Quote:
Originally Posted by Paul Markham
There is only one way out of this financial crisis. The West has to start producing goods it can sell to the East so the balance of payments are maintained. The idea that we in the West can suck in cheap goods and pay for them on credit will not keep working.
But to kick start the economies you are right but probably too limited. Everyone has to make "major spending cuts and more fiscal responsibility" not just Governments. People need to spend what they earn more than what they can borrow. It's called a "credit crunch" because credit is the problem from the top to the bottom.
As for tax cuts I'm not so sure. If you give 10 million people $10 a week in tax cuts they will rush to the malls to buy another product produced elsewhere. If you give 1 million people $100 a week they might think about a new car, holiday or extension on the home. The first two will send money out of the US.
If you spend $100 million dollars a week building roads, schools or hospitals you improve the lives of more people. It employs people, buys goods from local suppliers and leaves the country with something more solid than a new T Shirt made in China.
Roosevelt got the US out of the Depression with the New Deal. It worked then and it will work now. If the people working it do it right. Who is the better person to make a New Deal for the US, Obama or McCain and does the US and the West have the balls to make it work or would they be happier with a small tax cut so they can buy more goods from China?
And yes with a New Deal some of the money will flow out of the West, it's just that less will flow out. Bush has let too much flow out and unless McCain stops the flow it will never get better.
As for censoring the Internet and porn. It's a sticky problem and yes Governments change their tack, especially in the US. The problem is applying it to other countries and making sure the playing field is level. Maybe talking to Visa would work as well a site losing their ability to process Visa would have an immediate effect. Maybe blocking domains with unacceptable porn outside members areas. Maybe there are other solutions.
But the Internet is something that could be producing Billions if not Trillions for the West. If only people could make it work as a place to do honest business. And not a place where everything is free or supported by advertising. |
I agree strongly with you about the US needing to produce something it sells to other countries. This country, and the middle class of this country, were built on manufacturing. We built things and sold them. We sold them to the people of this country, but we also exported them and infused our economy with that fresh cash from other countries. That is changing now. Now we have a company that buys parts from one overseas company and ships them to another that assembles them then they sell those things to the people of the US. More and more of us are making our living selling things to each other that are brought in from other countries and not building new things to sell elsewhere and with every sale it is money leaving this country.
That said, it will be tough to change. I saw the other day that nearly 80% of the strength of the US economy is based on consumer spending. That means when people stop buying stuff they don't need it causes major troubles. We are seeing that now. There is financial trouble so people are cutting back on spending and it is making the trouble worse. We are in a position where the economy needs people to spend to keep it going, but also needs them to stop so we can move in a different direction. We need a leadership that is not afraid to tell the people that they are not entitled to anything and everything they desire and that spending more than they bring is a bad thing. That is not going to happen anytime soon. We are a nation where so many people feel like if they want it, they have it. A great example is this woman I know (she is my brother's mother in law). She likes horses. So she owns 9 of them. She doesn't breed them and she doesn't sell them, she rides them and keeps them as pets and they cost her around $2000 a month. She only makes about $1600 a month at her part time job so she spends every cent she makes and $400 of what her husband makes on those horses. Her husband is a freelance trucker. They have no 401K or retirement because she is wasting 24K on horses that get ridden once or twice a year and she will not get rid of them. She has said she would be homeless before she got rid of them. It is idiocy, but that is who she is and she isn't changing any time soon. I happen to think if she really were to have to choose between them and homelessness she would sell them, but for now she is happily wasting their retirement on them.
It will be hard to change that type of thinking and it will be hard to find a product that we can sell at a profit overseas while employing American workers to make it.
I think the first thing we need to do is cut our dependence on foreign energy. Once we stop sending 700+ billion a year overseas and keep it here in the US that will be a big help. Plus creating that energy will create a lot of good jobs for people. The second step is to really curb spending on the government level. They need to really cut the amount of money they spend on just about everything. They need to operate smarter and demand better results for their money. Third we need to sit every American down and teach them about budgeting and money managment so that we can move forward and not have a country where just about everyone is up to their eyes in debt. If we curb spending all around, manage money better and further streamline our government they won't require as much money and they can cut taxes and put more money into the hands of the people.
It won't be easy and I don't know that either Obama or McCain are the guy to do it, but then again I don't know who is the guy. It is a very complex problem and if it is not handled it could really continue to cause us trouble for a long time to come.