is it "the economy, stupid," or "the stupid economy"?

[Thats my opinion]

I realize that I’m no whiz at economics, but there are some fairly simple things I do understand. Those who are wiser about these matters will probably seek to straighten me out, and the invitation is herewith offered. Here are some generally agreed upon facts:

• We are not only deep in a serious economic chasm, but if things are getting any better, the progress has been unbearably sluggish.
• Consumer spending has slowed almost to a halt.
• High levels of chronic unemployment, a housing crisis, dramatically increased gas prices and general financial unrest are not conducive to generating open pocketbooks.
• The stock market holds at around 12000, and most corporate profits are excellent. What is more, corporations are holding two trillion uninvested dollars.
• Only increased consumer demand will get this excess money active in generating necessary jobs.
• Federal deficit spending and an alarming national debt are chronic problems that must be faced.

That’s where we are. So what are we doing?

• The biggest employers in the nation (governments) are cutting their budgets by mammoth amounts, which means the loss of several hundred thousand formerly secure jobs.
• While millions are bleeding to death economically, Congress is frittering away the time in a futile debate over the debt ceiling.
• Instead of funneling resources to the people who will spend it in this economy, tax relief is being held hostage in order to safeguard a low rate for those who don’t need it.
• While there is plenty of available capital for business investment, it is not being spent. Corporations will not invest until there is more consumer demand for their products.
• A proposal is on the table to radically shift the cost of health care from a successful Medicare program to seniors who cannot afford the change.
• While the price of gas has helped stall the recovery, oil companies, whose profits are out of sight, are still getting government subsidies.
• While the Republicans have a dreadful plan to deal with Medicare, to this point the Democrats have put no plan on the table.
• The Republicans have vowed that there will be no increased revenue and the Democrats have not even bothered to respond.
• We now live with the absurd notion that the more taxes are decreased the smaller the deficit. All in the light of the fact that the two Bush tax cuts took the country from yearly surpluses to the biggest deficits in history.

What can be done? Conservatives say that the private sector is the answer if only enough money flows to those who can create the jobs—that is private industry. But in corporate America there is no shortage of money. Corporate spending is now either geared to buying new equipment, much of which eliminates the need for workers, or is sent overseas to take advantage of cheap labor.

Historically the government has gotten us through these troubled times with investment programs to upgrade the infrastructure, build parks, bridges and highways, increase educational opportunities and fund social services. But the Republicans are horrified at the very same sorts of projects FDR developed to bring us out of the great depression. President Obama is roundly condemned for not doing anything to create jobs, but anything he has the power to do is decried.

This morning a team visited our community to explain how triage would work during a natural disaster—in our case a significant earthquake. They explained that no matter what other complaints an injured patient has—like two broken legs—if he is spurting red blood the first act must be to stop the bleeding. The national debt has broken our economic legs. It is serious and must be attended to. But America is spurting blood! The time will come when we must address the debt. But for now jobs are hemorrhaging from America’s economic arteries. What is more, millions of homes are under water and Americans have lost confidence in the future. And that means immediate action needs to be taken by the only institution ready and able to do so. The government!

[ixion]

1. The fly in the ointment

is the 20+ trillion in toxic CDO and CDS's and other such "investment vehicles". This is the millstone that will sink us all, no matter what we do. The longer we pretend like they don't exist, the worse it will be.

[sendero]

2. Pretty good synopsis..

... and I don't find anything but minor points to quibble over, so I'll just say "well said" :)

And that we've been hurtling toward a cliff for 3 years. Obama has done almost nothing and has a good chance of being a one-term president IMHO. Normally, that would bother me but since I now believe we are past the point where disaster can be averted I'd just as soon there be a Republican in office to take the "credit".