PeakTrader.com

[administrator]

Restrictive monetary policy, contractionary fiscal policy, and foreigners absorbing dollars (or shifting dollars from the private sector to the public sector) caused the recession. The world was flooded with dollars. Yet, there were too few dollars in the U.S. private sector.

2. The U.S. was on a path to a mild recession after the Fed eased the money supply in late '07 and Bush cut taxes in early '08.

3. When Lehman failed, the credit market froze and there were much fewer dollars causing a severe recession.

4. The Fed's quantitative easing, TARP, and a greater fiscal expansion together put a floor on the recession and began a recovery.

5. Fiscal policy squandered so much money on spending rather than tax cuts, the U.S. is in a very weak position. Basically, we used up all the fuel, and an economic boom is needed to fill up the tank, which we didn't get and won't get.

Two government failures are:

1. Fiscal policy doesn't operate like monetary policy (i.e. raising and cutting taxes to help smooth-out business cycles).

2. The moral hazard of "too big to fail" (government facilitating risk).

The government is blaming the private sector for problems created by the government.

The Democrats have been adept directing taxpayer anger towards Wall Street, while the Republicans have been incompetent explaining why it's the government's fault.

--------------------------------------------------------------------------------

It's not just public sector unions that broke California. Also:

Government spending projects where costs far exceed benefits.

High level of business hostility, which reduces investment or raises risk.

Large population of uneducated Third World immigrants and their children creating greater inequality.

Massive welfare programs to reduce inequality.

Extensive consumer protections causing high costs to businesses and landlords.

Intrusive government that controls almost everything.

--------------------------------------------------------------------------------

Daniel Gross of Newsweek states:

"So what will our new economy look like once the smoke finally clears? There will likely be fewer McMansions with four-car garages and more well-insulated homes, fewer Hummers and more Chevy Volts, less proprietary trading and more productivity-enhancing software, less debt and more capital, more exported goods and less imported energy."

Or fewer and smaller assets and goods, less capital created and captured in the global economy to distribute to the masses, higher taxes, prices, and interest rates, less consumption, more production to be exported, and higher energy prices.

--------------------------------------------------------------------------------

Just How Much Money is $1.25 Trillion?

In today's financial headlines - the word Trillion is often casually thrown around. So much so, that it's easy to lose perspective on how much money this really represents.

Picture a stack of $100 bills. It might surprise you to know that it only takes a stack four inches high to be worth $100,000. So $1,000,000 would be a stack of $100 bills 40 inches tall.

How about a Billion? Well, you would have to stack $100 bills up to the top of the Empire State Building...twice...in order to reach a Billion.

So to picture $1.25 Trillion represented by a stack of $100 bills - that stack would be 850 miles high...We're talking about a lot of money here.

--------------------------------------------------------------------------------

It seems, the only hope for this country is if Republicans get their act together (because conservative and moderate Democrats went along with the liberal spending spree "hog wild").

The Republican party would have to win big in 2010 and then win big again in 2012 to where it has a Republican president, 60 Senate seats, and control of the House (which it hasn't done since 1921).

Then it would need the sense to engineer a "creative-destruction" process in government, and complete it within two years, to eventually shrink the size of the federal government in half.

---------------------------------------------------------------------------------

Anon says: "Have you got any evidence that shows ignorance causes liberals?"

Yes, it was easily determined with over 100 subjects, and the population as a whole reflects that statement almost perfectly.

Conservatives know more than they say and liberals say more than they know. Moderates say about as much as they know and vice versa