Originally Posted by EvilGenius:
Had there not been a stimulus and auto bailout, the recession would have been significantly worse, maybe a depression. What you 6th grade economist always fail to mention, is that when Banks aren't loaning and are on the verge of collapse, corporations and large business aren't spending money, and the Federal Reserve has interest rates as low as they will go, the only way to stimulate the economy is with government spending. I would have preferred to see more infrastructure spending, although they did quite a bit of highway, rail, and airport projects. To stimulate the economy we really need to fund another large infrastructure building plan. Most of the country's infrastructure built during the 40's and 50's are crumbling. China is investing in genuine high speed rail, huge new airports, hydroelectric dams, and huge local infrastructure buildouts which will make them much more competitive than us over the next 30 to 50 years.
Oh and by the way, a TRILLION dollars of the deficit is due to the Bush wars in Afghanistan and Iraq. The Iraq war also allowed Iran to wreak havoc in the middle East since they didn't have to worry about Sadaam any longer causing more increase in military spending by us.
The tax rates should be returned to the level during the Clinton administration and thoughful cuts in spending be implemented. As President Eisenhower, Nixon, Ford, Reagan, Bush 1, all believed you must have a mix of taxes and spending cuts, Reagan and Bush 1 (the smart one) both raised taxes during their presidencies.
What you fail to realize is that the stimulus did little good. The cash for clunkers simply raised the cost of used cars, hurting the poor who usually buy used cars. After the initial sale of new cars, sales dipped back down.
Europe tried stimulus and is now in full austerity mode after that failure. FDR tried it in the mid-thirties and it didn't work. Do I have to post Secretary of Finance Morgenthau's speech to that effect, for the twelfth time! Japan had a massive infrastructure program that didn't help. Now, they have a national debt equal to 240 percent of their GDP, and growing.
China spent about 56 percent of their GDP on infrastructure. There are over twenty large cities almost empty, same for massive new malls. Note the Chinese geography, she has large interior population centers, surrounded by nothing, or deserts and mountain ranges with minimal roads. Rail makes sense for her as they must move people and freight.
As to US railroads, we have a high speed rail -- for freight. We move people by air and on well developed roads. In Europe, they have high speed rail for people and slow rail for freight. Drive on the German roads while sharing the road with low powered trucks with one or two trailers in tow at a top speed of 48 MPH if you want frustration. Especially, if they are lined up nose to tail for miles in the right lane in summer.
In the world, only two rail lines moving people break even, or make a profit -- a line in Japan and the Boston, NYC, DC line in the US.
The Chinese auditors report that perhaps $800 billion was diverted to private accounts. Many banks are near bankruptcy. For the last few years, the Chinese growth rate was fueled by spending in the interior, not trade. Now, trade is sinking, factories are going dark, and the piper must be paid.
Now, as to your seventh grade economics...!
