is stuff that was proved to be false. I mean, you’re just not going to get professors of economics who are sixty years old, stand up and say "I’m sorry, everything I taught, every policy I implemented was completely wrong, the economic theories I followed are completely wrong, and I have no useful knowledge, and I’m sorry." That’s just not going to happen. And if they did, why would anybody hire them for anything ever again? They have no useful skills.

              A conservative is a scab for the oligarchy.

              by NBBooks on Tue Oct 13, 2009 at 08:43:54 AM PDT

              [ Parent ]

            •  Public borrowing abroad (1+ / 0-)
              Recommended by:
              Benito

              or printing money are largely equivalent, in practice.

            •  an apt metaphor (1+ / 0-)
              Recommended by:
              Jerome a Paris

              Not for intensified lobbying efforts in Versailles.

              Who is our John Law?

              Sponge Bob, Mandrake, Cartoons. That's how your hard-core islamahomocommienazis work.

              by Benito on Tue Oct 13, 2009 at 12:00:56 PM PDT

              [ Parent ]

      •  I'm surprised at you, Jerome... (0+ / 0-)

        banks create money all the time, and it usually takes 4 quarters for the Fed to catch up. When a loan is made, is not the practice to add the amount to the debtor's deposit account?

        Fractional reserve lending. An electronic transaction. I don't know how good or bad this practice is - as usual, it seems to be a balancing act which needs constant detailed monitoring to maintain stability.

        But here I go, spinning off topic into monetary policy.

        Désolé. . . .

        Too many books, too little time. . . .

        by papicek on Tue Oct 13, 2009 at 08:45:11 AM PDT

        [ Parent ]

    •  However, (11+ / 0-)

      all the people employed in building the social and physical infrastructures will have salaries and will be more likely to buy new cars and computers then they would if unemployed. The only problem is that few of these items are actually made in the States. Remaking the economy will be more difficult than it would have been even ten years ago.

      If nothing is very different from you, what is a little different from you is very different from you. Ursula K. Le Guin

      by northsylvania on Tue Oct 13, 2009 at 05:50:23 AM PDT

      [ Parent ]

    •  really? the interstate highway system? (37+ / 0-)

      the tennessee valley authority? the erie canal? the rural electrification project? etc. etc. none of them reshaped the economy in new ways?

      a new smart grid energy infrastructure? high speed rail? electrified freight rail? urban weatherization, suburban insulation and solar roof installation? urban mass transit? government-funded R&D in green tech? laying broadband infrastructure? establishing rural and urban health free clinics? expanded education infrastructure - new colleges, repaired architecture and facilities, etc.? those things wouldn't reshape the way that the economy worked, esp. in a weak-dollar, expensive-oil future?

      what a paucity of imagination.

      surf putah, your friendly neighborhood central valley samizdat

      by wu ming on Tue Oct 13, 2009 at 05:52:49 AM PDT

      [ Parent ]

      •  Sure, all those things sound good. (1+ / 0-)
        Recommended by:
        Rich in PA

        But if the people wanted a secure economic future, not dependent of foreign oil or domestic environmental destruction and, access to affordable health care then the markets would tell us that and they don't.

        People want troll dolls, Grand Theft Auto and access to safe affordable erectile dysfuntion treatments.

        There is no way that replacing the wisdom of the markets with some grand infrastructure improvement program would "remake the economy" in a good way. It sounds like something the Chinese would do.

        Live to create the world you want to live in.

        by beerm on Tue Oct 13, 2009 at 06:15:42 AM PDT

        [ Parent ]

      •  If we did all of those things... (4+ / 0-)
        Recommended by:
        CWalter, Bonzo1, J M F, MGross

        ...who's to say we wouldn't just have a more efficient way to transport Chinese goods from our West Coast ports throughout the country?  

        The idea that putting trillions into physical and social infrastructure will "make us more competitive" is corporate boosterism that may or may not withstand critical scrutiny, and if we subjected the idea to a cost-benefit analysis we might just find that it's more efficient for government to subsidize worker salaries, or (gasp) simply cut corporate taxes to zero.  The infrastructure fetish is just that, a fetish, and what we're already seeing with the Stimulus of 2009 is that it creates only certain kinds of jobs, to the point of labor-supply bottlenecks and construction cost inflation, while not helping the people who've lost their jobs due to the collapse of manufacturing.

        Al que no le guste el caldo, le dan dos tazas.

        by Rich in PA on Tue Oct 13, 2009 at 06:21:32 AM PDT

        [ Parent ]

        •  Why would that be a bad thing? (1+ / 0-)
          Recommended by:
          Jerome a Paris

          ...who's to say we wouldn't just have a more efficient way to transport Chinese goods from our West Coast ports throughout the country?

          Do we want autarky? Maybe the best path for our economy is as a more efficient producer in service industries and high tech, not manufacturing. In that case, would it be such a bad thing to have better infrastructure to move around manufactured imports?

        •  Hmm. (2+ / 0-)
          Recommended by:
          Eric Blair, BYw

          When I read your first few comments, I was immediately irked, but this clarifies your perspective.

          On the other hand, consider that we've left our infrastructure to rot for 30 years. It's hard to argue against repairing bridges that are going to fall down if they aren't repaired. Amazingly, the Republicans have successfully made this argument for years and years. So if we need to spend money to stimulate the economy, it makes a lot of sense to spend it on some things we do, in fact, need.

          You're right, mind you, that some cost-benefit analysis might be in order. Although I'm pretty sure that cutting corporate taxes to zero is not going to fare well in any reality-based cost-benefit analysis.

          To put the torture behind us is, inevitably, to put it in front of us.

          by UntimelyRippd on Tue Oct 13, 2009 at 10:06:38 AM PDT

          [ Parent ]

      •  oh hell, (0+ / 0-)

        lets have our rail system running on the energy from nightclubs and exercise.... as well as windmills and tides... we have to think local until we can find carbon neutral or carbon negative means of transport

        "And the dream lives on" Edward M. Kennedy

        by boatsie on Tue Oct 13, 2009 at 06:43:22 AM PDT

        [ Parent ]

      •  all of the things you mentioned, of course, (0+ / 0-)

        are either funded by the stimulus or the budget that came out a month later.  No one here seems to remember.

    •  Half the story (0+ / 0-)

      It also would appear that this data aggregates consumer durable purchases and business investments in infrastructure.  If so, this would be extremely misleading as business investment is going to drive job creation.  Yes, consumer durable purchases will also create demand for more jobs, but that would be a second order effect.

  •  Obama's had a lot of unprecedented opportunities (23+ / 0-)

    to do a whole lot of things.

    Unfortunately, so far he's squandered them all.

    But then again, perhaps it's all been done by design.  

    Maybe, given the realities of power in this country--who REALLY has it, and who really pulls Obama's strings--there really isn't much he can do, and therefore such "unprecedented opportunities" are no more than illusory.

  •  Let's Not Eat the Seed Corn (4+ / 0-)
    Recommended by:
    raboof, gmb, inclusiveheart, ArtSchmart

    Can I get an amen?

  •  Ya. But he wont. (3+ / 0-)
    Recommended by:
    gmb, CWalter, NearlyNormal

    I have written an incredible book and YOU should buy it!

    by environmentalist on Tue Oct 13, 2009 at 05:49:19 AM PDT

  •  Unprecedented opportunity (25+ / 0-)

    Not only does Obama have an unprecedented opportunity to create the physical infrastructure to support the future economy, he has the opportunity to shape the institutional infrastructure that supports the global economy.  What is needed is international agreement not to race to the bottom.  

    Among the parts of that institutional infrastructure are;
    global enforceable labor standards and environmental standards,
    common and transparent accounting and auditing standards,
    tax enforcement reciprocation,
    a global commercial code,
    a globally common and nationally passed securities law.  

    The advantage to business is simplification of global investment; the advantage to everyone else is the end of race-to-the-bottom job extortion by transnational corporations.  This does on a global scale what the progressive movement in the US did on a national scale starting with Teddy Roosevelt and accelerating in FDR's regulation during the New Deal.

    •  indeed (14+ / 0-)
      with the current good will he can count on internationally, if he were to take some serious first steps (ie pushing for measures that do cause pain to US corporations) he could easily get the rest of the world to join suit.
      •  Labor standards (16+ / 0-)

        By far the most important agreement would be labor standards that (1) forbid child labor, (2) set minimum wages and maximum hours, (3) provide for a common standard of overtime, (4) provide for a common minimum standard for vacations, sick leave, etc.; (5) permit collective bargaining.

        As much as anything else, that created the widespread middle class in the US after the New Deal and World War II and similar measures seem to have created widespread middle classes in other developed countries.

        •  I agree with you (1+ / 0-)
          Recommended by:
          Only Needs a Beat

          but the reality is that most of that could only be done right now by bringing down the standards of living that western countries enjoy. 1 and 5 could be done right away. 2, 3 and 4 will take either a long time or a revolution. We live in an extremely asymmetric world.

          •  The reality is... (6+ / 0-)

            I don't think we know what the reality is.  It's not been tested in any international conference.

            Yeah, it'll take a revolution.  Revolutions have happened.  The New Deal was such a revolution.  If you assessed realistically the chances in 1932 of the Wage and Hour laws, Glass-Steagall Act, and other New Deal legislation being enacted to create a common national market, you would have been just as pessimistic.

            Saying that it is difficult is not the same as saying it will take a long time.  It requires a better understanding of where those difficulties really are coming from.  I think that an honest enabling of collective bargaining will be the key piece that allows the others to happen, just as it did in the US.  And will be very difficult to accomplish, especially in "socialist" economies, such as China or North Korea.

            The incentive for change is that it will create a prosperous market that will make transnational corporations more common, more regulated, and more profitable.

            •  We know what the reality is (0+ / 0-)

              as far as the differences in GDP between nations and GDP per capita. So how are you going to bring a Chinese at a GDP per capita of about $5,000 to that of an American at about $45,000 (rough numbers)? Are there enough resources in the world to achieve this?

              I whole heartedly agree with your sentiments and I hope to be utterly wrong in my assesments, but I just don't see income equalization without bringing westerners way down. In my view, this is necessary and part of what it is happening right now but I don't think most people will voluntarily do this.

              •  Relative purchasing power (2+ / 0-)
                Recommended by:
                TarheelDem, BYw

                If the cost of goods in China is 10% that of goods in the US, the different salaries aren't a big deal.  What matters more is what one can buy with that money.  For example, is bread there $3 a loaf, or 30 cents a loaf?

                We need to fix the relative values in different nations' currencies, and ensure that no nation is keeping their currency artificially low.

                •  Among other thngs (0+ / 0-)

                  That certainly would be one thing on the table to negotiate, how exactly to handle exchange rates so that financial policy does not advantage a country and game the system.  Either the rates are competitive market rates not manipulated by central banks or it's back to tariffs to create equivalent pricing.

                  •  It has nothing to do with exchange rates (1+ / 0-)
                    Recommended by:
                    CWalter

                    it is all about standards of living and how we measure this. We use dollars for comparative reasons. Just look at it this way: what can a wage provide for you in the U.S. vs China. That is the true measure. We know that the whole world can not live like Americans or Norwegians with the current resources available in the world. We need to give something up for them to rise up, that is what I am trying to say. That's just a fact. Be it oil, copper, etc. pick your favorite resources.

                    Achieving that is the true challenge politically speaking.

                    •  Interesting (1+ / 0-)
                      Recommended by:
                      basquebob

                      We know that the whole world can not live like Americans or Norwegians with the current resources available in the world

                      It really depends on how we live doesn't it.  Not necessarily the resource cost to live that way.  Apparently standard of living does not mean quality of life.

                      Although we need to give something up in the way of resources, that need not affect our quality of life unless we are all Hummer drivers.

                •  I don't think differences in currencies (0+ / 0-)

                  are entirely relevant. As you clearly demonstrate these are easily fungible through subsidies.

                  The problem is in what gets subsidized. That is where we are getting killed. That is why our factories have and are being moved. Labor is cheap because those subsidies do exist, otherwise Chinese workers could not live, and they have a lower standard of living by our perceptions.

                  •  I think you missed my point (0+ / 0-)

                    a dollar in another nation will stretch more; it has nothing to do with subsidies but with market forces.  Relative purchasing power, not absolute purchasing power.  So a similar good in the US is going to be more valuable than in another nation (like China) because of market forces.  By the way, there is evidence that China is artificially keeping its currency low in comparison to the dollar.

                    For example, collectively workers in the US now make more money than ever, but the costs of goods have outpaced the rise in wages.  So the cost of a loaf of bread is relatively more now than it has been in the past.  (In other words: our wages may have doubled in a given amount of time, but the market value of goods tripled.)

                    Nothing to do with subsidies, and everything to do with the fact that currencies are market commodities, and the price is in flux and not fixed.

          •  I don't know. (1+ / 0-)
            Recommended by:
            BYw

            I suspect that 5 is all that is really necessary.

            Though I'd strongly support child labor laws as well.
            And would want to include environmental protection.

            Given effective collective bargaining rules, the rest will evolve as fits each country's circumstances. Cheap labor is a reasonable thing to compete on, as long as it's not exploitation. Making sure that labor has the ability to bargain will ensure that they aren't exploited. Wages, hours, overtime, vacations, etc are all things that collective bargaining is designed to win.

            A minimum wage, expressed in terms of local cost of living, might be workable. Expressed in dollars, it could be devastating.

            The Empire never ended.

            by thejeff on Tue Oct 13, 2009 at 09:45:17 AM PDT

            [ Parent ]

        •  And if the US and Europe (4+ / 0-)

          jointly adopted consistent standards, and enforce them via external tariffs on non-compliant countries, you can be pretty sure that the rest of the world would ajust and/or follow suit.

      •  He seems reluctant (1+ / 0-)
        Recommended by:
        CWalter

        even in the case of the absurd health care debacle to step up and talk the talk of regulation or actual reform via the government. I'm getting very leery of the word, reform always seems to mean that more money and deregulation is being thrown at the entities that produce nothing but extortion and create nothing but debt disguised as profit.  

  •  But ... investing in business ... (2+ / 0-)
    Recommended by:
    EricS, shaharazade

    takes money away from a corporation's reason to exist - executive bonuses!

  •  Oops, wrong diary. (0+ / 0-)

    Sorry, I thought this was a diary about Afghanistan.

    "Do the next right thing!"...anonymous

    by Giles Goat Boy on Tue Oct 13, 2009 at 05:54:12 AM PDT

  •  Agreed, but gotta beat down the "deficit hawks". (14+ / 0-)

    There are already countless bleating voices, both Republican and Democratic, not to mention most of the disgraced Wall Street mavens, beating the drums about the "threat" of inflation. About the need for "fiscal responsibility" and the "threat to future generations posed by massive deficits".

    Never mind where these oh-so-responsible voices were while George W. Bush poured gasoline on Bill Clinton's trillion dollar surplus and set it on fire. Never mind that this kind of thinking was the proximate cause of the Great Depression. Never mind the hemorrhage of jobs that's pushing America's once mighty middle class into poverty.

    Oh, just never mind.

    •  BOTH Great Depressions. They Drove Fiscal Re- (9+ / 0-)

      sponsibility in 36-7 and as Krugman pointed out, we slid back down after substantial recovery.

      So we proved the value of government spending three times not once in the Great Depression. Once in the early New Deal, again toward the end of the 30's, then massively with war spending.

      Fool me four times, shame on me.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Tue Oct 13, 2009 at 06:03:12 AM PDT

      [ Parent ]

    •  I'm not sure what is going on... (7+ / 0-)

      ... but I think that the government is constrained by the international financial elite who, I believe, dictated the "bailout" of the financial system and are dictating the amount of any stimulus. Obama will not and is not listening to us he is listening to the international bankers both private and sovereign. Don't fool yourself this thing is out of our hands right now. We live in a global financial system and decisions will be made with that structure in mind.

  •  Unprecedented NEED, Not Necessarily Opportunity (11+ / 0-)

    Instead, we get the "government has grown too big already" pollyannas choking off any alternative voice. The right (and the neolib or bank-affiliated "left" like Summers and Geithner) have already succeeded in limiting the stimulus, and blaming its insufficient results on its being too big, rather than too small.

    That looks to me like a description of a thorough lack of opportunity.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Tue Oct 13, 2009 at 06:01:02 AM PDT

  •  President Obama? n/t (0+ / 0-)

    The Republican Party, courting the female vote for 2010 by clubbing us over the head and dragging us back to the polling place.

    by truesteam on Tue Oct 13, 2009 at 06:10:02 AM PDT

  •  Military Keynesianism's over, counterproductive. (6+ / 0-)

    Purely financial keynesianism's pretty much exhausted.
    Needed:
    Infrastructure-Healthcare-Ecology Keynesianism.

  •  Oh noes... INDUSTRIAL POLICY!!! (8+ / 0-)

    I totally agree with you.  However, I honestly believe Obama will not LEAD on this, just like he has not led on healthcare.

    Where is the boldness, the SPINE?

    -9.00, -5.85
    If only stupidity were painful...

    by Wintermute on Tue Oct 13, 2009 at 06:16:26 AM PDT

  •  Agreed, and health care reform is a foundation (4+ / 0-)
    Recommended by:
    Jerome a Paris, gmb, Bonzo1, Ezekial 23 20

    Much of the problem corporate America has is the increasing cost of health care to empolyees. Getting a handle on the health care industry gives  the country a footing to compete with the rest of the world.
    But remember, this unprecedented opportunity follows the unprecedented opportunists who have terrorized the financial mechanisms for their own gain. Why can't we follow the money to see who is responsible for the dilema we find ourselves in?

    •  It's obvious (2+ / 0-)
      Recommended by:
      Eric Blair, mochajava13

      who is responsible for this dilemma, which is not to me a dilemma. It's a sinking ship being bailed out by the government and their bosses, who could care less if we all drown. No matter what kind of hope they dangle for the people, they refuse to even acknowledge that freemarket neoliberalism  is the problem not the solution. Much like the war is peace bs. we get, brinks of disaster that they make profit off of and we are expected to pony up for another round.  

  •  He doesn't have the right advisors, and it (9+ / 0-)

    should be obvious to him after seeing how the incompetent banking jackasses got even bigger heads with fail-then-bail-out safety nets, have absolutely no fear of consequences for their dumb fuck risks,  and then had the arrogance to boycott his speech to them.

    Your points are all sensible and logical. But he can't do it all, obviously. Unless the handful of people in congress who have balls and have not whored out whip up a near revolution frenzy, it will be the same treadmill.

    Stop giving the fucking money to Wall Street. Spread it out too the other banks across the country. I am sure many of you saw the Moyers videos with Kaptur and Johnson.

    Bullshit is the glue that binds us as a nation. George Carlin

    by gereiztkind on Tue Oct 13, 2009 at 06:19:23 AM PDT

    •  Obama is not in charge he's only a broker n/t (3+ / 0-)
      Recommended by:
      gmb, boatsie, WedtoReason
    •  Sold Out to the Banks (5+ / 0-)

      The $700 billion in TARP funds and the trillions that the Federal Reserve has printed up for just a handful of the biggest banks (probably close to $20 trillion by now)

      http://zerohedge.blogspot.com/...

      just to protect wealthy shareholders has been the biggest theft in US history and we will all pay for it through inflation which is just an invisible tax.

      Geithner, Larry Summers and even Volcker (who made a faux complaint about too big to fail recently, faux because he's just wants that for the banks)are all sell outs to the wealthy. Geithner spends more time on the phone to his real boss's Blackfein and Dimon than Obama.

      Over a hundred banks have failed this year and were dealt with by the FDIC which is the way the big bust out banks should have been dealt with. Except that the wealthy shareholders would have lost their money.

      The idea that it was necessary to bail them out was a lie. It was necessary to bail them out only from their point of view. This was the biggest lie ever told and the bailout was a theft.

      Imagine a bank has just been robbed and we the taxpayers are on the floor arguing over a few pennies (healthcare) while the thieves (the bank shareholders) are already safely back in their mansions laughing at us "Let them eat cake".

      Healthcare for everyone

      by offthegrid on Tue Oct 13, 2009 at 07:23:26 AM PDT

      [ Parent ]

  •  but does Obama want to? (10+ / 0-)

    That's a serious question, not an attempt to slam him.  Either he doesn't want to or he doesn't think he can pass it.

    If it's the former, we're just going through the motions of governance anyway.  And if it's the latter, then I'd ask how bad does it have to get before he pushes for it?  If he's waiting until things are bad enough that he can get it through, I suspect he's badly miscalculated.  As long as the numbers of layoffs are not as bad as they were from Dec-March, he's not going to get the MSM saying things are bad.

    I'd really love to give the guy the benefit of the doubt.  I'd love it if he's got some strategy planned out where he's able to get really aggressive because conditions become ripe for it.  But I don't think that's gonna happen.  And I worry that Obama seems unwilling to forcefully advocate for something where he's not guaranteed of success.

    Want a progressive global warming novel, not a right wing rant? Go to www.edwardgtalbot.com for a free audio thriller.

    by eparrot on Tue Oct 13, 2009 at 06:29:42 AM PDT

    •  Bingo (3+ / 0-)
      Recommended by:
      CWalter, esquimaux, mochajava13

      And I worry that Obama seems unwilling to forcefully advocate for something where he's not guaranteed of success.

      That encapsulates this Presidency up to this point and likely to it's end - all 4 years of it.

      I am trying hard to imagine how terrible the next Republican Reign of Terror will be....

      The Democrats just never learn: Americans don't really care which side of an issue you're on as long as you don't act like pussies - Bill Maher

      by Wamsutta on Tue Oct 13, 2009 at 08:18:50 AM PDT

      [ Parent ]

      •  Many people who use "its only been ten months" (0+ / 0-)

        are forgetting something very important IMO.  Obama will not have the good will and public approval numbers like he does this first year.  This is the time to use that political capital!!

        I doubt many become LESS cynical as time passes...

  •  The President is not only from Chicago... (9+ / 0-)

    ... he's an apostle of the Chicago School.

    There will be no "remaking" of the uber-capitalist economy on his watch.
    His pick for Treasury Sec was the first indication of that and his ignoring cries for SEC overhaul echo it.

    The two most important things in life are good friends and a good bullpen. ---- Bob Lemon

    by miamiboats on Tue Oct 13, 2009 at 06:31:32 AM PDT

    •  i was really interested in this (0+ / 0-)

      wondering if UofC Law school was invaded by Federalists and to what extent the entire school is shaped by their economics dept. very scarey thing that we never did get to the bottom of exactly what Obama;s pov as a constitutional attorney WAS and IS. The writing is on the wall.... we still don't want to believe it. We were all caught up in the FT. Read Renegade and u get a pretty clear idea that he just wasn't into it ... then when it looked like he had a chance, Goldman, Citi & Co. moved in w/the big bucks....

      He still has a huge amt left... if he had any integrit he would repay them. As a group the individual donors contributed more than any of these groups. He not only was elected to represent us, he also received more $ from US

      "And the dream lives on" Edward M. Kennedy

      by boatsie on Tue Oct 13, 2009 at 07:07:58 AM PDT

      [ Parent ]

      •  Not even the whole econ dept is invaded by the (3+ / 0-)
        Recommended by:
        Jerome a Paris, CWalter, sabredance

        econ department, there are people there like Heckman (recent econ Nobel winner).

        If I had to make a guess as to why Obama buys into neolib ideas, I'd say it's his whole upbringing and life experience. Somebody (kos?) a while back mentioned Obama's age cohort has been the most right-leaning in many decades, and he, a liberal among them, has tended to be flexible, a compromiser and a negotiator, not an ideologue. And his childhood largely spent in or near Asia, where the economic growth of the last 50 years has shown real benefits for people who aren't already super-rich. In that sense, he is really ill-suited for the presidency at this time, this was a point when probably just about anyone could have beaten the Republicans and we should have elected the most ideological electable politician we could get our hands on (not that any of the other successful 2008 candidates were all that great--Howard Dean, maybe? but he wasn't running in 2008). Obama may need to deviate a lot from his usual approach to succeed in this environment, otherwise it will be a lost opportunity for all of us.

  •  The side no one is talking about: taxing (24+ / 0-)

    the very wealthy higher than we do now.

    Doing so on incomes over $1 million a year, estates over $20 million, and phony foundations that don't distribute funds would raise hundreds of billions.

    THIS is key - tax the very rich hard. Now.

  •  Obama needs to do MORE about Jobs (6+ / 0-)

    I don't understand why his economic team and political team are a little tone deaf on this.

    Obama has to LOOK like he is doing everything he can on the jobs front and he doesn't.  

    Although I feel that health care reform is extremely important and his decision on Afghanistan will be critical, Obama in 2010 from day 1 must be focused on jobs, jobs, jobs.

    He needs to promote the climate bill as a job creator.

    He needs to be out there at least once a week promoting something that will increase jobs.

    Americans have to feel that Obama is doing everything he can on the job front.

    Obama 7/09: "Don't bet against us" (unless the Dems screw it up).

    by Drdemocrat on Tue Oct 13, 2009 at 06:33:51 AM PDT

  •  I agree that public investment is what is needed (3+ / 0-)

    but I am a little wary...the last thing the president needs right now is a Nobel in economics. ;)

    But getting back to seriousness, public works projects are definitely the way to go.

    It's often said that life is strange. But compared to what? --Steve Forbert

    by darthstar on Tue Oct 13, 2009 at 06:36:03 AM PDT

  •  He's a tepidly conservative corporatist (6+ / 0-)

    why on earth would he want to remake the economy?

    "99% of the battles and skirmishes that we fought in Afghanistan were won by our side." ~ Marshall Akhromeyev

    by ActivistGuy on Tue Oct 13, 2009 at 06:43:29 AM PDT

  •  What I'm waiting to hear (24+ / 0-)

    We have a convergence of trends here.

    • The private sector is doing next to nothing to create jobs or invest, as this diary attests.

    • The financial sector in particular has soaked up hundreds of billions of taxpayer dollars and has been using it for mergers, shoring up toxic debt, and paying itself big bonuses - not using it to get the economy going.

    • While the financial sector has become ever larger, the manufacturing base in this country has become a smaller sector of the overall economy.

    • For decades Wall Street has rewarded companies that have slashed employee compensation, employee numbers, and moved jobs overseas - so long as it has meant money flowing to stockholders. Yet that devastated work force and its consumer spending is what ultimately keeps the economy going.

    • Conservatives are falling behind a move to expand the war in Afghanistan - but have no answer on how to pay for it other than cutting government spending elsewhere. They have no answer or desire to pay for the other bills they've run up either.

    • A constant push to cut taxes over the past decades means wealth has become concentrated at the top, government services and programs that help the middle class (don't even ask about the poor) have been decimated.

    • Health care spending is out of control; a majority of Americans want the government to do what the private sector won't - make it affordable and make it universal. Solid numbers show it can be done and save money.

    What I'm waiting to hear is the call to change the rules of the game that have put us in the mess we're in.

    I want to hear someone say that Government has to step up because the private sector has shown itself unwilling to make the hard choices or work in a way that advances the common good. I want to hear someone say it is time to stop cutting taxes and deregulating in the mistaken belief that making things easy for the rich will help the rest of us when we can now see it has not worked! I want to hear someone say judging economic success solely by the happiness of billionaires is the wrong measure. I want to hear someone say it's time to change policies that reward Wall Street shell games with money and instead invest in activities that will advance America, like creating green jobs and rebuilding our energy infrastructure. I want to hear someone say the public sector has been starved and attacked for too long - it's time to invest in the public good again.

    I don't care who says it - but it would be nice to hear that coming from a White House and a Congress that are supposed to be in Democratic hands.

    "No special skill, no standard attitude, no technology, and no organization - no matter how valuable - can safely replace thought itself."

    by xaxnar on Tue Oct 13, 2009 at 06:54:21 AM PDT

  •  I fear Krugman was right (9+ / 0-)

    He predicted that the stimulus was too small and would come up short, and a second round would be needed. And he also predicted that the President would not have the political capital to make a second round happen.

    I fear that is coming to pass. With all of the President's political capital invested in health care reform, and with the coming battle over Afghanistan, there won't be any leftover for a public works program. The tide is starting to turn and even Democrats are (rightly or wrongly) beginning to decry deficits.

    If apes evolved from humans, why are there still humans?

    by Bobs Telecaster on Tue Oct 13, 2009 at 06:56:18 AM PDT

  •  I want Bonddad back (3+ / 0-)
    Recommended by:
    claytonben, CWalter, cactusflinthead
  •  nobel economist (1+ / 0-)
    Recommended by:
    JanetT in MD

    Reading Elinor Ostrom's work, shows that local communities can and often do manage shared resources better on their own

    "And the dream lives on" Edward M. Kennedy

    by boatsie on Tue Oct 13, 2009 at 07:03:11 AM PDT

    •  Probably because results are (1+ / 0-)
      Recommended by:
      libnewsie

      'in your face' and must be lived with.

      Our Congresscritters are freed from the constraints of living with what they do as a result of the enormous wealth they obtain, and thus are more likely to do what is best for those that give them that wealth more than for the people they are supposed to represent.

      But there are large-scale needs that must be integrated across the entire country, so we do need some form of federalism.

      Plus, as disaster aid shows, small communities can be devastated by localized problems, and the only way to compensate is to spread the risk out over the entire country.

      Those who labour in the earth are the chosen people of God. - Thomas Jefferson

      by Ezekial 23 20 on Tue Oct 13, 2009 at 07:45:45 AM PDT

      [ Parent ]

  •  Private Sector Investment with the focus on (1+ / 0-)
    Recommended by:
    Jerome a Paris

    corporate growth and trickle down is over. Public investment by government is the only way that guarantees that economic growth focuses on the improvement of the "man-environment interface." And with human population still rising and resources dwindling, private enterprise must not be allowed to block "ecological planning". The economic issues have now merged with resource and energy concerns. This is a turning point in civilization. If wars continue to distract governments from survival issues, and corporations fail to recognize that they ultimately must serve people, things will be very tough. Stimulus spending is really a misnomer, I think a better term is survival spending.

  •  Unfortunately President Olympia Snowe (3+ / 0-)

    will shoot this down quickly.

    ............................ The Public Option IS the compromise.

    by ctsteve on Tue Oct 13, 2009 at 07:07:10 AM PDT

  •  Huh? (0+ / 0-)

    You may have missed it Jerome, but there was thing called the stimulus package.  It passed.  It's being spent a bit too slow but there is plenty of the infrastructure reinvestment that you talk of there.

    A bit odd for a European to be criticizing the American government for not doing enough, because the American stimulus package was significantly more aggressive than what Europe pulled out.

    But that's ok.  You want to keep riding our gravy train?  Go ahead.  Americans are generous like that. :-)

    If missiles were falling where my two daughters sleep, I would do everything in order to stop that. -- President Barack Obama

    by JPhurst on Tue Oct 13, 2009 at 07:09:59 AM PDT

    •  that has GOT to be the (6+ / 0-)

      most ill-informed, xenophobic response of the day.

      The american package was more aggressive than Europe's because the masters of the universe who almost brought the world economy down were all, how should I say this nicely - american banks.

      What gravy train? The only thing America has been contributing of late has been consumers.  People who consistently eat more than they produce.  You call it 'generosity'.

      The Right's heroine, Ayn Rand calls that 'Parasite'.

      Funny how that crap comes back to bite you huh?

      •  Yeah american banks like.... (0+ / 0-)

        ...Societe Generale....

        plenty of blame to go around.  Enough not to have to put up with the smugness of some Western Europeans who have become all too predictable.

        If missiles were falling where my two daughters sleep, I would do everything in order to stop that. -- President Barack Obama

        by JPhurst on Tue Oct 13, 2009 at 11:09:44 AM PDT

        [ Parent ]

    •  it's just not true (5+ / 0-)

      that European stimulus packages were less aggressive. The reality is that we have automatic stabilisers, is contra-cyclical policies that kick in without needing any specific decision (real unemployment benefits and the like). The stimulus investment came on top of that.

      As to the US package, it's still way too small.

    •  You seem to forget a few things. (3+ / 0-)

      I had the same discussion early this year on another blog. And just for fun, I looked at the US stimulus package back then. And I picked out some things that would be simply "normal" state and federal funding in most European countries. During boom and recession times.
      Some of the more obvious parts were:

      1. Health care $147.7 billion
      1. $44.5 billion in aid to local school districts to prevent layoffs and cutbacks
      1. $40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week
      1. $19.9 billion for the Food Stamp Program
      1. $8.8 billion: State Block Grants: in aid to states to defray budget cuts
      1. $14 billion: Expanded college credit to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010

      That´s roughly $250 billion of stimulus money just to come closer to European social safety net levels. And that number might be even higher because I didn´ really look at most of the "smaller" items.

      And I´ve read that the ($70 billion) tax fix "Alternative Minimum Tax" is an every year event? If true then an ordinary every year fix was included to make the numbers look more impressive.

  •  Except for health care, there's no sizable demand (1+ / 0-)
    Recommended by:
    CWalter

    for these types of investments. None.

    You expect electricity to be available all the time.  It is.
    You expect to be able to drive anywhere with your car. You can.
    You expect your house is insulated and that all your energy appliances are more efficient than they have ever been.  They are.
    You expect our educational systems to work, and although they cost more each year, you manage because you can.
    Etc, etc, etc.

    Noble ideas and intent, but outside of bad roads and bridges, the infrastructure 'need' isnt obvious at all.  In fact, arguably, its a luxury to those in the 10% unemployment slice, and those who have been unemployed so long they aren't counted anymore.  And these investments,, because of their skill level requirements, won't begin to make a dent in unemployment relief.

    The jobs lost, which were derived from a consumption based economy, arent coming back for a long, long time, if at all -- and there's nothing Obama can do about it, although I wish he could.

    Whenever you find yourself on the side of the majority, it is time to pause and reflect -- Mark Twain.

    by dcrolg on Tue Oct 13, 2009 at 07:12:18 AM PDT

    •  I expect to take trains a lot of places, I can't. (4+ / 0-)

      Have you ever tried taking a train between major cities east of the Mississippi, other than the DC - NY corridor?

      I also expect global warming to be controlled, it isn't.

    •  Err... (5+ / 0-)

      The US consumes double the energy per head Europe does, for roughly similar living standards. At a time of declining resources, and increasing dependnecy on imports, there IS a real need for oil-stingy infrastructure - weatherized houses, electric transport, public transport, etc...

      •  Consumable need drives demand for solutions (0+ / 0-)

        The consumable need for electricity is being met -- it is, right?, obviously you can look around a see electricity being used all over and conveinently too -- so there is no demand for a solution.

        The taxpayers arent seeing any need except for what I outlined.

        Whenever you find yourself on the side of the majority, it is time to pause and reflect -- Mark Twain.

        by dcrolg on Tue Oct 13, 2009 at 11:39:32 AM PDT

        [ Parent ]

        •  right (1+ / 0-)
          Recommended by:
          codairem

          it's like the old joke about falling from a cliff: "1,000m .... 900m ... 800m... so far, so good... 700m... 600m... 500m... hey, this is fine, I'm alive and having a great time...400m ... 300m ... 200m .... 100m ... I have no need for a solution to "falling" ... 50m.... 20m ... 10m ... 5m... 2m... hey, I can jump from here!"

          •  Brilliant riposte. Fits the comment (0+ / 0-)

            to a tee.  How the view came about that the government should have no role in influencing individual decisions - how "social engineering" came to be a dirty word - I will never understand.  It was certainly not so in the halcyon days of this nation, as understood by either conservatives or liberals.

            But let's grant dcroig's point for the sake of argument: only health care requires public investiment above current levels.  WHERE IS THE INVESTMENT?

            Silvio Levy

    •  How do you define (0+ / 0-)

      "electricity to be available all the time"?

      The last two times I visited friends in California (Alameda, Bay area) there was at least 1 black-out each time. From 15-20 minutes to several hours.
      During summer, during winter, every time.

      And it did seem "normal" to them? A package with candles was always in easy reach for such situations.

      •  I travelled from KS to MA to NJ... (1+ / 0-)
        Recommended by:
        CWalter

        and electricity was available all over places in the these states.

        so, in the aggregate, where's the widespread problem necessary for public policy?  There isnt.

        Whenever you find yourself on the side of the majority, it is time to pause and reflect -- Mark Twain.

        by dcrolg on Tue Oct 13, 2009 at 11:42:00 AM PDT

        [ Parent ]

  •  Jerome a Paris: From your mouth, to God's ear. (4+ / 0-)
    Recommended by:
    sabredance, megisi, TomP, Ezekial 23 20

    Your diary is spot on, and I couldn't agree more.

    Now is the time.

    "Try not to become a man of success, but rather to become a man of value." ~ Albert Einstein

    by LamontCranston on Tue Oct 13, 2009 at 07:12:57 AM PDT

  •  what makes you think (6+ / 0-)

    the summers - geithner axis is even interested in anything other than 'privatize profits - socialize costs' mantra?

    They are now joined by Rahm Emmanuel who has steadfastly supported the insurance company giveaway - everyone must buy insurance, even with taspayer subsidies but insurance companies will have no competition.

    We are not going to do any form of meaningful public investing because we have completely convinced ourselves that the government cannot do anything right.

    Let us face facts here:  the US is owned, lock, stock and barrel by corporate interests.

    I really  have no faith that Obama thinks any different.

  •  What's the return on this "investment" (6+ / 0-)

    How is it that the public assuming debt is being characterized as an investment? There are folks who work very hard to push this meme, and to these folks I would like to say: back off!

    Public "investment" is what lays down the foundation for private profit. There is no progress being made if every step being taken is a accompanied by a strenghtening of the private sector wealth engine that sends wealth upward. It is very short sighted to say we need jobs no matter what; the jobs we will get, over time as we compete ourselves to death, will be allowing survival only. It's not in our best interests to all be working if the wealth gap is increasing and concentration is at the top. Every dollar of profit works against the long term common interest in such a scenario.

    A financial investment brings in a return in financial terms for the investor. A public financial investment is never expected to do that is it? It throws money blindly to get the wealth engine puffing again because it sees no other way to immediately provide some relief to the working class, but it does so at great social cost. Borrowing our way to a lower standard of life is not a good investment for the simple reason that we will all price ourself out of house and home eventually. It's a false promise, IMHO.

    We need to get working, but in a way that opposes the status quo. If it means reinventing banking, business, healthcare or politics to benefit everyone then that is where we should all be employed. I am totally against the notion of investing more money/labor in a broken down society.

    •  Reinvention is the key (3+ / 0-)
      Recommended by:
      Jerome a Paris, sabredance, ferment

      If it means reinventing banking, business, healthcare or politics to benefit everyone then that is where we should all be employed.

      Throwing money at the existing structure is useless. Corporations have leveraged money we gave them with public investment and cheap labor at their disposal in other countries, thus decimating our workforce.

      There has never been a protracted war from which a country has benefited. The supreme art of war is to subdue the enemy without fighting. - Sun Tzu

      by OHeyeO on Tue Oct 13, 2009 at 07:32:10 AM PDT

      [ Parent ]

    •  Infinite Return Compared to Pentagon (4+ / 0-)
      Recommended by:
      CWalter, Cassandra Waites, papicek, Losty

      $700 billion a year not even including our two wars and nobody asks that about the Pentagon budget.  I can ride Acela to DC from Boston any day, but who needs a nuclear powered submarine?  An MRI machine can cost $2 million installed and a fighter jet costs $15 million.  Are we most likely to need an MRI machine or a fighter jet in our lifetime?

  •  "Runaway Debt?" - NOT! (0+ / 0-)

    The other, more reasonable argument is that debt should not be used to fund consumption

    WTF Jerome?  Why shouldn't debt be used to fund consumption?  Are you saying "Cash-4-Clunkers" was an evil plan?

    Americans have always used debt to fund consumption which is why consumption represents 70% of demand in our economy.  If consumption returned to normal levels, we would have full employment and a complete recovery.

    But no.  You want to go down the same dead-end road that Japan did in the 90's when it built infrastructure that is useless - "Bridges to Nowhere" all over the country.  That "investment" did nothing to produce prosperity in Japan.  Instead, it is still mired in its worst post-WWII recession with no end in sight.

    And please stop the fear-mongering over the U.S. debt. You are just BSing and you know it.

    •  Oh, All Righty then (4+ / 0-)
      Recommended by:
      averageyoungman, megisi, codairem, Losty

      Japan sucks because - exactly why? Oh, just because.

      So Japan does not have the 'robust' 3% GDP growth we have all come to accept as absolutely essential.

      Why?

      What is wrong with a Japanese economy that is growing at between 1% and 2% for the last 10 years?  They have had ridiculously low interest rates and fairly low unemployment rate over the last 10 years as well.

      In return, they have some of the best infrastructure in the world, awesome medical care for all citizens and a very healthy savings rate with little or no debt.  And unlike the US, their current account is actually positive and has been positive throughout the so called 'lost decade'.

      So, to summarize: they have good healthcare, great infrastructure, low debt, high current account and low interest rates and unemployment.  But their GDP grows at 'only' 2% and have not had a bubble since the real estate bubble back in 1996.

      We, on the other hand are swimming in debt, our health care sucks, unemployment is at 10%, lousy trade balance and our savings rate, until recently has been abysmal.

      So, what's with the senseless Japan bashing just because they don't hew to the University of Chicago model of economic prosperity?

      •  Oh really? (0+ / 0-)

        NY Times:

        TOKYO — Japan’s economy, the world’s second largest, is deteriorating at its worst pace since the oil crisis of the 1970s, hurt by shrinking exports and anemic spending at home.

        The country’s real gross domestic product shrank at an annual rate of 12.7 percent from October to December after contracting for two previous quarters, the government said Monday.

        The fourth-quarter results were Japan’s worst quarterly drop since its economy contracted at an annual pace of 13.1 percent in the first three months of 1974. Japan’s export-driven economy is particularly vulnerable to the current downturn.

        "There’s no question that this is the worst recession in the postwar period," Japan’s economic minister, Kaoru Yosano, said after the results were released.

        The dismal figures also place Japan firmly among the worst-hit in the global crisis, dwarfing economic declines in the United States and Europe.

        Little or no debt?

        March 31 (Bloomberg) -- Japan’s public debt is likely to surge to 197.3 percent of gross domestic product next year, limiting the government’s ability to spend more to revive growth, the Organization for Economic Cooperation and Development said.

        "With the debt ratio projected to approach 200 percent in 2010, the scope for additional fiscal stimulus is limited," the Paris-based organization said in a report today.

        The deepening global slump has spurred unprecedented drops in exports and industrial output and pushed unemployment to a three-year high.

        In November, the OECD estimated the ratio would rise to 177 percent next year. The debt burden was 172.1 percent in 2008, the highest among member countries, compared with 71.9 percent in the U.S. and 113.1 percent in Italy, OECD data show.

        The Bank of Japan needs to keep interest rates close to zero and continue its asset-purchase program until there is a "definitive" end to deflation, today’s report said.

        Thanks for the BS.

        •  ummm... significant difference: (1+ / 0-)
          Recommended by:
          Jerome a Paris

          Japan's debt is owed to itself which is what I was alluding to - their savings are invested in their own country which pays for all their infrastructure and medical benefits.

          Essentially, japanese use debt to redistribute savings amongst themselves.

          We use debt to... well, among other things, pay the japanese who manufacture those 52 inch TVs.

          Big difference.

          •  OK then (0+ / 0-)

            So Bloomberg and the OECD don't know WTF they are talking about and you actually understand Japan's financial situation sooo much better.

            Yeah, I'm just sure that is true.

            •  ooh. snap! (0+ / 0-)

              so much easier when you can just defer to them thar experts.

              Relieves you of the responsibility to actually, um, ThinkFirst

            •  the level of indebtedness (2+ / 0-)
              Recommended by:
              CWalter, codairem

              and who you owe it to are both relevant points. A high level of debt which is self-financed is not the same thing as a high level of debt funded by foreigners.

              •  Huh? (0+ / 0-)

                A high level of debt which is self-financed is not the same thing as a high level of debt funded by foreigners.

                That makes no sense. I would much rather have the Chinese owning our debt.  Then we can generate more debt when we need additional stimulus.

                Speaking of the Chinese, I found this interesting:

                China's vehicle sales vaulted 78 percent in September from a year earlier, widening a lead over the U.S. as the world's top auto market, with sales spurred by tax cuts and government stimulus spending.

                Overall vehicle sales totaled 1.33 million units, while passenger car sales climbed 84 percent to 1.02 million units, the China Association of Automobile Manufacturers reported.

                Total sales for the first nine months of the year rose to 9.66 million units, up 34 percent from a year earlier, it said.

                September was the seventh month that China's auto sales, boosted by tax cuts and subsidies as part of Beijing's stimulus, exceeded 1.1 million units.

                China leads the world in total 2009 sales, with the U.S. in second place with January-September sales at about 7.85 million units. U.S. sales fell 23 percent from a year earlier in September to just under 746,000

                 AP

                Looks like the world's most successful economy is ignoring your advice completely.

    •  I said it was a "more reasonable" argument (4+ / 0-)

      not one that absolutely had to be followed.

      Debt for consumption is dangerous, in general. It can be argued that today is a special case when it's justified. It can still be argued that it's a dangerous path.

      Debt for investment is much easier to justify.

      •  bullshit (1+ / 0-)
        Recommended by:
        Azazello

        Why be even slightly defensive over this?

        It is time we got up and said it loud:  debt driven consumption as a principle of long term economic prosperity is a terrible idea. It is not dangerous in general.  

        It is dangerous. Period.

        The only way to justify borrowing against tomorrow to consume today is that we will consume less tomorrow when we have to pay back the borrowing.

        Does anybody believe that is likely?

        •  Hmmm (0+ / 0-)

          So if I use my credit card to buy a new suit and shoes to go to a job interview, and I then get a job that doubles my salary, using debt to consume was a terrible idea?

          Thanks for the nonsense.

          •  yes, especially if you did NOT get that job (0+ / 0-)

            and if you got that job because you bought an Armani you could not afford then the guy who hired you is a moron as well.

            See, there is the problem with the debt for consumption argument -it always assumes that the consumption leads to better outcomes, never worse outcomes.

            That is why it was seen as such a great idea to take out home equity to go on a cruise and buy that 52 inch plasma TV. How did that work out?

            The only time debt for consumption makes sense is if the cost of debt is low enough and the consumption can be reasonably expected to produce returns in excess of that cost.  

            Paying 26% interest rate on an Armani suit in the hope that a job interview in that suit nets a doubling of salary is called 'gambling'.

            You might as well borrow money to bet on NFL Games.

      •  Car loans are "dangerous?" (1+ / 0-)
        Recommended by:
        libnewsie

        Debt for consumption is dangerous

        You sound like some Puritan from 400 years ago.

        •  Of course it is dangerous (1+ / 0-)
          Recommended by:
          SpamNunn

          If you take out a 50k loan on a 70k salary to buy that BMW.

          It is dangerous even if you take out that 15k loan to buy that used Honda Accord, but if that is the only way you can get to work then you have no choice.

          Recognizing that debt driven consumption is dangerous is the first step to being prudent in our consumption.

          But people do dangerous things all the time. And they don't think it is dangerous.  Until they get burned by it.

          •  How about student loans? (0+ / 0-)

            Are those "dangerous" too?

            At least with loans for consumption, you can always declare bankruptcy and walk away.

            Student loans never go away and the pay off may never happen.

            But if you really want to do something dangerous with your credit rating, here it is:  get married.

            I'll take the $70K BMW thank you.

            •  Oh, brother! (1+ / 0-)
              Recommended by:
              CornSyrupAwareness

              Student loans are the best example of a true investment founded in debt.  The expected payoff is certainly higher as I (and countless others) can personally attest having financed an advanced degree in that manner.

              Borrowing 70k for the BMW that loses 10% of its value coming out of the dealer's lot is the dumbest possible consumption from debt - especially when that 25k Honda will do just as well.

              I am starting to smell a troll here... no one can be quite this clueless and sound reasonably intelligent at the same time.

              •  Student Loans are just wonderful (0+ / 0-)

                because grads always get great jobs to pay them off.  Yeah, right, that is sooo true.

                Even Pres. Obama was "broke" for many years trying to pay off his student loans.

                On the other hand, let's say you are a real estate broker who needs to drive clients around - BMW or used Accord?  Hmmm.

        •  Car loans ARE dangerous (1+ / 0-)
          Recommended by:
          codairem

          if you're already deep in debt. It's all relative. At current levels of US household debt, yes, most consumer debt is dangerous.

          •  If you default on a car loan (0+ / 0-)

            they repo the car.

            If you default on a student loan or child support, you can't just walk away.  In fact, you may go to jail.

            So student loans and having kids are waaay more dangerous to you than a car loan.

            Most Americans have some consumer debt and have no problem managing it.  It has been that way for decades and is the primary reason for America's economic preeminence in the world economy.

            At current levels of US household debt, yes, most consumer debt is dangerous.

            Hopefully, no one listens to your advice because otherwise we will have major unemployment problems for years to come.

  •  Jerome, we are going to have to remake... (2+ / 0-)
    Recommended by:
    TomP, Only Needs a Beat

    the economy, with the demand for public sector investment. Obama won't do it for us. But he might, if the pressure is strong enough, respond to grass roots efforts to rebuild our infrastructure with the creation of public sector jobs.

  •  Good post. (4+ / 0-)

    If the Democrats and Obama want to stay in office, they will do something about jobs.  The only answer is government investment.

    "Free your mind & your ass will follow" Parliament Funkadelics

    by TomP on Tue Oct 13, 2009 at 07:39:37 AM PDT

  •  Obama has no interest in re-making the economy (3+ / 0-)
    Recommended by:
    Tanya, pkbarbiedoll, Wom Bat

    He's as ardent a defender of the status quo ante as we've ever seen.  He looks good in contrast to Bush only to the extent that Bush was actively trying to change somethings for the worse.

    This country does not have the luxury to entertain idiocy as if it is reasonable. --Digby

    by Thought Crime on Tue Oct 13, 2009 at 07:41:01 AM PDT

  •  Productivity is the root of all wealth (1+ / 0-)
    Recommended by:
    libnewsie

    Our standard of living and our ability to pay for the things we deem important is based on our ability as individuals and as a society to produce.  When the output per man hour goes up wealth is created. (Its NOT created by printing more money, a fact lost on many politicians of both stripes)

    I agree there are some infrastructure investment like the electrical grid which would provide a positive net return on investment.

    However, the government is notoriously inefficient at allocating investment resources due to the unavoidable meddling by politicians with political self interest as their primary concern in investment asset allocations.

    The private sector is the place where such decisions can be made in an efficient manner.  If the government wants the grid updated the most efficient approach would be to provide tax incentives to the private companies to foster such behavior.  similar arguments exist for other opportunities.

    when politicians make technical decisions we get debacles like the (ongoing) alcohol fuel program which doesn't save oil, wastes billions of gallons of precious water, and raises food prices worldwide.

    We need solutions that work, not ones that are politically attractive.

  •  CNN reports: No Jobs till 2012 (3+ / 0-)
    Recommended by:
    averageyoungman, sabredance, Losty

    They cheerleaded the stock market resurgence, and in the same breath smugly stated that jobs would not reappear until at least 2011-2012.  

    Sunshine on my shoulders...

    by pkbarbiedoll on Tue Oct 13, 2009 at 07:47:50 AM PDT

  •  This war was lost in April (3+ / 0-)
    Recommended by:
    CWalter, Tanya, gatorcog

    Obama is just not going to do it, for whatever reason.  If he was, healthcare would have been handled differently, and probably even Afghanistan.  He obviously does not see either the necessity or the urgency.  And he is not going to get a clue while most of the MSM is saying it's over.

    I will admit I'm surprised by the nonchalance toward the unemployment rate shown by this administration.  My only supposition is that Rahm is single-mindedly executing the Republican playbook; the guy with the most corporate money and the most TV commercials always wins. Wall Street uber alles.

    •  I think he's fearful (1+ / 0-)
      Recommended by:
      CWalter

      ...of being perceived as "uppity" if he tries to make substantial changes. He wants to be liked by everyone, but I fear his meekness on taking on major issues to help the common man will be the hallmark of this administration. Very unfortunate.

      The Democrats just never learn: Americans don't really care which side of an issue you're on as long as you don't act like pussies - Bill Maher

      by Wamsutta on Tue Oct 13, 2009 at 08:08:36 AM PDT

      [ Parent ]

      •  We are well beyond the viability... (2+ / 0-)
        Recommended by:
        CWalter, gatorcog

        Of that as an excuse. I will admit he has an apparently obsessive compulsion to seek consensus, however the HCR debate has proven beyond doubt that the majority that elected him are ready for the change his election, we thought, entailed. I mean, if sentiment for reform can survive that madness, amplified by the media, people are hungry for change.

        The fringe may be racially motivated, but they are just that, the fringe, and as economic matters progressively worsen, the desire for that change will be even stronger.

        In short I don't think this explains his actions. A portion of it is cautiousness, yes, but IMO an even larger portion is a philosophy of "incrementalism" across the board.

        As the former Bush might say - "Nawt Gunna Do'et."

        Slap happy is a platform.

        by averageyoungman on Tue Oct 13, 2009 at 09:16:18 AM PDT

        [ Parent ]

      •  He is a people-pleaser, IMO (0+ / 0-)

        tend to be nice folks, but to spend too much time thinking about the best way to make everyone happy instead of taking a stand (risk) and getting the job done.

  •  Not a Transformational President (4+ / 0-)
    Recommended by:
    Churchill, sabredance, megisi, Tanya

    We won't be seeing much in the way of diverting resources from the super-wealthy to the public. Not while the super-wealthy own our Government.

    We need a fire-breather, not another round of Kumbaya-By-The-Kampfire. And that simply isn't who Obama is, which is a shame at this critical time in US history.

    The Democrats just never learn: Americans don't really care which side of an issue you're on as long as you don't act like pussies - Bill Maher

    by Wamsutta on Tue Oct 13, 2009 at 08:01:32 AM PDT

  •  yet another reason... (1+ / 0-)
    Recommended by:
    Tanya

    the inflation hawks can be safely ignored. Business has no confidence in the economy.

    One must beware, though, of businesses becoming financially innovative, such as investing their proceeds in Dead Peasant Insurance.

    Too many books, too little time. . . .

    by papicek on Tue Oct 13, 2009 at 08:01:48 AM PDT

  •  I naively believed ... (3+ / 0-)

    ... that the stimulus would be used in a genuinely transformational way.

    Smart electrical grid
    Energy makeover
    Forward-thinking transportation
    Security hardening
    Health care delivery advances such as PCMH
    Idea incubation for entrepreneurs and inventors

    That's what I get for listening to fucking campaign speeches, however artfully delivered.

  •  He is re-making the economy (3+ / 0-)

    by continuing the policies designed by Goldman Sachs, Citi, Bank of America, Morgan Chase and their cohorts. He's continuing the project of re-making the economy that Clinton and Bush pushed forward so ably.

    Sometimes the choices are Either-Or, and this choice on the economy is/was one. I mean, sometimes you can do Both-And for a while. Like LBJ tried to do Guns and Butter at the same time, which he got away with for a while but not for long. And it only works when the different options are not totally inimical to each other.

    In this case, Obama made the choice that protecting the interests of the upper 1% was priority number one. And their interests are inimical to the interests of the other 99% of us, so it's not like this is somehow going to offer us some opportunities to benefit from the exaltation of the 1% or even to gain some ground in spite of them. Their aim is to accrue even more wealth to themselves at everyone else's expense. So most of the "public investment" thus far has consisted of short term programs to temporarily make the economic numbers look better (so stocks could recover some of their value) and long term debt for the American people so that the zombie banks could be reanimated. Similarly, the guiding principle behind the health care "reform" effort has been that corporate profits must be protected, especially from any of the possible efficiencies that could have occurred by expanding Medicare or leveraging the government's volume buying power to get decent prices on prescription drugs.

    The fundamental decision on whose economic interests to promote and protect is not one of those decisions you have both ways. And it's not one that the people in charge made lightly and are apt to suddenly have a change of heart about. This is at the core of what they are about politically, the central tenet of New Democrat/DLC/Blue Dog alliance that has dominated the party for 20+ years. Reward corporate America and they will donate big money to your campaigns and not undermine your credibility too much in the media, thus letting you win elections and maybe have a chance of getting your majority in Congress back. And it worked! Here they are with majorities in both houses of Congress plus the White House—why would they suddenly change now?

  •  No one man can remake an economy (2+ / 0-)
    Recommended by:
    CWalter, papicek

    Central planning always fails -- even the language of it doesn't work and puts too much pressure on a leader.  The president is NOT in charge of the economy -- you and I are.  We are in charge by our consumer choices, lifestyle, and the hundreds of decisions we make each day on whether our choices reflect a pro-community outlook.  Act locally -- shop locally, avoid chains, support community centers.  The "national" economy is not our major concern -- our closest family, friends and neighbors are our first concern and if we all started doing that, we would be a healthier and happier society.  The goal is not a rich and wealthy society, but a happy one.  

    •  FDR remade the economy (4+ / 0-)
      Recommended by:
      libnewsie, CWalter, Tanya, codairem

      as did multiple other efforts such as the Marshal Plan Europe. THe efforts to remake the Japanese economy. There are also the efforts going on in countries like Brazil right now which are both growing the middle class and leading to energy diversificiation (indeed, they were the first to go into the recession and the last to come out).  I can go on. Your thesis is wrong. It is no more correct or certain than any of the other certainties that neoliberals like to argue. The truth is it depends is the correct answer rather than ideological spin of economic history.

    •  I disagree. (9+ / 0-)

      One man destroyed an economy.

      His name was Ronald Reagan.

      One man can restore sanity, or at least lead the way by providing the bully pulpit to denounce and refute trickle down economic theory.

      Is Obama the right man to do the job?

      Try to make it real, compared to what.

      by shpilk on Tue Oct 13, 2009 at 08:47:39 AM PDT

      [ Parent ]

    •  Huuh? (2+ / 0-)
      Recommended by:
      Jerome a Paris, codairem

      "Central planning always fails "

      That is how the USA planned, executed and implemented  massive programs to fight  and win in WW 2.  "Failed".

      That is how China grows at 9-11% a year  for the last 30 years.  A command economy.

      Obviously both of those central planning examples were failures, we just don't know it yet as our conservative bretheren have known and believed it to be universally so for years!.

      That is a (S.N.A.R.K.)

      need it spelled again, in case you missed it the first time?

      "Central planning alway fails"  Did you just make this up?

      Says who, or do you believe just what you want to believe and ignore reality?

      cast away illusions, prepare for struggle

      by Pete Rock on Tue Oct 13, 2009 at 09:27:05 AM PDT

      [ Parent ]

    •  No person can remake the economy (0+ / 0-)

      but they can if they are elected to the highest most powerful position in the government they do have the power to use the bully pulpit and in Obama's case put the money where his mouth is. He choose the freemarket neolibs who are in charge of the economy. He could if nothing else use his considerable talent to make a case for regulation and the building a real economy, where were able to work and this country produces something other then debt and gambling on our misery.

      Other then this I totally agree with the rest of your comment. Community is the only solution we have at this point,and it's up to us to create en economy that we can actually live in. I think it's hard for a lot of people to admit that this party's over and the too bigs like the dinosaurs are going to fall all on us all. The too bigs can mandate all they want but you can't get blood out of a turnip. The feds seem to be just the enforcers for their looting and destruction.      

  •  Class warfare, and the wealthy continue to win. (13+ / 0-)

    Every sign points to the disparity between the wealthy and everyone else is growing again, and this time it's throwing millions of people in the middle class out of their jobs and homes.

    How long will the Democratic Government in DC allow this to go on without taking strong action?

    Tax the wealthy, tax the corporations, tax speculation, tax dynasties.

    Until meaningful progressive taxation is restored, the economy will continue to operate under Reagan's VooDoo economic reign.

    When will Obama put a stake through the heart of trickle down economics?

    Try to make it real, compared to what.

    by shpilk on Tue Oct 13, 2009 at 08:46:12 AM PDT

  •  If government spending stimulus is the (0+ / 0-)

    answer to economic woes, then it is hard to argue that the government has not spent enough money in last ten years.

    The USA government has been spending like crazy for at least the last ten years and the economy is still in the toilet.  So like your whole argument doesn't really make all that much sense at least from a historical perspective.

  •  Is the power grid... (0+ / 0-)

    ...a state/private thing?

    Or can the government build a "national" power grid etc.?

    There's something attractive about invincible ignorance... for the first 5 seconds.

    by MNPundit on Tue Oct 13, 2009 at 09:17:17 AM PDT

  •  Incurring more debt won't be a solution. (2+ / 0-)
    Recommended by:
    Jerome a Paris, Kimball Cross

    Instead, we need to pare back the military by at least $200 billion, and re-direct those funds to the infrastructure you mention.  Get the ex-servicemen/women who would inevitably be shed by such military budget cuts to work on the infrastructure projects.  Hell - they've spent so much time over the last 8 years on "nation-building" efforts that have proven largely futile overseas; it might be nice for them to try nation-building at home for a change.

    I'd rather have a bottle in front of me than a frontal lobotomy.

    by TheOrchid on Tue Oct 13, 2009 at 09:27:24 AM PDT

  •  US spent $2.4T on "stimulus", no money left.. (1+ / 0-)
    Recommended by:
    codairem

    US is making investments but in the wrong areas.

    1. $800B investment in AIG, CitiBank, et al.
    1. $800B "stimulus" most of which was $400B of wasted tax cuts.
    1. $800B planned investment in health insurance companies.

    So US has or will spend $2.4T on "stimulus", a 20% of GDP shot, but it is misspent money and there's none left. Sorry.

    But take hope, the failure of the GOP stimulus will lead to Democrats being blamed for the failure (they did go along with it) and in 2010 will get more GOP elected and policies will be even worse.

  •   Right now, we have runaway debt and no real (0+ / 0-)

     recovery plan, ie the worst of all worlds.

     Obama will go only as far as he is pushed to go.

    He doesn't need a "public option" until health care transform is hostaged to a genuine PO passing in Congress.

    Same goes for massive public investments to transfrom the economy.  The really rich don't need it, but if it is a choice between doing nothing and inflaming class war, and getting  some inflation and spending down to the masses that will support those companies starving for business...well...
    maybe.

    cast away illusions, prepare for struggle

    by Pete Rock on Tue Oct 13, 2009 at 09:34:08 AM PDT

  •  Financial sector deregulation=disincentive (2+ / 0-)
    Recommended by:
    Jerome a Paris, codairem

      Why would a manufacturer invest in domestic production capabilities right now?  Aside from the fact that win or lose, you stand to make a killing of a living by working in the financial industries vs manufacturing for a lot less investment, the bankers call all the shots and hold all the cards.
      Say you've worked hard for decades, gone public, and make a decent living for yourself and your employees.  Some punk can sell you short, destabilize your hard-won trust from investors and customers, and kill your company for a short-term gain.  And those punks are so important to the fabric of American society, we won't let them wreck their own companies when they try, and we'll pay them bonuses to boot for their "efforts".
      Who in their right mind wouldn't offshore production, even if they didn't want to?  It is the only long-term economically viable model right now, and I'm sure the bankers love how removing American jobs from the calculations lends them invisibility.  Oh, and domestic industries like construction, healthcare, and education cannot escape the economic pressure form the shrinking manufacturing base, so they must downsize or die as well.
      Meanwhile there is no capital for small or startup companies, and little credit for individuals to afford anything more than necessities... and they are all tied to the bigger economic picture in a truly brutal way.  
     There will be no improvements in job growth until it's safe again to invest in America.

    "Pro life" my ass!

    by jhop7 on Tue Oct 13, 2009 at 09:45:42 AM PDT

  •  No new net investment is indicative of people (1+ / 0-)
    Recommended by:
    Samulayo

    being reluctant to spend money when they know that they will not be permitted to retain the fruits of their investments.  Do you agree with JFK, Jerome?:

    Our true choice is not between tax reduction, on the one hand, and the avoidance of large federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget — just as it will never produce enough jobs or enough profits. Surely the lesson of the last decade is that budget deficits are not caused by wild-eyed spenders but by slow economic growth and periodic recessions, and any new recession would break all deficit records.

    In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. The experience of a number of European countries and Japan have borne this out. This country's own experience with tax reduction in 1954 has borne this out. And the reason is that only full employment can balance the budget, and tax reduction can pave the way to that employment. The purpose of cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.

    I repeat: our practical choice is not between a tax-cut deficit and a budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy, or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve, I believe — and I believe this can be done — a budget surplus. The first type of deficit is a sign of waste and weakness; the second reflects an investment in the future.

    - John F. Kennedy's 1962 address to the Economic Club of New York

    Full text, here:  http://www.americanrhetoric.com/...

    Having credibility when making an argument is the straightest path to persuasion.

    by SpamNunn on Tue Oct 13, 2009 at 09:58:10 AM PDT

  •  Since Obama hasn't led yet, he won't lead now (1+ / 0-)
    Recommended by:
    Liberalindependent28

    a good and decent man who saw wrong and tried to right it, saw suffering and tried to heal it, saw war and tried to stop it. 80% of success is just showing up!

    by Churchill on Tue Oct 13, 2009 at 10:02:42 AM PDT

    •  None of these accomplishments showed leadership: (2+ / 0-)
      Recommended by:
      Churchill, codairem
      * Included funding for "green" jobs in the stimulus bill * Initiated first steps to develop a legally-binding treaty to reduce mercury emissions worldwide * Dedicated more than $60 billion for clean energy * Instituted "cash for clunkers," getting more fuel efficient cars on the street * Allocated $2 billion in stimulus cash for advanced batteries systems (for automobiles) * Declared (via EPA) carbon dioxide a threat to health, the first step towards regulating greenhouse gases under the Clean Air Act * Funded Energy Efficiency and Conservation Block Grant, which gives $2.8 billion to cities * Put over 2 million acres of wilderness, thousands of miles of river and a host of national trails and parks under federal protection, the largest conservation effort in 15 years * Funding a $475 million initiative to restore and clean the Great Lakes * Overturned the federal funding ban for stem cell research * Instituted better standards for comparative research in medicine and an agency to handle this * Added staff to the FDA and brought back emphasis on science * Allocated over $1 billion to the National Institutes of Health, whose budget Bush let stagnate * Eliminated funding for abstinence-only education * Signed an executive order repealing the "Mexico City policy" or "global gag rule" that withheld U.S. funds from organizations that discuss or provide family planning services abroad * Announced US would resume contributions to the UN population fund for family planning and more than double the previous contribution made in 2001 * Appropriated $19 billion in the stimulus package to help implement an electronic medical record system * Set aside billions in budget to overhaul the health care system * Enacted Children's Health Insurance Program Reauthorization, providing healthcare to 11 million children * Established 65% COBRA subsidy for 7 million unemployed Americans * Allocated $1 billion for prevention and wellness programs * Provided $87 billion to states to bolster their Medicaid programs during the downturn * Increased funding for urban HIV/AIDS Prevention and Awareness * Included provision in stimulus legislation that, for the first time, supported the ideas of Net Neutrality-like non-discrimination and openness for the Internet * The administration demonstrated a new commitment to fighting for change on the UN Human Rights Council by announcing it will run for a seat next year, reversing the Bush administration boycott * Announced that the U.S. will support a United Nations declaration urging nations to decriminalize homosexuality * Created office of Urban Policy * Gave Department of Justice $2 billion for Byrne Grants, which funds anti-gang and anti-gun task forces (cut during Bush years) * Allocated $5 billion for early learning programs, including Head Start, Early Head Start, child care, and programs for children with special needs * Signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act to protect Americans from unfair and deceptive credit card practices * Enacted the Making Homes Affordable Program * Boosted credit flow to small businesses * Increased focus on funding for high speed rail * Funded the Community Oriented Police program (COPS) * Appointed first Hispanic justice to the Supreme Court and most qualified Supreme Court candidate in decades * Revoked Bush administration executive order on regulatory review that enabled political appointees at the White House's OMB to override agencies' rulemaking, undermining everything from worker safety to environmental protection * Signed 3 executive orders, including one reversing a Bush order to limit union representation on federal contracts * Moved to prevent federal contractors from being reimbursed for unionbusting propganda compaigns during collective bargaining * Signed executive order overturning Bush administration's ban on project labor agreements (PLAs) on federally funded construction (PLAs set wages and establish work rules and methods of settling grievances on large multi-contractor construction projects) * Signed the Lilly Ledbetter Fair Pay Act, guaranteeing the right to sue for wage discrimination based on gender, race, disability, etc. * Extended unemployment benefits for struggling Americans

      * Obama's Department of Transportation has approved 2,500 highway projects * Cut taxes for 95% of all working families * Provided over $500 million in funding for vocational rehabilitation services to help with job training, education and placement

  •  What to make of this then? (3+ / 0-)
    Recommended by:
    CWalter, ferment, codairem

    From Salon

    Obama backs off on big business

    Specifically, the Obama administration had hoped to raise $200 billion dollars by ending the tax break that allows "allows American multinationals to defer paying taxes on revenues earned abroad until companies repatriate them." The WSJ article is a blow-by-blow description of how big business rallied its forces to oppose closing the tax-deferral loophole, and, apparently, won the battle.

    News like this really makes my blood boil.

    Who the fuck is on our side? Anyone?!?

    As far as I'm concerned, these corporations are committing treason by willingly sabotaging our economy.

    -8.00, -8.26 "Fascism is capitalism plus murder." - Upton Sinclair

    by djMikulec on Tue Oct 13, 2009 at 10:18:32 AM PDT

  •  Wrong. (0+ / 0-)

    Glossing over the problem with "Second Stimulus" is bound to repeat the Japanese debacle.
    How is it that no one gets what happened in Japan?
    Until we reconcile the fine art of book keeping, realize private sector losses accordingly, no amount of stimulus will pull us out.

  •  Y'know, the US government can issue its (1+ / 0-)
    Recommended by:
    codairem

    own currency, and lend it at reasonable rates. Completely cutting the bankers out of the game. Just like Lincoln did to finance the Civil War, and just like the Populist Movement wanted the US to do during the 1880-90s.

    It just takes one Executive Order to do this.

    Until we break the corporate virtual monopoly on what we hear and see, we keep losing, don't matter what we do.

    by Jim P on Tue Oct 13, 2009 at 10:53:05 AM PDT

  •  something continues to disturb me a great deal (5+ / 0-)

    and diaries that posit positions such as this that the economy requires much more growth before prosperity can return. I believe that is the underlying premise anyway.

    My question is how much growth can the planet survive on a global basis.

    There seems still be a total disconnect between growth in economic terms and population growth and what our responsibilities are to reduce growth and over use of remaining finite resources and actual planetary survival.

    We don't seem to be having these conversation in tandem but completely eparate as though one has nothing to do with the other.

  •  Somehow, I (2+ / 0-)
    Recommended by:
    bruh1, CWalter

    don't see BO remaking anything, much less the economy.

    Hey, he could surprise me though.

    The banks have a stranglehold on the political process. Mike Whitney

    by dfarrah on Tue Oct 13, 2009 at 11:11:10 AM PDT

  •  We have more than one branch of government (2+ / 0-)

    So Obama isn't going to doing jack unless the Congress, at the very least, agrees to do so. Heck, conservatives are already pushing the idea of a SCOTUS challenge of the health care bill when it passes.

    I'm sorry, but any analysis that doesn't focus on our present system of government, but instead pretends that we live in a dictatorship where "Obama can remake the economy" as in the way suggested in this diary, is not helpful in advancing our causes.

    I want to know how we overcome the naysayers, we know who they will be, can't we devise some strategy that deals with them? Have we learned nothing in this health care battle about the extremes these powers are willing to go to in order to maintain their grip?

    We must also persuade our fellow citizens that we need to go as far as suggested in remaking the economy. There is no analysis here of how to do that. Yes the country generally supports most of our ideas in polling, but as we've seen with health care, they don't exactly rise up to throw corporate power off their backs.

    So even with all the bad news, all the suffering going on right now, all the lamenting about Obama, and the capitalist structure as we find it now, no one has talked about a real plan to move people and thus over the government. That is what it is going to take. The President isn't going to march off a political cliff, he just isn't. No politician is likely to do so unless we galvanize people. Yelling at politician to act in ways counter to their political survival doesn't work for what we need to do.

    So fellow Progressives, if you want to remake the economy in the way people are wishing for in the comments, then you must lead. You must step away from the whine machine and go block by block an organize a movement so massive and resolute that it can overcome the opposition. Since you don't like the leadership you have, you must lead that it how it has been done in the country. FDR and LBJ were able to get things done because there were already popular movements organizing and agitating. That is what we must do.

    "Most people would sooner die than think; in fact, they do so." ...Bertrand Russell

    by sebastianguy99 on Tue Oct 13, 2009 at 11:37:52 AM PDT

  •  Won't happen (0+ / 0-)

    this is twilight of the empire Jerome. Spain. The Netherlands. Britain. US. Inevitable.

    Sponge Bob, Mandrake, Cartoons. That's how your hard-core islamahomocommienazis work.

    by Benito on Tue Oct 13, 2009 at 11:52:36 AM PDT

  •  the return of our pension funds is a bad thing? (2+ / 0-)
    Recommended by:
    sebastianguy99, CWalter

    Most Americans are invested in the stock market through their pension fund. Even if they do not have a 401K, that is where their union/firm has invested their pension funds.

    The fact that the stock market has returned means that millions of Americans will be able to retire with a little more finacial peace of mind.

    It also means that current workers (future retirees) will not have their pensions cut (as much).

    I get what you are saying about investment, but you underestimate the impact the stock maket has on the working class.

  •  INCOME TAX INFORMATION (0+ / 0-)

    Where can i go and find out the real truth on what is the actual percentage breakdown on who pays taxes. These income level examples such as what percentage from 0-10,000 pay to 10-001-20,000 and so forth?

  •  JP, your stuff is always informative and (3+ / 0-)

    elicits excellent comments. Thanks.

    When an old man dies, a library burns down. --African proverb

    by Wom Bat on Tue Oct 13, 2009 at 12:49:13 PM PDT

  •  But he won't. (1+ / 0-)
    Recommended by:
    Sagebrush Bob

    a hard rain's gonna fall

    by Paul Goodman on Tue Oct 13, 2009 at 01:08:46 PM PDT

  •  I don't know how what you suggest (0+ / 0-)

    amounts to remaking the US economy - but I support the gist of it.  I don't really know if there is something unprecedented about it either.  American infrastructure has been declining for the past 30 years.  Every president has had a chance to advance projects like light rail and has chosen not to.  Hopefully Obama reverses the trend.  I'm skeptical.

  •  If they're not investing in the real economy, (0+ / 0-)

    what are the speculators going to do with their money next?

  •  Actually, no (0+ / 0-)

    The main argument against government spending and borrowing is that it will "crowd out" investment in the private sector (ie prevent it from happening) and increase interest rates.

     Actually the main argument against it is that our foreign creditors are getting ready to balk at loaning us more money.

    "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

    by gjohnsit on Tue Oct 13, 2009 at 03:38:23 PM PDT

  •  I agree wholeheartedly. (1+ / 0-)
    Recommended by:
    codairem

    From an older capitalist perspective, Obama's government could prime investment in new companies and new industries with government money, research, and attention.  Money currently parked (from corporate surpluses accrued by cutbacks, etc.) would probably follow.

    From a more leftward perspective, Obama's government could do far more.  

    1.  He could declare that any corporation that went chapter 11 (perhaps above a certain size) would be taken over by the workers with government funding and involvement, to continue in business run by the workers.  Management and board of directors could stay on as fellow-employees if they liked, but only at parity wages, not at exorbitant salaries.  I'd bet that 70-80% of such companies would end up doing better than they had, in real terms of benefits to all company people and the communities in which they operate.
    1.  He could re-nationalize those functions that have been privatized.
    1.  He could break up the "too big to fail" banking conglomerates, replacing them with publicly owned (or not) smaller banks.
    1.  He could get the United States to withdraw from the World Trade Organization, thus breaking its power.

    I could go on.  I won't.  But, as usual, Jerome, you're right on it.  

  •  Jerome's right, this is a paradigm change (1+ / 0-)
    Recommended by:
    codairem

    If that chart is right then private investment has fallen to near zero. This is unheard of in the post WWII era. If we are about building a sustainable civilization it may happen with a government-industry partnership, something new. I don't see the private sector fueled by new potential profits and the accompanying bubble. Most likely the government will push the new economy. This is heresy to the Free Market fanatics. Building a new economy is complicated and some of the steps will require government funding, government direction and government research. Some of the steps will have negative earnings by themselves, kind of a moat to jump over.

    I agree that spending stimulus is not a long term strategy. Where is the long term return? This is future debt for current consumption. On the other hand, infrastructure spending had better be really well targeted to have a long term payback. If not, then it's all the same. I think that we are stuck in the rut of funding public projects based on the grants available and not the long term return on investment, that is, not targeted to build the next economy. It all comes down to vision and leadership.

  •  No, That's the Wrong Direction (0+ / 0-)

    This is not an opportunity for public investment. It's an opportunity to fix the structural problem, which is the poor international trade agreements the U.S. has signed.

    These treaties allow companies to sell products in the U.S. that are not made to our standards of wages, workplace conditions, or environmental standards. The U.S. should use this opportunity to renegotiate those treaties so that they include, at a minimum, an international minimum wage that is some fraction of our domestic one.

    The U.S. has to send a strong message to the corporate world that the free ride of making profits off wage arbitrage is over. Unless we do that, we will continue to see a weak economy stagger from recession to recession.

    A strong indication that we will not accept products made with cheap labor is essential to inducing corporations to start to build manufacturing in the U.S. This is crucial to our financial future. Without wealth-creating jobs in this country, we cannot afford to pay off our debts. Currently, 40% of tax dollars are going to pay off federal debt. Private debt is even more staggering, especially now that many mortgages are under water.

    We have two choices. We can continue to do what we are doing or we can make a stand against continued deterioration. If we insist that all products sold in this country be made to the same standards that we expect here, then we can help raise the standards of other countries to ours. If not, we can continue to descend to third-world standards. I'm really tired of seeing the enormous wealth and civil society we've built pissed away by poor trade policy. Please help me get the message out.

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