Rasing taxes on the "rich" will do nothing to help these tough economic times. Nor will rasing taxes on corporations and taxing windfall profits of oil companies, whom would pass that cost on to us. This is what Obama wants to do.
Joined: 26 May 2007 {Posts: 425 } Location: San Antonio, Texas
Posted: Wed 17 Sep 2008 14:10 Post subject: Re: "The Fundamentals of Our Economy Are Strong..."
DChapman wrote:
Rasing taxes on the "rich" will do nothing to help these tough economic times.
Okay...
DChapman wrote:
Nor will rasing taxes on corporations and taxing windfall profits of oil companies, whom would pass that cost on to us. This is what Obama wants to do.
This actually depends on how lower-income people are taxed. Costs may be passed on to us, but if it's the rich who are going to shoulder the burden of the taxes, and I'm paying less - then that could more than make up for it.
Economist Nancy Kimelman says with 94 percent of Americans employed, things aren't going to be that bad, but she makes a distinction between an economic crisis and the crisis within the financial sector.
Analysis: Are economy's fundamentals actually OK?
Wednesday September 17, 9:35 am ET
By Tom Raum, Associated Press Writer
Analysis: Fundamental condition of US economy becomes political issue -- is it really OK?
WASHINGTON (AP) -- Unemployment is at a five-year high. Financial firms that withstood the Great Depression are failing. Congress and a lame-duck president are gridlocked. So when John McCain declared that "the fundamentals of our economy are strong," it drew ridicule from Democrat Barack Obama.
McCain later toned down his remarks, but his observation reflected a debate among analysts and policymakers about the economy's underlying health. Plenty of them think he's right.
Polls show a majority of voters put the economy as their No. 1 concern with seven weeks to go until the presidential election. Many economists believe we are now in a recession. Signs of economic distress are everywhere as housing prices continue to fall and the nation's financial system is pounded by a series of shocks, including a 504-point drop in the Dow Jones industrials on Monday.
"Strains in financial markets have increased significantly and labor markets have weakened further," the Federal Reserve said in a sober assessment Tuesday. But in deciding against lowering interest rates, the central bank signaled that it didn't see the economy's present situation as dire.
"When you have jobs being lost, industrial production down, personal incomes down and so forth, the economy's not in good shape," said Nariman Behravesh, chief economist at Global Insight, a Lexington, Mass., forecasting firm.
Still, he added, "If the issue is whether the U.S. had a dynamic, resilient economy, and that the long-term trends are positive, I completely agree. ... It's important not to get carried away with gloom and doom."
And David Wyss, chief economist for Standard & Poor's, said that while there is a serious financial-sector problem "the fundamental economy actually isn't in that bad a shape." But, Wyss added, "I still think we're in a recession."
That dichotomy is at the heart of the dispute over McCain's remarks.
McCain declared Monday that "the fundamentals of our economy are strong," a phrase he has used before. After Democrats pounced, he backtracked and declared the economy to be in a crisis and said "fundamentals are threatened."
Democrats kept up their assault. "How can John McCain fix our economy if he doesn't understand it's broken?" asked an Obama TV ad.
While the housing and financial sectors are in near meltdown, the larger economy is plodding along, the numbers suggest.
After turning negative in the final three months of 2007 and growing at an anemic 0.9 percent in the first three months of 2008, the nation's gross domestic product -- helped by government stimulus checks -- grew at 3.3 percent in the April-June quarter. A relatively weak dollar has helped U.S. exports. High prices for food and other commodities have helped agriculture and the energy and mining industries.
A survey of CEOs by accounting firm PricewaterhouseCoopers found that, while the unemployment rate jumped to 6.1 percent in August, a majority of the top corporate leaders surveyed said they are not planning significant cutbacks of people, products or services. Instead, the CEOs are focusing on opportunities to improve efficiency and ways to emerge from the slowdown in a better position to compete......
Thursday, Oct. 16, 2008
The Economy Really Is Fundamentally Strong
By Justin Fox
John McCain's claim that "the fundamentals of our economy are strong," uttered just before the financial crisis turned dire, may go down as one of the great blunders of presidential-campaign history. "Senator McCain, what economy are you talking about?" Barack Obama exclaimed hours after the words escaped his opponent's mouth. The mocking TV ads soon followed, and as the weeks wore on and financial jitters gave way to near collapse and certain recession, McCain's statement began to evoke unsettling memories of Herbert Hoover, who said similar things in the early 1930s.
Less likely to be remembered is running mate Sarah Palin's defense. "He means our workforce, he means the ingenuity of the American people," she said. "And of course that is strong, and that is the foundation of our economy."
Palin was actually on to something. Our workforce and the ingenuity of the American people are in fact among the most important of economic fundamentals. And it's not at all crazy to argue that these fundamentals are still strong.
When economists talk about such matters, they focus on the concept of productivity. "Productivity growth," wrote economist (and now Nobel laureate and New York Times columnist) Paul Krugman back in 1990, "is the single most important factor affecting our economic well-being." It was growth in productivity — most commonly measured as economic output per hour worked — during the Industrial Revolution that powered the rise of the West out of millenniums of stagnation. It was a productivity boom that ushered in America's postwar era of mass affluence.
And it was a lengthy productivity slump beginning in the early 1970s that created concern among economists such as Krugman. Low productivity growth explained much of what had gone wrong with the U.S. economy: stagnant wages, high inflation, ground lost to Japan. But what caused it? The most convincing explanation came from Northwestern University's Robert J. Gordon. In the early and mid-20th century, he argued, the U.S. benefited from a spectacular confluence of technological innovation involving electricity, the internal combustion engine, petrochemicals and communications. By the 1970s the economic impact of innovation in these fields had waned, and nothing came along to replace it.
Until the mid-'90s, that is, when productivity growth rebounded, from about 1.5% a year to more than 2.5%. The engine apparently was the rise of the computer and the Internet. And the boom continued even after the technology bust of 2001. In 2006-07, productivity growth slumped to pre-1995 levels, before rebounding somewhat in the first half of this year. But year-to-year numbers can be confusingly noisy; it's the trend that matters. Gordon, who doesn't buy that computers and the Internet are nearly as economically significant as cars, electricity and their ilk, thinks we're headed back toward the low pre-1995 productivity trend. The country's other most prominent productivity guru, Harvard's Dale Jorgenson, is more sanguine. He sees large swaths of the economy — health care, education, government — still waiting to be transformed by information technology and expects that to bring us another decade of high productivity growth. We'll have to wait and see who's right. In the meantime, if we average their latest projections, we get productivity growth of just over 2%, which isn't bad at all.
None of this means we won't see sharply rising unemployment and falling economic output in the coming months as we work off the financial excesses of recent years. Higher productivity makes higher economic growth possible; it doesn't guarantee it. What's more, a financial breakdown can trump long-term fundamentals for years. Gordon identifies the peak years of the 20th century's big wave of productivity growth as 1928 to 1950. A lot of good that did anybody in 1932.
But assuming such a breakdown is averted — and recent government actions in the U.S. and Europe make that a plausible assumption — economic fundamentals, and productivity growth in particular, are going to matter a lot. Strong productivity growth makes inflation less of a threat, giving the Federal Reserve more leeway in battling recession. And because it enables more economic growth down the road, it could make it far easier to pay off the giant debts the Federal Government is incurring to save the banking system and the economy.
And so, if he wins, Obama may partly owe the presidency to McCain's claim that our economic fundamentals are strong. But once in office, the winner's job will be made a lot easier if it turns out, as seems likely, that McCain was right.
Posted: Fri 17 Oct 2008 20:42 Post subject: Re: "The Fundamentals of Our Economy Are Strong..."
What you actually thought there was a moment when they weren't?
Didn't know caves were up for rent recently.
But back on point..it is true that the fundamentals of our economy are strong that's why most foreign investors of our bonds don't flush our paper down the toilet. Everyone out there knows that if there is any one country that can take a hitting and rebound with a hell of a chance it's good ole uncle sam's land. I think this recent economic crisis is the equivalent of turning a corner at 140 mph and actually living through it.
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