A Moderate Depression?
American Express became a bank today. Yes, indeed. They want their fists on that super-secret Fed money–also known as your tax dollars.
Just so we’re clear: These would be the institutions that lobbied Congress to make filing bankruptcy more difficult and getting a fresh start nearly impossible. And Congress passed the law. And President Bush signed it.
Now, these same institutions, who have been stupid about their money, want your money. Meanwhile, the market continues to tank. And banks refuse to lend to all but the very best bets. That’s not very helpful to struggling businesses.
MaxedOutMama’s solution long-term doesn’t mesh with the nature of Democrats:
A depression lasts longer than a recesssion and so the net drop in GDP is more; I am expecting to see that annualized drop head down around the 5% range. So it would be very severe and an unprecedented event.
Most of this is going to come from a massive drop in real incomes for the lower half of the income range, which will destroy a lot of jobs and then continue to inflict damage to higher incomes.
The key to avoiding this is to subsidize the really lower income groups, dump all the effing alternative energy crap and instead do what we can now do, not try to institute any new entitlement programs, reform bankruptcy reform to something reasonable, and control the necessary tax increases to keep them moderate and beginning around the 80K range. Doing that will be challenge enough! If Obama and the Dems could pull that off they’d be doing wonderfully. However we have got to cut federal spending pretty significantly over the next few years. It’s time to cut out a lot of the fluff, and Lord knows there is a lot of it.
You get much more net economic stimulus from subsidies like unemployment and energy to low income groups. They will spend it. In a recession, the higher income groups save more because they can and because they are worried.
I do know this: The drop in gas prices have been a huge relief. Talking about windmills is just stupid, right now. Sorry T. Boone. What we need is cheap fuel. Now.
Recession? Moderate depression? It’s not 1929, but the next year could be a lot more challenging for a lot more people.
Cross-posted at MelissaClouthier.com