Asians Have No Confidence in "Stimulus Package"
Posted in International News
Jan. 21, 2008 at 12:26
by BrendaBee
Is this the beginning of the fall from grace? Or is the grace period up? It has been the investments coming out of dollar rich China and India that has managed to keep our economy balancing on the brink for some time now. In fact we have been on the brink and going blithely on our merry spending ways ignoring the very real possibility that the Asian Markets would dump dollars and stop carrying our economy and thus permitting our excessive self indulgence.Well it happen Monday because no one really has any faith that Congress will get it's collective head out of "that place" and do what really has to be done. The federal government must make the deep slashes in spending that will not keep a recession from happening, but will make it's affect on our economy less hurtful. There is no confidence at all in the so-called stimulus package doing any good except adding to the already deadly US federal deficit.
Why won't the stimulus package work as it should with people pouring the money back into the economy by spending? Because the wrong people will get the "tax rebate" that is proposed. The tax payers will get the rebate and are the people who are just as likely to save the money as spend it. The low income masses (60% of the working population) who pay little or no income taxes and who would certainly spend the money won't get a cent. This is after all an election year and tho the Democratic candidates are yelling for a wholesale give away they feel safe in doing so because they know that Congress will not take this step and alienate the voters. (middle class tax payers are more likely to vote that low income people)
Now don't take this that I personally am in favor of a huge give away program to low income people because I am not at all. I am for Congress making drastic and immediate cuts in spending. Or at the very least to "freeze" spending on non-essentials like all the ear marks and new weapons systems and other things we can well do without for a time. This message will resonate in the rest of the world to our benefit. There will be a recession in the United States because of cuts government spending causing lay offs and hardship to those industries dependent on government spending, but it will encourage the rest of the world, and especially the Asians, to continue investing in the United States thus giving our economy time to adjust.
You see we and Europe depend on the Asian Markets to hold up our economies by 1) sending us cheaper goods due to cheaper labor costs, and 2) investing their excess profits in our economies. But the fact is that the Asians do not need to deal with the United States or Europe because there is enough trading within the Asian block countries to sustain them. ("Some analysts predict that Asia won't suffer dramatically from a U.S. recession because increased trade and investment within Asia has made the region less reliant on the United States than in the past. Excluding Japan, 43 percent of Asia's exports go to other nations in the region, Lehman Brothers calculates, up from 37 percent in 1995.") So they are dumping these US investments as fast as they can. Look for Wall Street to panic when the market opens tomorrow. MLK Day has given us a one day reprieve.
The following article gives more detail and uses the appropriate terminology, but my blue-collar assessment of the situation says pretty much the same thing. BB
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Headlines: Stock markets plunge worldwide
By TOBY ANDERSON, AP Business Writer
LONDON "Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession."
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It certainly looks to be inevitable now that we are in deep doo doo, and that the Europeans are following their Asian counterparts in having lost faith in our government's ability to pull us out of a recession. Or, rather probably the truth is worse than that and they have followed most Americans in having lost faith that Congress can do anything but point and shout at the other party. BB
Breaking News Alert
The New York Times
Monday, January 21, 2008 -- 12:11 PM ET
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Headline: Stock Markets in Europe Plunge 7 Percent
"Stocks fell steeply in Europe on Monday after sharp overnight
declines in Asia, reacting to fears that an American
recession was unavoidable and would crimp global growth. The
DAX index in Germany closed off 7.16 percent and the CAC 40
in France lost 6.83 percent. British stocks fared slightly
less badly; the FTSE 100 lost 5.48 percent. United States
financial markets are closed today; Canadian and Mexican
stocks were off sharply at midday."
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