Economy and debt: How to make it all better!

Atrios explains in just a few words what Democrats can’t seem to explain at all.

 “It looks like the LTRO is having a positive contribution. Does it solve all of the problems sustainably? Probably not,” said Andrew Bosomworth, a senior portfolio manager at Pimco.

At the end of the day, it comes down to growth — that’s what these countries need to keep their debt sustainable.”

Everybody has been getting it backwards.
1) Cut spending
2) ??
3) Growth
When the reality is:
1) Increase spending
2) Growth
3) pay down debt

13 responses to “Economy and debt: How to make it all better!

  1. Yep.. and so often the timeless problem of language plays into this – people mean so very different things with the same words.
    “Growth” for GOP is just one singular thing. More in the piggy bank for the rich.
    Whatever with the country.


  2. There’s a huge problem with that fantasy – government spending doesn’t generate growth, therefor doesn’t generate increased government, revenues, therefor doesn’t allow for paying down the increased debt.


    • jonolan, government spending generates income to people who spend that money which leads to growth. And growth means more revenue going to Feds which means less need to borrow . . . .


      • government spending generates income to people who spend that money which leads to growth.

        Government has to take that money from someone first. And they certainly would have spent that money better.


    • It doesn’t work, Moe. It never has. It’s a wonderful fantasy but can you show me anytime when it has worked beyond the local level?

      You see, Moe, the problem is that the people getting that income aren’t the ones who can generate a chain of growth. They just grunts like you and I and they don’t get enough extra from the spending to dramatically change their spending.

      Hell! Your favorite punching bag, President Bush proved that with his tax rebate checks. They did nothing positive for the economy because the money mostly went to debts or savings – Nice, but not growth generators.

      Same thing with Stimulus. What jobs it created were mostly temporary and not especially high-paid – just not the sort of thing to cause growth, as the economy (outside of the global financial sector making its money off of foreign growth zones) rather sadly proves.


  3. ” When the reality is:
    1) Increase spending
    2) Growth
    3) pay down debt ”

    Yes, and for 3 years it hasn’t worked .


    • But it has. We are growing. It’s slow, but it’s happening. Check a post I’m putting up shortly.


      • Sure. Parts of the economy are recovering. They’re just not doing it due to government spending.


          • GM was kept alive in a reduced form through the spending; that;’s true. Given that their new stock is once again falling and their loosing marketshare outside America – foreign sales being GM’s only good market – I’d hardly call it growth, Moe, when they’re still loosing out to Japanese imports even with the disaster having disrupted manufacturing there.

            It was, however, the closest to effective government spending we’ve seen since one could argue that anything better than total collapse was a success.


          • Well, here’s what the Detroit Free Press reported last week:

            It’s official.
            General Motors surpassed Toyota and Volkswagen to reclaim the crown of world’s largest automaker with global sales of 9.03 million vehicles in 2011.
            That was 11% higher than Volkswagen, which last week reported 2011 global sales of 8.16 million. Toyota has not yet reported its final 2011 sales, but last month the Japanese automaker estimated it sold 7.9 million vehicles globally last year.
            GM’s 2011 sales rose 7.6% from 2011. Sales in the U.S. led the way for Chevrolet with total vehicle sales of 1,775,812, up more than 13%. China posted record sales of 595,068, up 9.5% from the previous year. Other markets that posted significant year-over-year increases include Vietnam (79%), Russia (49%), Turkey (30%) and Germany (21%).

            (The story acknowledges the impact of the Tsunami on Toyota)

            The administration also pressured both management and hte unions toward some historic agreements, cutting benefits significantly, a level of cooperation that GM’s prior management had been unable to accomplish.


          • Moe,
            You might want to look at the trending numbers before shifting any investments –

            It’s not near as rosy as The Detroit Free Press paints it, which is no surprise since that outlet has to be or, at least, sound optimistic about auto sales if they want to stay in business themselves.

            Simply put, the auto industry isn’t doing very well because people aren’t buying cars as often. 10 years or so ago Americans got new cars every 6 years on average. Now it’s every 10 years.

            The used car market is not doing badly though…


          • Oh jonolan, there you go getting all wonky again. 🙂 I looked but my eyes blurred over.

            True enough that new car sales have been very low since the crash – but from what I’ve read Detroit has wised up to that and is being realistic in their strategic planning so they can stay healthy.

            By the way, when I googled the GM info, I choose the Free Press specifically cuz I thought they were the closest to the story, but there were dozens of stories elsewhere saying pretty much the same thing.


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