Saturday, June 5, 2010

Double Dip?

Robert Reich (and Goldwater's Ghost) think we're headed for a "double dip" recession. I disagree. I think we're simply a year into a three to five year stretch of little or no growth. Certain indicators in the economy will rise and fall, and there will be a concomitant rise or fall in the markets. But by and large, the Dow will hover between largely between 10K and 11K for the foreseeable future--and THAT'S OK. We don't NEED to do any more monkeying around with things. We need to let the toxins work their way out of the system. We need to allow the housing inventory to decline slowly, over time. We need to allow the real signs of increased productivity in the productive side of our economy continue--even as government seeks to support that productivity with enlightened policy decisions (not what we're seeing today). We need to get used to high unemployment and low growth while we work to shore up the fundamentals of the economy. We need to cut spending and move to more rational revenue models.

What we don't need is more stimulus. What we don't need is more debt. What we do need it to take some of the medicine we are so freely prescribing to Greece.

4 comments:

"The Hammer" said...

I got one word for this guy...Circus!

Goldwater's Ghost said...

I agree with you in principle (what we don't need to do). Unfortunately, doing nothing simply won't do for an activist, big government administration. Look at how much heat Obama is taking for the Gulf spill. Instead, Obama and the D's will insist on more spending for 'Main Street' at the expense of 'Wall Street', without realizing the two are linked. In order to generate revenue, they will have to raise taxes on EVERYONE (we've got 50 - or is it 57 - little Greeces to feed). Businesses won't be incented to take risks and expand in a climate where they are taxed and regulated to death, and the sectors that have historically driven growth can't be counted on to do the same this time around.

I hope I'm wrong - and I probably am. But the wonderful thing about economics is that no one is ever wrong - conditions just change.

"The Hammer" said...

GG, as I've said many times, the laws of economics are as immutable as the laws of physics. With a complex economy you can hide a lot of bad stuff, but sooner or later the fiddler MUST be paid.

I'm Just Musing said...

Robert Reich is the same guy who thinks Obama should take over BP oil: http://robertreich.org/post/650145579/why-obama-should-put-bp-under-temporary-receivership
Just another step in the plan to turn us into a socalist state.

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