Category Archives: The Economy

The news is full of people telling us how the downturn is going to be worse and the Obama recovery plan is not going to work. They are saying there is a disconnect between the plan and the reality.
The disconnect exists because the top tier of the economy, people who collected the big bonuses and extravagant salary and benefit packages of large corporations, have become accustomed to government handouts while making sure that there are no handouts to anyone who actually needs one. When the government gives to banks and corporations, it is supporting the market economy. When it gives to working people, the middle class, or to the poor that is Socialism.
Here is how the bailout has worked so far: every dime that the Government has given to banks and corporations to spur the economy is still in the pocket it went into. Owners and CEO’s and people in a position to control this windfall are accustomed to entitlement, and they are not going to let go of any of it to restart lending or create jobs or invest in recovery. They are going to put it in their treasure room as a hedge against harder times. This is their reality. This is what caused hard times in the first place, people who had legitimate or fraudulent (or that new hybrid) access to our invested retirement and savings and home equity pulling it out of circulation and socking it away, freezing it for themselves as their security in the coming apocalypse. We all know that greed is a sin, so they will surely be Left Behind, protected by their money when a few of us have been taken in the rapture and the rest have been swept away by turbulence.
That is why, to get lending and investment flowing again, we will have to raise taxes on the wealthy owners and operators of banks and corporations. They will never re-invest the wealth they have bled off, and there will never be any more wealth to bleed off unless we force re-investment by taxing and government spending.

Did you know that Congress gives Big Oil $6 billion in tax subsidies a year?

The Wall Street Journal likes Barack Obama?s economics, and refers to the Fed and Bush treasury?s ?destructive and all but explicit dollar devaluation strategy.?

If you believe government should leave business alone because business will do good for people because it makes more money for them if they have good service and good products to offer, you must read this article in The New York Times. If you read it all and still think government should not regulate business, you need to read it again.

The New York Times today in a story Retailing Chains Caught in a Wave of Bankruptcies By Michael Barbaro:

Since last fall, eight mostly midsize chains ? as diverse as the furniture store Levitz and the electronics seller Sharper Image ? have filed for bankruptcy protection as they staggered under mounting debt and declining sales.
But the troubles are quickly spreading to bigger national companies, like Linens ?n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.
Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.

When you lose stores because people can?t buy, you lose services because stores can?t stock their shelves and pay their bills:

Because retailers rely on a broad network of suppliers, their bankruptcies are rippling across the economy. The cash-short chains are leaving behind tens of millions of dollars in unpaid bills to shipping companies, furniture manufacturers, mall owners and advertising agencies. Many are unlikely to be paid in full, spreading the economic pain.
When it filed for bankruptcy, Sharper Image owed $6.6 million to United Parcel Service. The furniture chain Levitz owed Sealy $1.4 million.
And it is not just large companies that are absorbing the losses. When Domain, the furniture retailer, filed for bankruptcy, it owed On Time Express, a 90-employee transportation and logistics company in Tempe, Ariz., about $30,000.

And then of course people can?t buy because they lose their jobs when stores and services close down.
If you aren?t big oil or an Iraq war profiteer, you would most likely be a person somewhere in this picture. You could be a person paying more for food because it moves around in trucks that burn gas and paying more for gas to drive to work, and therefore you are less able to buy those shoes you want from Foot Locker or that cool lamp from Sharper Image. Or you could be one of the employees getting laid off because the store you work for is closing. In fact, you could be both. You could even be both of these and a person whose house is being foreclosed ? which if that were me, I know I would be a person going without medical care for stress, which I wouldn?t be able to afford.
I?m just glad our decider has a stimulus package coming down the pike that will fix everything.