Op-Ed: Help Small Businesses Hire Again - Mark Zandi »
Posted By deathray 3 months, 1 week ago in Business & Finance
THE Great Recession is over. The solid 3.5 percent gain in gross domestic product during the third quarter proves that the longest, broadest and most severe American downturn since the 1930s has finally given way to recovery. It is no accident that the recession ended just as Washington’ s fiscal stimulus program began providing its maximum impetus to the economy. If the financial crisis had been allowed to continue unchecked by aggressive government action, we would not yet have reached a turning point.
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deathray
Hm...summarizing a life...Investment banker, sailor, unintentional gourmet cook. Ex US Naval officer, also Foreign Service. Split my time between NYC and Miami Beach ...
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deathray3 months, 1 week ago
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this may be one of the hottest economic and political topics in the us today.
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on the one hand, the low dollar valuation has energized us exports. on the other hand, the us has been such a consumer and information society we don't have much to make.
additionally, internal demand for goods has made the consumer economy contract significantly.
ultimately, putting people back to work has become the pivot point on which the perception of economic recovery rests. remember that an annualized gdp growth rate of 3.7% was what pushed the employment level down during the '90s.
now, the keynesians will tell us that this is the point at which government should provide incentives to business (either through capital injections or tax breaks) to stimulate hiring, and the monetarists rely strictly on tax breaks (on the assumption that benefits trickle down to employees) in a recessed economy.-
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hyperbola3 months, 1 week ago
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A growth of 0.9% (provisionally) during one quarter may prove to be illusory. It would in fact be astounding if we could not buy at least that amount of "growth" with the enormous deficits we have incurred. More important is perhaps whether the "feel good news" from our corporate media will attenuate our drive to clean out financial and other corruption.
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So far we may just have propped up a bubble that still needs to burst.
By the way, we should keep in mind that just as we systematically underestimate our unemployment compared to the rest of the world, so we also systematically overestimate our economic growth. If we applied Japanese or European statistical practices our unemployment would almost double and our growth halve.
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beavith13 months, 1 week ago
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or, as you Keynesians would say, the animal spirits are still depressed.
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i think calling this recession over is very premature. nothing has fundamentally changed. the banks are broke and broken. savings are up. lending is down. consumption is down. value of the $ is declining. price of oil is up. gold is up.
just like the liquidity crunch of early 1929, we're one run away from another stock collapse.
i wish that i could see one bright spot...-
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deathray3 months, 1 week ago
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ok beav -
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when you say "fix the banks," what exactly do you mean?
if the banks are broke and broken, why are they registering record profits?
why, exactly, aren't they lending with all tjis newfound liquidity?
oil is priced in a range; go look at the eis website. any volatility comes from china, india on the demand side, and opec on the supply side.
gold prices are driven by a worldwide fear, although is suspect gold isn't going to get you much, snce that value is largely arbitrary, except for industrial uses.
savings are up is a very bright spot, i think.
gold prices are driven by fear -
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hyperbola3 months, 1 week ago
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Actually Beavith, the "predator" banks are doing just fine - which is a sign that we have so far failed to address the real problems and the incestuous corruption between the government and such banks continues apace. Perhaps we should cut off the "corrupt oligarchs" with some innovative thinking.
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CUT WALL STREET OUT! HOW STATES CAN FINANCE THEIR OWN RECOVERY
http://www.webofdebt.com/articles/cut_wallstreet.p...
Pouring money into the private banking system has only fixed the economy for bankers and the wealthy; it has not done much to address either the fundamental problem of unemployment or the debt trap so many Americans find themselves in.
President Obama's $787 billion stimulus plan has so far failed to halt the growth of unemployment: 2.7 million jobs have been lost since the stimulus plan began. California has lost 336,400 jobs. Arizona has lost 77,300. Michigan has lost 137,300. A total of 49 states and the District of Columbia have all reported net job losses.
In this dark firmament, however, one bright star shines. The sole state to actually gain jobs is an unlikely candidate for the distinction: North Dakota. North Dakota is also one of only two states expected to meet their budgets in 2010. (The other is Montana.) North Dakota is a sparsely populated state of less than 700,000 people, largely located in cold and isolated farming communities. Yet, since 2000, the state's GNP has grown 56 percent, personal income has grown 43 percent and wages have grown 34 percent. The state not only has no funding problems, but this year it has a budget surplus of $1.3 billion, the largest it has ever had.
Why is North Dakota doing so well, when other states are suffering the ravages of a deepening credit crisis? Its secret may be that it has its own credit machine. North Dakota is the only state in the Union to own its own bank. The Bank of North Dakota (BND) was established by the state legislature in 1919, specifically to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. The bank's stated mission is to deliver sound financial services that promote agriculture, commerce and industry in North Dakota. ....
http://www.webofdebt.com/articles/cut-wallstreet.p... -
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jordan113 months, 1 week ago
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Tax breaks. Small business doesn't need tax breaks when they aren't generating profit. And they can't generate profit when they can't get credit. We paid off the banks for their bad loans to open up the credit, but it didn't.
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The system of small business relies on credit. The small manufacturers get an order from credit worthy buyers. I'll use COSTCO as an example. The manufacturer needs money to make the product. So they get a short term loan using the invoice from COSTCO as collateral. The bank loans them the amount needed to make the product, they ship the order, and when COSTCO pays their invoice they pay the bank loan.
No credit, no manufacturing, no business, no jobs.
Then of course there's the consumer. Their dollar has eroded. They're afraid of losing their jobs (or already have) their health care insurance has skyrocketed. Energy costs are through the roof. (food prices are finally dropping somewhat) gas prices are going back up.....& they're not buying a whole lot. And.....we've yet to see the full impact of losses from the debt that consumers are holding.
Putting people back to work appears the first priority to me. Can we afford it? They did it during the depression. About three million men were given jobs in the conservation corps, and the program was up and running THREE MONTHS after it was decided to do it. How did they do that? These men literally saved the topsoil of the United States that had been decimated by poor farming practices all over the country. Land that had been destroyed by decimating forests was replanted with 2.3 BILLION trees. The men at the camps were taught to read and write if they couldn't. Unbelievable. How did they do that with nothing? In the middle of the great depression?
And here we are, 70 years later glued to faux noise, whining about "socialism" (which conservatives did during the great depression as well) and generally immobilized by utter nonsense. THAT will be our downfall. The nonsense.
Recovery? I want to see recovery as much as anyone else. But this mess we got ourselves into isn't going away any time soon, & fixing it is a monumental task. Monumental because there is NO WAY conservatives want Obama to succeed, and they'll do anything to stop a recovery, not giving a damn what happens to the people of this country. They want power, and nothing else. If we don't see marked recovery during Obama's terms, I'm sure as heck not going to blame him. That would be childish, now wouldn't it?-
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chevydog3 months, 1 week ago
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I'm not sure what kind of answers I have. You give a good example with a small manufacturer; but not all small businesses are manufacturers. And I'd submit that we've done an awful lot over the last 40 or so years to make small manufacturers unwelcome. Big ones too, for that matter.
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On the consumer side, I don't see food prices dropping. When I go to the grocery store, I see prices going ever higher. I do see prepared food prices dropping -- McD, Burger King, pizza joints and the like. Can often eat there for less than it costs me to fix stuff at home. What this means? Dunno. Gas prices I've learned long ago to live with--you do everything the best way you can all the time. And let prices go where they will.
What worries me most about govt programs is not their mere existence; "socialism" doesn't bother me all that much. It's that a job must answer a need. And I fervently hope that after govt money sources dry up that there will still be underlying needs that drive employment. Not that I know what it would take really; but I still have the ugly feeling that we've avoided this area completely and are only dealing in symptoms rather than causes.
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insuranceman3 months, 1 week ago
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Expansion is happening mostly in the public sector. These types of reports are pulling data from giveaway programs like cash for clunkers, home buyer tax credits, etc. Millions of people still are unemployed and there are still 6 unemployed people to one available job.
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corl643 months, 1 week ago
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It's the administration saying that the economy is recovering. The actual panel of economist that call the start and finish of a recession (their name escapes me at the moment) have not done so yet, and probably won't for a few more months still. One of their big criterias they use to judge is the employment stats. If the economy is not spurring jobs, either new or recall of layoffs, there can not be a real recovery. We still seem a long way off in that case.
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