People have been asking me what will turn the economy around and are we or at least our government, going in the right direction.
Tonight, you will hear Obama make a case for his plan. He wants the credit markets to unfreeze or put another way, banks to start lending again.
Yes, we want businesses to be able to borrow money because businesses cannot operate without some credit. My business has just received a renewal of its line of credit (for a $6,000 fee – that’s something I have not seen before) and so I think banks are actively lending to businesses, they are just making super sure that the businesses they are lending to are viable or at least will be viable in the near term.
But businesses rely on customers and the demand customers generate for a product or service that a business provides and I have a feeling that the Fed wants to stimulate a consumer “demand” by making money easy to borrow again and here is where I have a problem.
To my mind, easy credit is what helped us get in this mess in the first place. Without a steady income stream (job) no one in his right mind, would spend money on anything but the direst necessities no matter how easy the credit.
So it is jobs; keeping existing jobs and creating new jobs that appear to be the answer to our problem. But jobs are only created or sustained if whatever product or service the job provides, is in demand and people are willing to pay for that product or service. So we are in that cycle thing where a spark needs to create a demand that will eventually create the jobs that will keep the demand supplied and thus start and keep the wheels spinning.
Obama’s stimulus spending will create jobs which will create money for spending (demand) but because those jobs will be of limited duration (construction done and so is the job), those holding the temporary jobs will not feel safe enough to enter into any long term debt arrangements and so demand created by these temporary jobs will be limited in scope.
Obama will maintain that he is also helping to sustain existing jobs which are of a permanent nature and afford the workers holding those jobs, a little more of a secure feeling which may or may not, induce them to enter longer term debt obligations (buy something big and new) which will create the demand that creates the jobs, etc.
I feel that the intense, irresponsible demand of years past is dead, should be dead and should not reappear. The demand of the past needs to be scaled severely back to a responsible demand or one that can be paid for within a reasonable period of time just like on-lay-away, in the old days.
This in itself will scale down substantially our entire economic system which our government is probably not happy with. To them, they would rather go back to the red hot days of loose credit and consumer purchasing insanity. Well, that scenario is no longer sustainable or even attainable, in my mind.
Let’s tone it down and get back on the straight and narrow with regulatory oversight strong enough to prevent this nonsense from ever happening again and don’t forget I am a capitalist but I also need structure and not mayhem to do well in our capitalist system.
Tonight, you will hear Obama make a case for his plan. He wants the credit markets to unfreeze or put another way, banks to start lending again.
Yes, we want businesses to be able to borrow money because businesses cannot operate without some credit. My business has just received a renewal of its line of credit (for a $6,000 fee – that’s something I have not seen before) and so I think banks are actively lending to businesses, they are just making super sure that the businesses they are lending to are viable or at least will be viable in the near term.
But businesses rely on customers and the demand customers generate for a product or service that a business provides and I have a feeling that the Fed wants to stimulate a consumer “demand” by making money easy to borrow again and here is where I have a problem.
To my mind, easy credit is what helped us get in this mess in the first place. Without a steady income stream (job) no one in his right mind, would spend money on anything but the direst necessities no matter how easy the credit.
So it is jobs; keeping existing jobs and creating new jobs that appear to be the answer to our problem. But jobs are only created or sustained if whatever product or service the job provides, is in demand and people are willing to pay for that product or service. So we are in that cycle thing where a spark needs to create a demand that will eventually create the jobs that will keep the demand supplied and thus start and keep the wheels spinning.
Obama’s stimulus spending will create jobs which will create money for spending (demand) but because those jobs will be of limited duration (construction done and so is the job), those holding the temporary jobs will not feel safe enough to enter into any long term debt arrangements and so demand created by these temporary jobs will be limited in scope.
Obama will maintain that he is also helping to sustain existing jobs which are of a permanent nature and afford the workers holding those jobs, a little more of a secure feeling which may or may not, induce them to enter longer term debt obligations (buy something big and new) which will create the demand that creates the jobs, etc.
I feel that the intense, irresponsible demand of years past is dead, should be dead and should not reappear. The demand of the past needs to be scaled severely back to a responsible demand or one that can be paid for within a reasonable period of time just like on-lay-away, in the old days.
This in itself will scale down substantially our entire economic system which our government is probably not happy with. To them, they would rather go back to the red hot days of loose credit and consumer purchasing insanity. Well, that scenario is no longer sustainable or even attainable, in my mind.
Let’s tone it down and get back on the straight and narrow with regulatory oversight strong enough to prevent this nonsense from ever happening again and don’t forget I am a capitalist but I also need structure and not mayhem to do well in our capitalist system.
No comments:
Post a Comment