Can the market alone fix the economy?

[misgfool]

Should I assume then that you would teach them NOT to covet the material wealth of others, contrary to the message of Democrats?

The material wealth of others is irrelevant, unless it causes a disturbance to the operation of the society. Which is exactly what money does. This has nothing to do with coveting. In capitalism money just has to be constantly rotating.

Ps. Some ancient greeks might be turning in their graves, but I think you have established that democrats are pure evil. No need to keep repeating it.

 

[Al68]

The fact is that the money is not in the economy. You can see that by looking at Dow Jones or Nasdaq and they are not falling because of US taxation policy. They are falling because (rich) people are so afraid for their precious dollars. But they don't seem to understand, that their fear is having massively destructive global consequences. Wasting time amplifies the effects.

There is no escape, the money has to return to the economy. Now the government can get and spend money by printing it or taxing it. Exploiting both options is a way to make sure that it does a rapid return and as a positive side-effect it forces the loose cash out.

I can't even imagine what premises you use to conclude the above. If I have $!000 of spending money, $1000 of cash reserves, and $100,000 in investments, and I owe the IRS $10,000, it will come from my investment money.

Even if a rich person is conservative, his money will at least be in CD's, not cash reserves.

 

[Al68]

It's really very simple math. When the government pays $100 for a brick, then the economy has directly grown with $100 and indirectly more (as the brickmaker has to spend to make the brick etc).

The problem is, the math is not that simple. The act of taxation or printing dollars does not create wealth.

 

[Al68]

The material wealth of others is irrelevant, unless it causes a disturbance to the operation of the society. Which is exactly what money does. This has nothing to do with coveting. In capitalism money just has to be constantly rotating.

Ps. Some ancient greeks might be turning in their graves, but I think you have established that democrats are pure evil. No need to keep repeating it.

lol. It's "Democrats" that are pure evil, not "democrats".:!)

 

[BoomBoom]

Well, for one thing, we can feed the poor without resorting to thievery. Even so, that accounts for a tiny fraction of one percent of federal spending.

Would you teach your kid that it's wrong to steal, unless it's from someone who can easily afford it and you use it for a good purpose?

No need to light those candles, the rich will be fine regardless.

Despite the claims of Democrats, opposition to them isn't based on people losing sleep worrying about the financial well-being of rich people. That's obviously just hatespeech.

Hmmm, if it's so cheap to feed the poor, I wonder why republicans oppose it so vehemently?

I find your continued assertion that taxes are stealing quite amusing. Indeed claiming that democrats are thieves is also obviously hatespeech. Maybe we should just get rid of all taxes and see where we end up as a nation?

I'm sure you are not to that extreme, but you probably just oppose a progressive tax system because you see it as unfair. I would contend that it is also unfair that the poor and lower middle class have to pay more for large purchases than those who are more affluent. The banks love high risk loans as they can charge inflated interest rates, not to mention late and overdraft fees etc.. It's also unfair that they "front-load" interest payments on loans so they can milk as much as they can out of you (with minimal applied to the principle). Of course I could go on and on... Our financial industry has been getting rich off the backs of the poor and middle class for decades.

It's ridiculous to think that raising taxes and increasing gov't spending could actually improve the economy..

I suppose you prefer the Reagan/Bush alternative of increasing government spending and lowering taxes? We all know where that leads...

Government investments into research/development and infrastructure have always helped the economy. Not only by creating jobs, but also new technologies that spawn new companies. Being that this will be the largest such investment we have seen (at least since Reagan), I'd love to hear you make that statement in another 8 years and keep a straight face.

 

[misgfool]

I can't even imagine what premises you use to conclude the above. If I have $!000 of spending money, $1000 of cash reserves, and $100,000 in investments, and I owe the IRS $10,000, it will come from my investment money.

Even if a rich person is conservative, his money will at least be in CD's, not cash reserves.

Well, that's good. As long as you cash reserves are in that range, i have no objections.

 

[misgfool]

The act of taxation or printing dollars does not create wealth.

Yes, but when govt spends the money, it creates demand and gets the stagnant money moving. It has the same beneficial effect as war does.

 

[Al68]

Hmmm, if it's so cheap to feed the poor, I wonder why republicans oppose it so vehemently?

Republicans on average donate much more than Democrats to help the poor. Spending the money of others doesn't qualify as "compassion".

I find your continued assertion that taxes are stealing quite amusing.

I never said that all taxes were stealing.

I suppose you prefer the Reagan/Bush alternative of increasing government spending and lowering taxes? We all know where that leads...

Tax revenues were not lowered by either. Federal tax revenues doubled during the 80's.

I will agree that deficit spending is the equivalent of raising taxes, since it devalues the dollar.

And if referring to taking someone's property (because they can afford it) in order to give it to someone else (because they need it more) as theft is hatespeech, then blame it on the dictionary. The last time I checked, that's what the word theft means.

 

[Al68]

Yes, but when govt spends the money, it creates demand and gets the stagnant money moving. It has the same beneficial effect as war does.

That might be true if the money were free. Otherwise you have to account for the damage done obtaining the money.

Gov't spending does cause inflation, which is beneficial to the economy to a point (at the expense of the poor). But only under the right circumstances.

 

[Al68]

Well, that's good. As long as you cash reserves are in that range, i have no objections.

I think you missed the point. The cash reserves of the rich are very small compared to their net worth and are not used to pay taxes.

 

[mheslep]

Increasing output is a complete waste of resources if the demand for the product is not there...this is a money losing venture.

This can also be said of expansion as well. For one, Starbucks is a good example of this. They expanded beyond the demand for their product until there was practically a Starbucks on every corner...and now they are forced to close down all these excess stores.

I do understand the research and development argument as well (brought up by others), but this likely only applies to a small fraction of companies. Most companies provide a service or sell products and aren't involved in research and development.

US 2009 R&D
Business/Industry: $257B
Fed Govt: $99B
http://www.battelle.org/news/pdfs/2009RDFundingfinalreport.pdf
Page 10.

But a large portion of the higher taxes you are all complaining about will be used for research and development

Yes this new budget contains increases in federal R&D. I can http://www.whitehouse.gov/omb/" only a $15B increase for the energy dept (renewables, clean coal), and $6B for cancer. That's it. The rest is other spending. So we have $21B of R&D increases out of a budget of $3.6T, on top of what used to be $99B in R&D across the federal govt.

... which is a win/win, because it will result in new types of companies and spin-offs from the new technology that is developed. Not to mention all of the jobs it will create...which will result in more people employed that have more money to spend and increase demand for products and services which will result in companies growing and hiring more people.

In the first instance here, you claim there will somehow be spin-offs and job creation. Above, you claim with no qualification that without demand there can be no more jobs. The only way out of this paradox, is to magically claim only the government can somehow create jobs.

 

[mheslep]

It's really very simple math. When the government pays $100 for a brick, then the economy has directly grown with $100 and indirectly more (as the brickmaker has to spend to make the brick etc).

This borders on misinformation. The process of growing GDP through government purchases is much more complicated than just writing a check. The argument, as presented, suggest governments could all just spend themselves into infinite affluence. Where do you suppose that $100 came from in the first instance?

 

[mheslep]

That might be true if the money were free. Otherwise you have to account for the damage done obtaining the money.

Gov't spending does cause inflation,

Can cause, under full demand, not does.

 

[BoomBoom]

US 2009 R&D
Business/Industry: $257B
Fed Govt: $99B
http://www.battelle.org/news/pdfs/2009RDFundingfinalreport.pdf
Page 10.

That's all good, but I wasn't claiming that the government invested more than industry. I claimed that the majority of companies don't engage in R&D activity.

Yes this new budget contains increases in federal R&D. I can http://www.whitehouse.gov/omb/" only a $15B increase for the energy dept (renewables, clean coal), and $6B for cancer. That's it. The rest is other spending. So we have $21B of R&D increases out of a budget of $3.6T, on top of what used to be $99B in R&D across the federal govt.

Perhaps you didn't include the recovery act? The recovery plan by itself invests over $150B in energy and science...although I'm not sure how much of this is dedicated R&D, but I'd imagine it's a good portion. Besides that, there is $ for R&D all over the place in the budget that you fail to recognize. Indeed many of the department budgets include money for this as they always have, such as the DOD, DOA, DOE, DOT, NASA, EPA, Homland security, NIH, NSF,...etc. I think you are being a bit selective here.

In the first instance here, you claim there will somehow be spin-offs and job creation. Above, you claim with no qualification that without demand there can be no more jobs. The only way out of this paradox, is to magically claim only the government can somehow create jobs.

The number of products we have enjoyed over the last many decades that were spin-offs directly from technology developed under government funding is simply too many to list. Whether it be NASA from the 60's, the Dept. of Defense in the 80's, NIH and NSF in the 90's, etc., the result always seems the same.

While money certainly does not seem to "trickle down", technology definitely does.

 

[Al68]

The number of products we have enjoyed over the last many decades that were spin-offs directly from technology developed under government funding is simply too many to list.

I agree. And the rest (the majority) is due to private industry funded with the profits from investments. The very same funds that Democrats want to confiscate.

And the official R&D figures greatly underestimates reality for both government and private investment. Especially when it comes to new life-saving medical devices and drugs.

And I really can't understand why some people want to make the research, development, and testing of new drugs less profitable. Why not just shoot old people at random? Same result.

 

[mheslep]

That's all good, but I wasn't claiming that the government invested more than industry. I claimed that the majority of companies don't engage in R&D activity.

You claimed this to what possible point then? It was clear that you were implying that additional funds to industry would be wasted because they don't do R&D at the level the government does, justifying the transfer of funds to the government. Clearly, this is not the case. Can we take this statement as a retraction then that additional funding to industry, via tax breaks, will not create jobs?

Perhaps you didn't include the recovery act? The recovery plan by itself invests over $150B in energy and science...although I'm not sure how much of this is dedicated R&D, but I'd imagine it's a good portion.

You imagine wrong by an order of magnitude. C'mon, you can look these things up.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

Besides that, there is $ for R&D all over the place in the budget that you fail to recognize. Indeed many of the department budgets include money for this as they always have, such as the DOD, DOA, DOE, DOT, NASA, EPA, Homeland security, NIH, NSF,...etc. I think you are being a bit selective here.

I don't fail to recognize existing federal R&D, you failed to read my post. I cited the existing R&D in federal spending and sourced it.

The number of products we have enjoyed over the last many decades that were spin-offs directly from technology developed under government funding is simply too many to list. Whether it be NASA from the 60's, the Dept. of Defense in the 80's, NIH and NSF in the 90's, etc., the result always seems the same.

Yes, and the new tech products we've enjoyed from industry are too many to list. The airplane comes to mind. So to the point, spin-offs, or more generally new companies require private capital. Federal R&D budgets don't fund and manage the creation of new companies. So would you agree tax breaks would help with the generation of new companies an spin-offs?

 

[DrClapeyron]

The argument, as presented, suggest governments could all just spend themselves into infinite affluence. Where do you suppose that $100 came from in the first instance?

No, just the US Government. Only the US Government has the ability to print fiat money at random and the Federal Reserve never hesitates to purchase US fiat money plus interest. Where did the $100 come from? Whoever thought it was a good idea to spend $100 on a brick. Must have been a pretty damn good brick.

 

[BoomBoom]

You claimed this to what possible point then? It was clear that you were implying that additional funds to industry would be wasted because they don't do R&D at the level the government does, justifying the transfer of funds to the government. Clearly, this is not the case. Can we take this statement as a retraction then that additional funding to industry, via tax breaks, will not create jobs?

That is clearly not what I was implying. I stated it would be a waste for a company to hire workers it does not need. Then when R&D was brought up I stated that the majority of businesses do not engage in this activity...the rest was colorfully added by your imagination. Besides, Obama's budget does include tax breaks for companies that invest in R&D and he also proposes making these tax cuts permanent.

You imagine wrong by an order of magnitude. C'mon, you can look these things up.
http://www.washingtonpost.com/wp-dyn/content/graphic/2009/02/01/GR2009020100154.html

I don't fail to recognize existing federal R&D, you failed to read my post. I cited the existing R&D in federal spending and sourced it.

And I read through your source (http://www.whitehouse.gov/omb" ) and found you overlooked quite a bit. Indeed 14 out of the 23 departments included some sort of funding of this nature. If you read more carefully, I'm sure you can find 'em. That's the way research is funded... a scientist applies for funding from all these various departments and institutions to fund his/her research project.

Just for one example: you claimed there was $6B for cancer research and also made the claim that included the Recovery Act funding, however the Recovery Act did include an extra $10B.

The Budget includes over $6 billion within the National Institutes of Health (NIH) to support cancer research. This funding is central to the President’s sustained, multi-year plan to double cancer research. These resources will be committed strategically to have the greatest impact on developing innovative diagnostics, treatments, and cures for cancer. This initiative will build upon the unprecedented $10 billion provided in the recovery Act, which will support new NIH research in 2009 and 2010.

Yes, and the new tech products we've enjoyed from industry are too many to list. The airplane comes to mind. So to the point, spin-offs, or more generally new companies require private capital. Federal R&D budgets don't fund and manage the creation of new companies. So would you agree tax breaks would help with the generation of new companies an spin-offs?

Yes, I would support tax breaks for new startups. I'm not sure if Obama has any or not, but I know he has proposed funding for new businesses to get startup loans.

 

[Astronuc]

Citigroup to lower mortgage payments for some homeowners that are out of work
http://biz.yahoo.com/ap/090303/citigroup_mortgages.html

NEW YORK (AP) -- Struggling bank Citigroup Inc. said Tuesday that it will lower mortgage payments for some homeowners to an average of $500 a month for three months as part of a new program to help the unemployed.

The struggling bank makes the move as President Barack Obama looks to lenders to adjust the way loans are handled.

Citigroup's new mortgage efforts also come on the heels of the latest attempt to bail out the company, which includes the U.S. government's exchange of up to $25 billion in emergency bailout money given to Citigroup for as much as a 36 percent equity stake in the company. The deal between the Treasury Department and Citigroup represents the third rescue attempt for the bank in the past five months.

Unemployed homeowners who may qualify for assistance from Citigroup under the Homeowner Unemployment Assist program include those that are 60 days or more past due on their mortgages or in foreclosure and can pay the reduced amount. Customers must also have a first mortgage loan that is owned and serviced by CitiMortgage Inc. and conforms to government sponsored enterprise limits. The house must also be the customer's primary residence, with homeowners meeting all insurer and guaranty requirements.

. . . .

Cheers to Citi. In theory, as Citigroup recovers, the government can sell its equity, and hopefully repay money it borrowed - rather than spend it on another program.

Meanwhile - Mortgage delinquencies up for 8th straight quarter
http://biz.yahoo.com/ap/090303/transunion_mortgage_delinquencies.html
TransUnion data shows mortgage delinquencies up in last 3 months of 2008 for 8th straight qtr.

Corrective action should have been initiated 2 years ago, e.g. loan requirements should have been tightened, and subprime mortgages suspended.

 

[misgfool]

That might be true if the money were free. Otherwise you have to account for the damage done obtaining the money.

Gov't spending does cause inflation, which is beneficial to the economy to a point (at the expense of the poor). But only under the right circumstances.

Inflation is essential in all circumstances. Btw, what exactly do the poor have to lose?

 

[misgfool]

I think you missed the point. The cash reserves of the rich are very small compared to their net worth and are not used to pay taxes.

The cash reserves should be small in absolute terms, not relative. And I have to say that your example doesn't give a very realistic picture of the current situation. Also CD's at the moment are almost as bad as cash, since the banks aren't lending. I'm not going to allow rich people to hide behind banks this time. It's either consumption or direct investments to the economy.

 

[misgfool]

This borders on misinformation. The process of growing GDP through government purchases is much more complicated than just writing a check. The argument, as presented, suggest governments could all just spend themselves into infinite affluence. Where do you suppose that $100 came from in the first instance?

"GDP is the total value of all final goods and services produced in a particular economy."

Agreed, I don't know how it is exactly calculated, but the rough idea is that, when the government buys a $100 brick, which has to be produced, then the GPD grows with value of the brick. If the government lends those $100, then of course the debt also grows. Anyway if the private sector is not spending, then the government has to do it for them.

 

[mheslep]

"GDP is the total value of all final goods and services produced in a particular economy."

Agreed, I don't know how it is exactly calculated, but the rough idea is that, when the government buys a $100 brick, which has to be produced, then the GPD grows with value of the brick. If the government lends those $100, then of course the debt also grows. Anyway if the private sector is not spending, then the government has to do it for them.

As you might imagine there a couple ways of tallying up GDP. The common one is the 'expenditures' method:
GDP = C(t) + I(r) + G + (X − M).
C = consumption, dependent in part on taxes
I = investment, dependent in part on interest rates
G = government purchases
X-M = net exports (~small compared to the others)
http://en.wikipedia.org/wiki/Gross_domestic_product

If the government buys a brick all we know for certain is that 'G', government purchases, increase. What happens to GDP is much more complex, since if the government raises taxes it it tends to lower 'C', and if borrows more money it may raise interest rates and thus lower 'I'. Generally, the theory is that if there is slack in the economy, e.g. in a recession, the government can get away with borrowing money without forcing up interest rates.

 

[mheslep]

Citigroup to lower mortgage payments for some homeowners that are out of work
http://biz.yahoo.com/ap/090303/citigroup_mortgages.html
Cheers to Citi. In theory, as Citigroup recovers, the government can sell its equity, and hopefully repay money it borrowed - rather than spend it on another program.

Meanwhile - Mortgage delinquencies up for 8th straight quarter
http://biz.yahoo.com/ap/090303/transunion_mortgage_delinquencies.html
TransUnion data shows mortgage delinquencies up in last 3 months of 2008 for 8th straight qtr.

Corrective action should have been initiated 2 years ago, e.g. loan requirements should have been tightened, and subprime mortgages suspended.

Citi was still making subprime loans (or buying MBS's containing them) as of March 2007? Good grief.

 

[Astronuc]

Citi was still making subprime loans (or buying MBS's) as of March 2007? Good grief.

I think even into 2008. I'm waiting impatiently for Bethany McLean's book on this mess.

 

[Astronuc]

Here's a twist - As recession saps demand, a world awash in oil
http://news.yahoo.com/s/ap/20090303/ap_on_bi_ge/awash_in_oil

NEW YORK – Supertankers that once raced around the world to satisfy an unquenchable thirst for oil are now parked offshore, fully loaded, anchors down, their crews killing time. In the United States, vast storage farms for oil are almost out of room.

As demand for crude has plummeted, the world suddenly finds itself awash in oil that has nowhere to go.

It's been less than a year since oil prices hit record highs. But now producers and traders are struggling with the new reality: The world wants less oil, not more. And turning off the spigot is about as easy as turning around one of those tankers.

So oil companies and investors are stashing crude, waiting for demand to rise and the bear market to end so they can turn a profit later.

Meanwhile, oil-producing countries such as Iran have pumped millions of barrels of their own crude into idle tankers, effectively taking crude off the market to halt declining prices that are devastating their economies.

Traders have always played a game of store and sell, bringing oil to market when it can fetch the best price. They say this time is different because of how fast the bottom fell out of the oil market.

"Nobody expected this," said Antoine Halff, an analyst with Newedge. "The majority of people out there thought the market would keep rising to $200, even $250, a barrel. They were tripping over each other to pick a higher forecast."

Now the strategy is storage. Anyone who can buy cheap oil and store it might be able to sell it at a premium later, when the global economy ramps up again.

The oil tanks that surround Cushing, Okla., in a sprawling network that holds 10 percent of the nation's oil, have been swelling for months. Exactly how close they are to full is a closely guarded secret, but analysts who cover the industry say Cushing is approaching capacity.

. . .

Don't you wish you owned an oil tanker. I wonder how many people got burned when the price of oil plummeted?

 

[mheslep]

And I read through your source (http://www.whitehouse.gov/omb" ) and found you overlooked quite a bit. Indeed 14 out of the 23 departments included some sort of funding of this nature. If you read more carefully, I'm sure you can find 'em.

I did not 'overlook' the other departments, whether there are 23 or 230, R&D increases in the other departments are pocket change in comparison to Energy and NIH.

Just for one example: you claimed there was $6B for cancer research and also made the claim that included the Recovery Act funding, however the Recovery Act did include an extra $10B.

You are mistaken. I clearly stated the $6B for cancer came from the budget proposal alone. I also stated that the Recovery Act committed an order of magnitude less than the $150B you claimed, i.e., ~$15-20B which includes the NIH funding.

 

[Astronuc]

Stock futures point higher after 5 days of selling
http://finance.yahoo.com/news/Stock-futures-point-higher-apf-14538077.html
Investors appear ready to move back into the market after 5 days of heavy selling

AIG is a real bargain at $0.43 (52wk Range: $0.38 - 49.50 ). If they don't go bust, they could climb back to the $40 range - but that's a big IF. Just imagine buying 1000 shares and having it increase 100-fold.

World stocks rebound on China stimulus hopes
http://finance.yahoo.com/news/World-stocks-rebound-on-China-apf-14537578.html
World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

 

[misgfool]

As you might imagine there a couple ways of tallying up GDP. The common one is the 'expenditures' method:
GDP = C(t) + I(r) + G + (X − M).
C = consumption, dependent in part on taxes
I = investment, dependent in part on interest rates
G = government purchases
X-M = net exports (~small compared to the others)
http://en.wikipedia.org/wiki/Gross_domestic_product

I also read what wiki says, but that doesn't mean that GDP is actually calculated like that.

If the government buys a brick all we know for certain is that 'G', government purchases, increase. What happens to GDP is much more complex, since if the government raises taxes it it tends to lower 'C', and if borrows more money it may raise interest rates and thus lower 'I'. Generally, the theory is that if there is slack in the economy, e.g. in a recession, the government can get away with borrowing money without forcing up interest rates.

I believe I have already addressed this issue in this thread. But as our beloved prime minister says: "There is no need for discussion, because you disagree anyway."

 

[OmCheeto]

World stocks rebound on China stimulus hopes
http://finance.yahoo.com/news/World-stocks-rebound-on-China-apf-14537578.html
World stock markets rebound on Chinese stimulus hopes, Shanghai leads recovery

Proof that all this stimulus money is just a big communist plot.

Do you think Rush will come out with a big "Told you so! Neeener neeener neeener." speech?

 

[BoomBoom]

I also stated that the Recovery Act committed an order of magnitude less than the $150B you claimed, i.e., ~$15-20B which includes the NIH funding.

Again, that is not what I said at all. What I said was:

The recovery plan by itself invests over $150B in energy and science...although I'm not sure how much of this is dedicated R&D, but I'd imagine it's a good portion.

A real quick browse through the (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h1enr.pdf"), I can see a little over $30B in R&D just in the Recovery Act alone. While 20% is a bit less than I thought it would be, it still seems like a "good portion".

I feel like the point is getting lost here...in order to bring this back to the subject of how to fix the economy, I will bring up another point that federal money for research also helps private industry in support roles as well.

As an example, the Human Genome Project in the 90's spawned huge growth in the biotech industry in support roles and technology development by private industry. This investment was a small fraction of what is being proposed now.
http://www.genome.gov/11006943"

In 1990, Congress established funding for the Human Genome Project and set a target completion date of 2005. Although estimates suggested that the project would cost a total of $3 billion over this period, the project ended up costing less than expected, about $2.7 billion in FY 1991 dollars. Additionally, the project is being completed more than two years ahead of schedule.

It is also important to consider that the Human Genome Project will likely pay for itself many times over on an economic basis - if one considers that genome-based research will play an important role in seeding biotechnology and drug development industries, not to mention improvements in human health.

If you truly want to believe that federal funds will not create job growth and economic recovery, then go ahead and believe that. If you are right, then in 2012 perhaps you can replace Obama with someone you find more suitable. If you are wrong, you will likely have to wait until 2016.

 

[mheslep]

I also read what wiki says, but that doesn't mean that GDP is actually calculated like that.

Wiki's just a convenient reference, you'll find the same thing plus other equivalent methods of tallying GDP in any macroeconomics textbook. The point is this equation is valid; it is widely supported by evidence. If you break down GDP into the components of government purchases, consumption, and investment (+net exports), and the evidence shows that you can, then the sum of those must increase to guarantee an increase in GDP.

 

[mheslep]

...I feel like the point is getting lost here...

Yes the original point in our discussion was that this statement mocking the idea that tax cuts create jobs:

I hear all the time that "tax cuts to business create jobs". Really? Do they? Where is the evidence for this? That is somewhat counter-intuitive to how business operates. Business is in the business of maximizing profit, so why in the world would a business hire people it doesn't need just because it's taxes were lowered? That's ridiculous...they will simply make more profit and not hire anyone. The only reason a business will hire people is when they are needed, and this only happens when they have more demand for their product.

is misinformed, and counter to accepted economic theory, especially that the academic work of the President's principle economic advisor, which I cited, and is used to back the billions of tax cuts in the Recovery Act. Her work, based in part on the theory that tax cuts create more demand and investment, details just how much growth they should create.

If you truly want to believe that federal funds will not create job growth and economic recovery, then go ahead and believe that.

I said no such thing in this conversation. No doubt the Recovery Act will create some jobs. I hope it creates a great deal since this is our money being spent, people need jobs, and now rather than later. The questions are how many, how soon, and at what eventual cost to the country. I do have doubts about those questions thanks to, among others, the father of fiscal spending:

Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.

http://thinkmarkets.wordpress.com/2009/01/25/keynes-as-public-works-skeptic/

 

[BoomBoom]

Yes, well obviously, my use of an absolute ("only") and the over-generalization of the term "tax cuts", was a mistake of phrasing on my part. But the general idea that it is demand that mainly creates jobs still stands IMO. Indeed the billions in tax cuts you mention are targeted specifically for this purpose...along with incentives for growth and R&D. This is also the reason why there are no tax cuts for the wealthiest 5% in the plan because that would not create more demand. (I would assume the rich buy whatever they want regardless of their taxes)

 

[Astronuc]

Ford to cut $10B in debt with cash, equity offer
http://news.yahoo.com/s/ap/ford_tender_offer

DEARBORN, Mich. – Ford Motor Co. says it will eliminate up to $10.4 billion of its debt by offering debtholders cash and stock instead, as the automaker continues to restructure amid a severe automotive sales downturn.

The Dearborn, Mich., automaker and its financial arm are putting up $2.2 billion in cash and about 500 million shares of stock to entice holders of bonds and secured-term debt.

The company said Wednesday it is restructuring the debt to reduce its costs and remain competitive, and it still does not intend to seek government loans.

. . .

Keep an eye on Ford.