Addressing Fears of Recession
http://thedianerehmshow.org/shows/2011-08-23/addressing-fears-recession
President Obama says the U.S. is not facing another recession. But he acknowledges an unemployment rate that is too high and an economy that's not growing fast enough. He has been criticized for not moving more quickly to ease regulations that business and industry view as overly burdensome. Today the White House announced new regulatory reforms to address those concerns. It expects the measures to save businesses billions of dollars, spurring them to hire workers. And the president will outline a jobs program after Labor Day. In this hour, economic experts weigh in on ideas to spark growth of the economy and jobs.
Guests
Jared Bernstein
senior fellow, Center on Budget and Policy Priorities; former chief economist and economic policy adviser for Vice President Biden.
Phillip Swagel
professor at the University of Maryland School of Public Policy, senior fellow Milken Institute and assistant secretary for economic policy at the Treasury Department from 2006 to January 2009.
Eamon Javers
Washington correspondent, CNBC.
Zanny Minton Beddoes
economics editor, The Economist; formerly, economist at the International Monetary Fund.
Russell Roberts
a professor of economics at George Mason University, Distinguished Scholar at the Mercatus Center and a research fellow at Stanford University's Hoover Institution.
Program Highlights
Although President Obama insists that we are not headed for another recession, many Americans consider the wild fluctuations in financial markets and poor economic indicators as harbingers of a double-dip. Our guests discussed some of the reasons behind the current economic crisis, including the housing bubble, and offered some policy suggestions they think will help get the country out of it.
- "I think the crisis of confidence is real. I think there is a lot of concern and legitimate concern about where the economy is heading. I think no good economist should predict a recession or not. I don't think we really have any idea of what's going to happen. There could be a bunch of good news that comes along, and suddenly things look rosier," Roberts said."
- "You have every reason to be frightened of the stock market right now when it's doing this kind of thing every day. But unemployment, still very high. I mean, if your brother-in-law is still out of work, and - you're going to feel it. And it's going to scare you that you might be out of work. And housing - this is an economic crisis that started in the housing sector," Javers said.
- "We are in a world where we had a huge housing bubble that's bust. We've got very over-levered consumers. We have consumers, therefore, that are reluctant to spend more, reluctant to borrow more. That's an ongoing drag on the economy. So people who've looked at those kinds of situations in the past - and there haven't been that many of them - said that this recovery was always going to be a weak and feeble one," Bedoes said.
- Diane asked the guests what one thing they would each do right now if they could to help spur economic growth.
- "There's no silver bullet. But here's an idea for you. It's called FAST, fix America's schools today. There are 100,000 schools out there, public schools. And almost every one of them is in an ill state of repair. They need insulation. Many need retrofits, new windows, new boilers. Think of the energy efficiency savings," Bernstein said.
Comments
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We cannot pretend that there was not a lot of short sighted, ill conceived and poorly timed legislation put in place by the president and the democratic controlled Congress. A liberal nanny state wish list was the top priority for the new administration, everything else took second place. The Affordable Care Act, Dodd Frank, Consumer Protection Agency, are only a few of the burdens placed on job creation from the Obama administration. "Obama Care" was obviously designed to create a single payer system by forcing employers to opt out of providing health care, many readers of this are just fine with this government takeover I know, but please spare me the fallacy that Obama is a centrist. Employers rightfully are waiting for market conditions to force hiring but do realize that the uncertainty of having to pay for the permanently unemployable underclass is not in the budget. The other initiatives were designed to create more government bureaucracy that in essence were put into place because of the incompetence of currently existing government agencies, this also has added a new and unnecessary cost to do business.
It's hard to believe but I am hearing the whispers of yet another government agency in the works "Department of Jobs" give me a break! we already have the department of labor.
If this is a serious conversation on reviving the economy. Repeal all of the above and insist that Mr. Obama step aside from the upcoming 2012 elections.
A question regarding my background was raised. I was in the apartment management business and owner for twenty years for low income mostly minority black renters. I am an expert on welfare abuse, most of you do not have a clue as to what is really going on with government handout programs and the problems they produce.
Good intentions do not justify the trillions of dollars wasted.
Monte:
I know what you mean by abuse. To think my dad came to this country with literally nothing, no government assistance existed when he entered this country in 1922. The only "Hope and Change" that existed was that in the US he had a potiential future and " Change" was that there was not the after effects of a Civil War that had just ended (Mexico).
Handouts were an insult to the many of millions that came to this country. But gradually liberalism started to show its ugly head. Now what, half the country is on somekind of assitance.
Like I have preached so many times, non profits, churches, and individuals would have done a better job at one third the cost to taxpayers for these social programs. (Meangreen)
The boom and bust of the business “cycle” and the thriving and collapse of civilization are the same phenomenon seen at different scales. These chaotic instabilities reflect systemic flaws. If we were to recognize that natural resource wealth belongs to all (as described by John Locke, John Stuart Mill & others), then we would expect that those who take natural resources in pursuit of profit will pay a fee when they take or degrade the quality of that which belongs to all
As owners of resources, the people at large should define limits on the rate of resource extraction & release of pollution. A random survey could indicate whether most people felt that environmental impacts of various kinds are acceptable, or whether they might be too high or too low. Fees could be adjusted up or down, according to whether the reality matched what the largest number of people say is acceptable. Alternatively, limited numbers of permits for various kinds of environmental impacts could be sold in a free market auction
As economies overheat, as may happen due to normal fluctuations of a dynamic system, the fees on taking resources (and putting pollution) will increase, as demands for natural resources (and services) increase. This will put a natural damper on growth that would tend to keep economic activity within sustainable levels
With fee proceeds shared among all people equally, no one would live in abject poverty. When economies slow (due to natural variation), some people will lose jobs or see their wages or hours reduced. But they would have a minimum income based on shared ownership of natural resource wealth that would insulate them from the worst vicissitudes of the business “cycle”. The part of the economy that provides vital goods and services would, therefore, be insulated from the economic swings of boom and bust
If we limit environmental impacts efficiently and fairly, we can build a sustainable and just civilization
http://gaiabrain.blogspot.com
2AM MON. 8-22-11 WERE I THE CHIEF EXEC. I WOULD TAKE A QUICK HELICOPTER RIDE BACK TO DC, AND HAVE A FAST NEWS CONFERENCE AS FOLLOWS: (TODAY-THIS MORNING)
I HAVE SPOKEN WITH BEN BERNAKE AND THE FED WILL BE ANNOUNCING SOME POSITIVE NEWS REGARDING RELIEF FOR THIS SITUATION. WHEN I RETURN TO WASH. MY PLAN FOR JOBS' GROWTH WILL IMMEDIATELY PRODUCE NEW JOBS. MOREOVER, I AM CONVINCED THEAT BOTH PARTIES OF CONGRESS WILL NOW AGREE ON MANY OF THESE NEW MEASURES.
THEN RETURN TO MARTHA'S V. AND WATCH THE DOW SURGE 3-400 PTS.
IS MR. O. SO NAIVE THAT HE DOES NOT REALIZE PEOPLE AND BUSINESS NEED REASSURRING NOW, NOT AFTER LABOR DAY. DOES HE NEED TO SEE GOLD REACH $2000. WHY DOES HE NOT SHOW A LITTLE LEADERSHIP WHEN IT'S NEEDED. IF ALL HE SAYS DOES NOT COME COMPLETELY TO FRUITION, SO WHAT. NOTHING VENTURED........ DAVID-FL & MANHATTAN
Thanks Monte, Many have criticized the post office workers for goofing off, as they should have. Perhaps the blame shifts to management after a period of time, and the non-working continues.
The same reasoning applies to non qualifying welfare recipients. I assume you fulfilled your civic duty.
Are you suggesting that my family should not have used government supplied food, clothing and health care?
Marvin Wagner wrote:
Thanks Monte, Many have criticized the post office workers for goofing off, as they should have. Perhaps the blame shifts to management after a period of time, and the non-working continues.
The same reasoning applies to non qualifying welfare recipients. I assume you fulfilled your civic duty.
Are you suggesting that my family should not have used government supplied food, clothing and health care?
Marvin:
Perhaps the non profits and churches could of done this funded by us the American people. We have always been givers. Look how much we contributed to the victims of 9/11.
I am not an economic expert. I do know that my husband got laid off last year, me this year, and he almost got laid off again this year at another company. He's an electrical engineer and I'm a teacher. I ALMOST feel that my undergrad degree and teaching license were a waste of time at this point in my life. I've been unemployed since June and have only managed to attain an Americorps position. Though I LOVE their mission, money-wise, we're in a bind. After teaching myself Islamic law in undergrad, studying abroad, writing a 70 page thesis, working, AND getting my teaching license, I'm still laid off. It's crazy how over-educated and over-qualified most workers are for their jobs these days. To those who say we're in recovery mode? My family and friends aren't seeing it.
If people hear about jobs by word of mouth, and people start new, potentially more viable businesses through partnering with others; then why not have a social capital stimulus? Couldn’t universities help students from various disciplines team up to create start-ups?
Can churches and other community organizations open empty meeting spaces for low cost events where neighbors can meet each other?
So the president will be 'addressing' the burdensome regulations for businesses - in other words drop the costs for the job creators so they will create jobs.
Sorry to be a bit discouraged by such a move. The fact is we-the-people bailed out the banks so they could loan money again and we are stil waiting for the banks to begin loaning again.
The job creators are not creating jobs - new incentives need to be just that, incentives. IF the 'job creators' who actually create jobs here on American soil were rewarded with lower costs I could support that. The problem is all the wealthy people who have been designated as 'job creators' are all getting the bennies of these lower taxes/ lower costs whether they create jobs or not.
Best would be to reward only the ones who actually create jobs on American soil and increase the taxes on the ones who either export/create jobs overseas or not create jobs at all. The problem with blanket coverage is there is no incentive - if jobs have to be created to qualify for the lower taxes there would be more jobs created.
Give them incentive - we will see results.
I haven't heard anyone address the issue about the need for more jobs as our troops come home. There are so many of our soldiers out of work now. Won't this present a very large crisis for our work force?
The Depression ended with the US entry into WWII This Keynesian stimulus was not short and timely... Spending continued well after the War's end.
Reagan ended the induced recession with a huge tax cut and a bigger Keynesian stimulus of Government s;pending on the military build up to confront the Soviets. This stimulus was NOT short and timely either. O'Neil, Bush, Clinton raised taxes and got the defense spending under control.
Bush II ended the small recession with a tax cut and then the 911 shock with an enormous Keynesian stimulus that was not timely or short lived.
Obama's Stimulus was only 1/3 goverment spending but was not on Guns and 2/3 were taxes and counter cyclical spending. This spending was short and timely and is now over.
This was a text book (econ 101) stimulus and the consensus is that it worked well but was insufficient for the hole created.
Don't we need a program on par with Reagan and Bush II that extends for years. My recommendation would be to invest in butter this time and put into place an industrial policy that makes us competitive with Germany, China etc.
in 2008 the FED changed its guidlines on excess reserves held for member banks unlimiting the ammount they could store in the FED for garaunteed returns of 6%. Why would a bank distribute new bond money in risky loans in a shaky economy while this policy stands?
Welfare abuse is a serious problem. In 2007, for instance, TANF (Temporary Assistance for Needy Families) was 18 billion dollars. That is 0.63% of the Federal Budget that year. It went towards giving single mothers money for rent and food and other necessities- that is the money which was not just 'abuse.' So if 100% of the people in that program are 'abusers' and are just 'wasting money' it will take 55 and a half years to get to $1 trillion. In the meantime whatever they buy with that money helps a business and they pay basic taxes as well.
Some might consider Social Security as 'welfare' but they would be wrong. People pay for their own social security. It isn't even an entitlement it is an earned benefit.
Some might consider Medicare/Medicaid as 'welfare' but a society cannot function on the dog-eat-dog level. People will not just stand there and watch their family members die. I won't stand there and watch them die either.
If the elected government is not meeting the basic needs of ALL of its people then it is not a just or legitimate entity. Anyone over 18 has the right to vote and if the government they elect cannot provide for a system that protects the interests of its members then it is not a democracy.
Some people make a lot of money off of the government- maybe people who manage properties that rely on welfare recipients to make money- they are the true abusers of our society. Protecting the poor does not require padding the pockets of people who despise the poor.
The banks need to lend the money, I want to start my own business but am having an extremely hard time getting funding to do so. This business is would be the economic engine that everybody wants but no engine I know of will run without first providing a spark. The bank is the spark, but they are not interested.
Between 2000 and 2009 our multinationals shed 2.9 millions of jobs in US while creating 2.4 million of jobs overseas.
Most of those jobs were probably subsidized by US taxpayers through generous tax breaks (se GE).
It galls me to see all the comments about government regulation and about people getting something that you didn't. Believe it or not, most of the people on welfare are not black.
And, all the people who complain when something happens to them because of the lack of regulations i.e. food contamination or ENRON steals their pensions, yet they don't want regulations. This is absolutely insane.
Further, when the Bush administration came in gasoline was .99 per gal, there were surpluses forever. We had manufacturing on the shores of the U. S. in 8 years all that went away because manufacturers wanted to charge premium prices for goods, and pay paupers wages to create them.
Someone should have foreseen that when you send American jobs to Shrilanka, india and Mexico, Americans are not going to be able to buy more goods and services.
Is the 2.5 trillion that the banks are sitting on money made on interest off of the money lent to them from the US treasury? If it is why are why not force them to feed that money back into the US system?
The economic world we live in developed from the industrial revolution, where large companies provided steady income to employees, enticing them to move from rural areas in hopes of a better life. This was a move away from an economy of shop owners and small business. That is what is puzzling about all the plans with the economy being placed on the small business owner. Isn’t the core issue the trend of large US companies laying off well paid middle class people and shipping their jobs overseas to cut costs and therefore reward the corporation leaders with huge bonuses.
When that Middle class worker loses his/her job they stop going to the dry cleaner, and eating out, maybe they mow their own lawn now rather than use a lawn service as a result all those small businesses are hurt by the actions of the large corporation. That also trickles down to the community groups/youth athletic teams that used to be supported by the small business but can't afford to anymore.
Wouldn’t there be a more positive effect on the economy if there was an incentive to corporations to create more American jobs and move away from the off shore of Americans job.
If jobs are a problem...instead of extending the retirement age for baby boomers, let us retire now and let young people take our jobs.
To the panel members:
Sure it is just as unfair to bail out those who took out home loans irresponsibly as to bail out the banks who made these loans. However, doing nothing is hurting those of us who were responsible. In 2005, I downsized to a condo, and put down 42%. Now I am surrounded by underwater single-family homes and condos - including in my own building. I did nothing wrong, but my condo is worth 50% less than what I paid. We need some creative, entreprenerial thinking to solve this problem - not more ideology - before today's titanic really sinks.
Whata a surprise - diane asks each guest what they would do today to fix the economy. The more liberal guests gave an opinion, the conservative said not what Obama is doing. The same thing as our House of Representatives, knock what others are trying to do, but offering no solutions of their own.
I am in Rep Boehners district north of Dayton Ohio helping take care of elderly parents. Recently talked with a layed off GM worker who had just applied at Wal Mart where is 18 year old daugher was employed. In Boehners district a Delphi plant on Needmore Rd that had employed 3000 jobs was just leveled. Getting rid of the evidence of the failing economy.
That is the state of the economy. Bring those MSM cameras to Boehners district.
Why do we continue to hear that new home construction is our only salvation? Haven't we over-built already and have many homes abandoned from foreclosure?
What does it cost the tax payer to maintain Congress at its present life style - perks, insurance, pay raises, etc.?
Good example of government at work is Texas. All new jobs created are public sector jobs and lost jobs were private sector jobs. Texas benefitted a lot from stimulus package.
If only Perry would learn about his own state.
Texas is another poor southern state ("english speaking Mexico"). Yet they are portrayed as a model to follow.
Doug...you nailed it. I have been driving all over Dayton Ohio (where I lived 40 years ago) Master and Electric, NCR, GM most manufacturing gone gone gone. Follow the decline of unions, manufacturing moving overseas and you follow the decline of the middle class in the US.
Multinationals are anti american
Phil just said he would choose jobs overseas than no jobs at all. As if there is not something in between those two choices How about less for the fat cats on top and jobs in the US. Diane asked the right question about multinationals being anti American.
No one answered
We're in a pure "trickle down" economy -- the result of too many tax cuts for the wealthy. It never worked; it never will.
We've heard all the pundits admit it, and all the bankers admit it, and all the businesspeople admit it. So, let's ALL repeat it aloud, please? All together now: "People who HAVE PLENTY OF MONEY can't be CERTAIN that spending PART of their massive wealth will get them RICHER, so they spend NOTHING."
One side effect most of them also enjoy: their selfishness, and lack of commitment to what America needs now, ALSO makes Obama look bad!
There is no doubt that there is inflation. Any small business owner will speak about the cost of goods, and utilities. Unfortunately, commodities are currently more valuable than employees. The housing bubble of 2005-2207 was caused by monetary policy, politics, and banking errors, but also by the fact that housing was being treated as a commodity. This is true today in 2011.
On the front page of todays Sarasota Herald Tribune(8/23/2011) a feature article states that several of the highest sales in Sarasota on Siesta Key have been all cash. These home sales were for $6 million, $5.9million and $4.45 million. The article further states that there is so much competition for these high end homes that a party that has to go through a lender will not be able to compete fast enough with cash buyers.
Also look at all of the shops selling and buying gold and silver because of the concern over the value of the U.S. dollar.
Thank you
If an individual was doing what multinationals do, he or she would be considered a traitor and thrown in jail.
Yet brainwashed public, herded with pretty slogans is voting against their own interests.