The foolishness of economic 'stimulus'

January 24, 2008
The foolishness of economic 'stimulus'

Fairfax, Va. - A consensus is building that America's economy is sliding – perhaps plummeting – into recession. In December the unemployment rate jumped to 5.0 percent, up 3/10ths of 1 percent from its November level. And of course investors are now growlingly bearish.

To no one's surprise, politicians are rushing in with various plans for helping the economy. Most of these plans involve "stimulus." The calls are loud to put more money into the hands of ordinary Americans in hopes that they will spend – not save – it, thereby boosting the overall economy.

Bankers Face Grim Truth: Worst Is Yet to Come

December 12, 2007
Bankers Face Grim Truth: Worst Is Yet to Come

AS the credit crisis sweeps wildly through Wall Street, major investment banks face a grim truth about their already-slumping profits: the worst is yet to come.

Beginning with Lehman Brothers on Thursday, major investment banks and securities firms will begin reporting what are likely to be their weakest quarterly earnings in years.

The results will show how hard the recent turmoil in the financial markets continues to hit the even the mightiest Wall Street banks, and could cast doubt over the future of several chief executives. Multibillion-dollar write-offs have already prompted Merrill Lynch and Citigroup to replace their chief executives.

Symptoms of an economic depression

December 9, 2007
Symptoms of an economic depression

It is not only a matter of mass foreclosures. It is not merely a question of collapsing home prices. It is not simply the shutting down of large portions of the construction industry (which is inspiring some of the doom-and-gloom prognostications). It is not just the born-again skittishness of financial institutions that have, all of a sudden, gotten religion, rediscovered the word "prudence" and won't lend to anybody. It is all of this, taken together, that points ominously to a general collapse of the credit structure that has shored up consumer capitalism for decades.

Finally, it is vital to recall that this tsunami of bad business is about to wash over an already very sick economy. While the old regime, the Reagan-Bush counterrevolution, has lived off the heady vapors of the FIRE sector, it has left in its wake a deindustrialized nation, full of super-exploited immigrants and millions of families whose earnings have suffered steady erosion. Two wage-earners, working longer hours, are now needed to (barely) sustain a standard of living once earned by one. And that doesn't count the melting away of health insurance, pensions and other forms of protection against the vicissitudes of the free market or natural calamities.

Crisis looms for entire economy

March 20, 2007
Crisis looms for entire economy

If Washington doesn't address the rapidly building multi-trillion-dollar crisis in residential mortgage defaults, its paralysis will help trigger a national economic recession that could touch every homeowner.

The crisis has been building for months - if not years. Experts agree it is a result of banks and other lenders' granting home loans to people who were not truly able to afford the payments. Now, with the national economy in a slide, the number of mortgage defaults is rising at an alarming rate.

Before we engage in the usual finger-pointing over how we got into this mess, let's agree on an aggressive course of action to mitigate it. Our nation must recognize there will be economic pain if the problem goes unaddressed; there will be residential foreclosures and billions of dollars in write-offs as auditors discover that many of these mortgages can never be fully paid down. Many families will find that they may have to consolidate their living space if they hope to hold on to at least one viable residential dwelling.