While IMF expects US gross domestic product (GDP) growth of 3.25% in 2010 and 3% in 2011, unemployment is projected to remain above 9%.
IMF warned in a statement that "the backlog of foreclosures and high levels of negative equity, combined with elevated unemployment, pose risks of a double dip in housing."
Sure. I may be wrong, but I am under the impression that housing sales were below normal, even WITH the housing tax credit, so naturally after the credit expired housing sales stayed poor and even dropped.
It's like our government is claiming they are trying to jump start our economic car by putting on jumper cables and then saying "see it is working" when they then turn on the headlights. They they take the jumper cables off and wonder why the car wont start. The temporary fix to a symptom of the problem (headlights that didnt work) does absolutely nothing to fix the root cause of the greater problem (consumer and business confidence in our economy).
I really dont think that if republicans take over congress in November that they will do a better job that the democrats at fixing our problems, but I do hope that the change in congress will improve consumer and business confidence.
Business or consumer confidence is generally meaningless at this point in the economic cycle. Everyone in the US and most of the developed world has to much debt, and most consumers are in the process of paying it down, or defaulting on it. This means economic contraction is going to occur to whether or not people are confident or not.
There are a few ways to handle this type of situation, I will list two
Quick, deep and very painfull, but with a faster eventual recovery. This is where you let the business's fail, the banks fail and people declare bankruptcy. The economic contraction is deep, and job loss's are steep along with the number of business's shutting down. When the bad debt is worked through economic expansion can occur again, and it would typically be a strong expansion. Typically Hong Kong has gone through this type of contraction
Slow, shallow but of moderate pain, with a very slow and weak recovery. This is where you protect the people and the companies from going bankrupt. The job loss's are high, but no where near as high as method one. However the recovery in the job market takes a long time, and any expansion is quite weak as the bad debts still are on the books and will take years to pay off. Japan has been following this method for the last 15 years or so
The job loss's are high, but no where near as high as method one. However the recovery in the job market takes a long time, and any expansion is quite weak as the bad debts still are on the books and will take years to pay off. Japan has been following this method for the last 15 years or so
Rather than pointing to a different country with a different culture, I can point to this scenario within US history. About the great depression Herbert Hoover took a very conservative approach to handling our economy, and his approach failed.
Then FDR took the opposite approach as he should have (why continue a failed policy) and it also failed - until WW 2, at which time the spend spend spend approach, even if by that point in history it was not intended to create a better economy, did pull us out of the depression. The "new deal" did not actually end with WW2, it was just shifted to the war effort and drastically expanded.
To fund this incredible government spending, tax rates on the rich went up to 94%, yet our economy prospered. The top tax rate has been steadily falling since 1944. If lower taxes on the rich somehow created a good economy, we should be seeing the best economy that we have ever had, and the lowest unemployment rates. But we are not, so that myth is busted. This historical observation alone pretty much debunks the argument that higher taxes on the rich hurts our economy.
The historically proved facts are that that government spending, when large enough and focused enough, with minimal fraud and corruption, can fill in the gap where the private side fails, and higher taxes on the rich can support that spending without harming economic growth.
Far right ideology, on the surface it seems logical enough, but in reality, it has historically failed. The practical view is an "optimization" between far right and far left ideologies. This type of practicality can only be conceived of by a "radical moderate".
I generally agreed with what you said, but I thought this part was strange. What evidence do you have to show that doing nothing leads to higher unemployment than doing something?
Also, Japan has been following this method, yet they still have not rebounded for those 15 years.
WWII did not pull us out of the depression, because if you think about it, it still sucked during the war even though we had GDP growth (due to government spending which really isn't valuable to consumers, showing a flaw in using GDP as a measure of wealth). Instead, we finally pulled out of the depression when regulations were relaxed once WWII ended.
Southern Illinois University The Great Depression - End of the DepressionIn the late 1930s, the Great Depression was weakening, but many Americans were still poverty stricken. Americans watched as German forces became more powerful and took over neighboring countries. With the invasion of Poland, World War II erupted in Europe. The suffering American economy was given a boost when the fighting countries needed supplies and looked to America to make them. After Pearl Harbor was bombed on December 7, 1941, America entered the war. The U.S. enlisted more than 10 million men and women into the military. Since so many were fighting in the war, it was left for those left at home to work in the factories to make supplies for the war effort. The desperate need for soldiers, pilots, and workers to make ammunition, weaponry, and air/sea craft all contributed to the end of the Great Depression. The economy of America skyrocketed and was on the road to restoration.
I don't know what's confusing, respectfully, Phattonez. I directed my original post to your assertion that WWII did not lift the US from The Great Depression.
As to my offhand statement that one could argue our standard of living has NOT improved since WWII, I give you families needing double incomes to survive, children growing up without the benefit of a stay-at-home parent, and an insatiable desire for material things. There are those who say, and I'm one of them, that these things do not represent an improvement in our standard of living.
I'd say that we've improved, because back then it was not possible to have a modern life, but in this modern life we can still choose the old life.
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