Almost always, the deeper an economy plunges, the more vigorously it springs back. But this Great Recession is different. Therefore, it’s time for a reality check. Economic growth — in the United States and in San Diego — will almost certainly be very slow for the next several years. Unemployment will remain high. Consumers won’t be spending. Their savings will go up, even though they will get piddling returns on certificates of deposit and money market funds and will likely pay higher taxes on corporate stock dividends.

Federal Reserve chairman Ben Bernanke, a professional liar, looks for moderate growth of around 3.5 to 4 percent the next two years, but he admits that won’t be enough to bring jobs back. “We’ll have a continued recovery, but it won’t be terrific,” he allows. Most economists look for 3 percent during the same period.

The wise person will cut those professional forecasts in half — or more.

And be prepared for the bleakest possibility: a second recession. Happily, it’s only a minority of economists — not including Bernanke — who see this so-called double dip. But Kelly Cunningham, economist for the National University System Institute for Policy Research, says, “I would not be surprised by a double dip in California.” San Diego would do better than the state, as it usually does, but economic life wouldn’t be pleasant, he says.

There could even be another financial panic, but that, too, is a long shot. However, Carlsbad’s E. James Welsh of Welsh Money Management thinks that there will be a secular (long-term) bear market in stocks until 2014 or 2016. There will probably be cyclical (short-term) bull markets inside that bear, but Welsh expects another drop of 20 to 30 percent. That might not officially be called a panic, but it would certainly cause some folks to push the panic button.

Don’t be fooled when the stock market rallies and TV talking heads effervesce about the recovery. The market, which has been flat for 11 years, may surge from time to time because of the weak employment picture. Companies aren’t rehiring, and many are still slashing jobs; this is one factor pushing profits and stocks up. Bernanke says he will keep giving money away free to big banks as long as unemployment remains high. So Wall Street is feasting on Main Street’s pain. The Federal Reserve has printed so much money, and the federal government has built up such huge deficits, that a brisk economic rebound would cause inflation and high interest rates. The last thing Bernanke wants is a brisk rebound, although he won’t admit it.

Why the economic megrims? We lived beyond our means for decades. Now we have to go in reverse gear. Household debt (mortgage, credit card, installment debt, etc.) as a percentage of the nation’s total annual economic output was 44 in 1982, says Welsh. Then it ballooned to a grossly unsustainable 98 percent in 2007 when the bubble burst. It has since come down slightly. During that period, people were borrowing off the inflated value of their homes and stocks. That game is over.

“Consumption is going to remain weak,” both nationally and in San Diego, says Alan Gin, economist at the University of San Diego. “Unemployment is high. There is less equity in homes to draw [borrow] on. There is a shift in consumer attitudes. The downturn is so bad that consumers are ratcheting down consumption habits.”

Meanwhile, governments have been spending and borrowing excessively too — particularly in the last couple of years, when the U.S. federal government has been applying Keynesian remedies to the recession. And “spending by states has increased by 6 percent annually for the last 30 years,” says Welsh, but it will come down sharply. States such as California and Illinois are at the edge of the abyss. The federal debt has ballooned from $5.8 trillion only two years ago to $8.4 trillion. Nations of Europe are vastly overleveraged, but U.S. deficits as a percentage of the economy are almost as bad, and worse in some cases.

“We have to get that debt down to sustainable levels,” says Marney Cox, chief economist for the San Diego Association of Governments (SANDAG). “The State of California deficit is $20 billion, so the state is taking money from local jurisdictions, which are then cutting services.”

Jobs are hard to find. “I’m looking for half a percent to one percent job growth in San Diego this year — 6000 to 12,000 jobs,” says Cox. Cunningham, however, points out that local tech employment is holding its own, and “biotech employment has actually increased in the last two years. You don’t want to be laying off highly skilled workers.”

San Diego has a high cost of living but not a high level of personal income, such as Silicon Valley enjoys. That means local consumers might cut back on spending more than in some metro areas. California taxes are inordinately high. Voters in cities such as El Cajon, La Mesa, National City, and Vista have approved even higher sales tax rates. And higher taxes inhibit consumer purchases.

In November, voters will consider an $11 billion water bond. “I don’t know where they think the money will come from,” says Cox.

The housing crisis is not over. San Diego prices plunged more than 40 percent from their November 2005 peak and are still down 36 percent, although they have risen for 11 consecutive months. “High housing prices were an illusion,” says Cox. Then came the foreclosures. But they have stalled, partly because of federal and state relief programs, but greatly because banks don’t want to take more homes over. They are loaded with them. Many people are simply not paying their mortgages, knowing the banks don’t want those homes.

“We have to slog our way through all those foreclosures,” says Cox, who expects home values to drop again. Cunningham and Welsh agree.

Says Gin, “There will be more foreclosures but not necessarily another dip in housing prices — possibly just a slow market.” But he is sure of one thing: “Commercial real estate is not coming out of its slump.” More and more people are working from remote locations. That hurts the office market. “By one estimate, there is 20 percent too much retail space,” partly because of consumers not buying and partly because they do so much shopping online.

More from the web

Comments

SurfPuppy619 June 23, 2010 @ 1:49 p.m.

Why the economic megrims? We lived beyond our means for decades.

That is a big part of the problem, but exporting our manufacturing job base to China, India, Korea and other countries have taken the good paying middle class jobs out of the country, givng the USA a one-two punch.

A country that does not produce goods will never be an economic powerhouse.

0

Don Bauder June 23, 2010 @ 3:04 p.m.

Response to post #1: Yes, giving up our manufacturing base for the sake of bigger short term profits -- a process that picked up steam in the 1980s and has not abated -- is also responsible for our woes. Best, Don Bauder

0

David Dodd June 24, 2010 @ 12:18 a.m.

It isn't just in living beyond one's means, it's the fact that government encouraged it.

0

Don Bauder June 24, 2010 @ 5:38 a.m.

Response to post #3: You are correct: government actually encouraged the U.S. becoming an economy dominated by consumer spending (70% of GDP). Government did nothing to discourage corporations from massively moving their manufacturing offshore to maximize short term profits. Right now, what the U.S. needs most of all is consumer savings. But the Federal Reserve keeps interest rates at zero (for the banks) and keeps long-term rates at inordinate lows to stimulate housing and consumer spending. The government and central bank are encouraging consumption; however, the people may flip the bird at their leaders and continue to build up savings. Best, Don Bauder

0

a2zresource June 24, 2010 @ 9:55 a.m.

I'm no economist, but I do have training and some experience in systems analysis and design, so I tend to look at markets initially as black boxes, more interested in inputs and outputs than in processes that are hard or practically impossible to observe without having attended the right prep school earlier in life.

This is just my thought, but the most important input that our economy is now missing is some long-term goal, where goal-stimulated income from productivity becomes sufficiently large that ordinary people feel we can live with the enormous long-term debt we have piled up lately, for whatever reasons. If we were sufficiently productive, Arizona would not have resorted to the tried-and-true indicator of a weak economy, attempting to kick out the Mexicans, and we could look forward to paying down this debt if not in our lifetimes, then in our children's.

Without that goal, we can expect consumer confidence to be as thin and weak as it is now... and unfortunately, the way things are will most likely remain as they are, with no incentive for the artificial persons now tied to politicians in both parties to press for the sort of change in direction that may force them to actually work for a living, or at least work for us rather than against us ordinary folk.

0

Don Bauder June 24, 2010 @ 1:20 p.m.

Response to post #5: I think you make excellent points. Hysteria about immigration will likely arise in a period of economic insecurity. Consumer confidence will remain weak for a number of reasons, and that is one of them. Best, Don Bauder

0

Psycholizard June 26, 2010 @ 1:18 a.m.

The federal government has no choice but to run a bigger deficit RIGHT NOW, to put money in the pocket of consumers who must buy the surplus inventory to restart the world economy. Foreign investors now are sucking up the stimulus money, refusing to spend, because of doubts about other currencies, such as the Euro. Even with our record deficits, the world sees our currency as a hold or buy, even with no real interest paid. I can't say these buyers are wrong.

Our currency is backed by huge tax receipts, and an incredible real estate portfolio, as well as vast mineral and energy resources on our public land. We are not too poor to spend our way out of this mess.

We may be too stupid, cheap and mean spirited. Those that complain that our grandchildren will pay this debt should reflect that those grandchildren will be living on the street if we cut their parents unemployment checks now.

We should increase the deficits until the inventories empty and inflation returns, THEN we should balance the budget.

0

David Dodd June 26, 2010 @ 1:36 a.m.

"The federal government has no choice but to run a bigger deficit RIGHT NOW, to put money in the pocket of consumers who must buy the surplus inventory to restart the world economy."

Obviously, you haven't seen the long lines waiting to buy the very newest in iPhone technology. No one is going to use their stimulus money to buy surplus inventory made from old technology.

0

Don Bauder June 26, 2010 @ 8:35 a.m.

Response to post #7: This is the view of some excellent economists, such as Joe Stiglitz and Paul Krugman. I certainly agree that we have to continue extending unemployment benefits with the huge number of unemployed, particularly those who have been so for six months or more. Infrastructural spending is not a waste, either. But keep in mind that Japan has had incredibly easy money plus massive deficit spending for 21 years and it hasn't done much good. Here's one to chew on: let's get out of Afghanistan, a war that has utterly no purpose. And continue getting out of Iraq. Cut back sharply on other defense spending. We would save money in the trillions that could then go into domestic spending. Best, Don Bauder

0

Don Bauder June 26, 2010 @ 8:39 a.m.

Response to post #8: I think Psycholizard was talking about regular retail inventory -- clothing, appliances, etc. -- that has not been bought. He was not referring to early-generation technology equipment that can't compete with new models. Best, Don Bauder

0

Psycholizard June 26, 2010 @ 10:21 a.m.

I agree that war spending is central to the present fiasco. The bloated defense budget is the first place I would look for savings in the federal budget. Right now, in the middle of two wars and a recession, I wouldn't look to save on the total bill, but to cut out the idiocy of continuing failed programs designed to fight the Soviet bloc. We need to end the use of mercenaries and reverse our return to the camp follower system of supply. We need an all American supply train. We need to restore our Merchant Navy even if it costs more than foreign flagged ships.

We should remember that mercenaries and camp followers failed the British in our then rugged terrain, and we won our first war because the British supply line failed. George Washington won very few battles. By the end of the nineteenth century European nations abandoned the camp follower system.

Outsourcing our supply train might be a reason we have recession and war at the same time. Our defense dollars stimulate the home economies of mercenaries rather than our own.

0

Don Bauder June 26, 2010 @ 3:50 p.m.

Response to post #11: The biggest and worst mercenary force of all, Blackwater (former name), mainly consisted of Americans. It wanted to put facilities in the U.S. People in Potrero blocked that proposed monstrosity there. But the shooting range at the border sailed through the courts. Blackwater is still getting U.S. contracts. They probably stimulate the U.S. economy. But they are abhorrent. Economics isn't everything. Best, Don Bauder

0

Psycholizard June 26, 2010 @ 8:59 p.m.

If economics ruled there would be no war. I don't endorse defense spending for economic reasons, I do believe that years of transferring procurement and supply from the government to the private sector has left us weaker, and created a war lobby that did not exist when the military made weapons. Republicans were Isolationist Pacifists before the Military started contracting out production, instead of seizing factories and shipyards and doing it themselves.

Schemers told that private enterprise would bring us war on the cheap, we got war and economic disaster. Our military must be able to feed, clothe and supply itself, regardless of the cost, otherwise we risk being the Athenians at Syracuse or Cornwallis at Yorktown, defeated by a failed supply line.

0

Don Bauder June 26, 2010 @ 9:09 p.m.

Response to post #13: Ike warned of the military-industrial complex. He also warned that academic institutions should not live increasingly off government grants lest education become polluted. Best, Don Bauder

0

Psycholizard June 27, 2010 @ 1:57 a.m.

Eisenhower hated unnecessary spending, and kept our government lean and effective. Though he never signed a balanced budget, (I don't suggest he should have), he tried to get our money's worth. Though he supported the military, he fought waste and avoided war. Perhaps it's best he didn't live to see our military defeated again and again by bloated ineptitude.

He did see our nation driven into the paranoid jingoism of Nixon and Kennedy, and blamed the rejection of his moderate foreign and military policy on war profiteers. This was astute if not complete. By 1980 his memory was ridiculed by left and right.

We miss him now.

0

Don Bauder June 27, 2010 @ 7:03 a.m.

Response to post #15: I was in high school and college through Ike's terms. We didn't appreciate him then as much as we should have. History has not yet recognized his greatness. Best, Don Bauder

0

Psycholizard June 27, 2010 @ 7:20 p.m.

Ike appeared humble, and used this persona to outfox many egomaniacs with more apparent genius at self promotion, from Patton to Montgomery to MacArthur, to McCarthy. At the key 1952 Republican Convention, the GOP chose the cold war approach of Eisenhower over the nuclear attack strategy advocated by MacArthur. The GOP liked Ike, but many loved MacArthur. Eisenhower was the cool head who won the day, and united a splintered party lurching towards disaster. Because of his humble demeanor, he was the second choice of fanatics who hated each other.

Certainly he was talented and incredibly ambitious, but somehow he seemed to be an Everyman, just doing his duty. Since the great men of history are usually connected with wholesale slaughter, perhaps he was nobler than the great.

The Nation should celebrate him for the wars he avoided.

0

Don Bauder June 27, 2010 @ 8:40 p.m.

Response to post #17: Yes, wars get presidents recognized as "great" by historians. Keeping the nation out of wars should merit consideration. Ike managed it. Best, Don Bauder

0

SurfPuppy619 June 27, 2010 @ 10:03 p.m.

Ike warned of the military-industrial complex

Now to go wioth the military, we have the financial/Wall St-industrial complex.

The educational-industrial complex.

The public employee-industrial complex.

And last but not least the political correctness/global warming/ green-industrial complex.

0

SurfPuppy619 June 27, 2010 @ 10:07 p.m.

We need to end the use of mercenaries

Biggest mistake this country has ever made. Hiring mercs to fight OUR war.

I watched (a repeat) a 60 Minutes segment tonight on a Blackwater disaster with one of their aircraft supply branches-inept/incompetence at it's worst, and I am sure that the gov was rewarding that incompetence with millions of dollars to Blackwater, for just a few hundred dollars of value.

Profiteering is right-that IS the correct term for this nonsense.

0

Psycholizard June 28, 2010 @ 3:16 a.m.

Replacing the camp follower supply chain with uniformed soldiers and American flagged ships might perhaps be more expensive, but it is necessary. If we need to pay our military what our police and fire make to recruit the numbers needed we should do it regardless of the deficit. They will be collecting unemployment or welfare if we don't.

0

Don Bauder June 28, 2010 @ 6:37 a.m.

Response to post #19: The Wall Street/industrial complex -- the financial engineers -- present an even greater risk to our society than the military/industrial complex, although it's a close call. Best, Don Bauder

0

Don Bauder June 28, 2010 @ 6:38 a.m.

Response to post #20: The mercenaries get paid big bucks while those in uniform suffer with low pay. Best, Don Bauder

0

Don Bauder June 28, 2010 @ 6:40 a.m.

Response to post #21: Even more importantly, we have to take care of our injured veterans when they return home. Best, Don Bauder

0

Psycholizard June 28, 2010 @ 2:03 p.m.

We have blogged mostly on the fiscal side of the crisis, rightly I believe, because interest rates to the banks can't get lower. There is more that must be done on the lending side also.

Interest rates on consumer debt must be lowered.

There is currently roughly a trillion dollars outstanding in credit card debt alone, at rates sometimes higher than 30%. Every point of drop in these rates would add over 10 billion in added spending power to consumers who have proven in the past to be willing to spend.

The current situation, of the citizens loaning money to the banks at 0%, then letting the banks lend at 30%, is reasonable only to bankers and their friends. If necessary the government should loan directly to refinance the highest rates,

The average consumer is a better credit risk than the banks. Most consumers did not go bankrupt two years ago. Most credit card holders work for a living. The banks are now mostly professional gamblers.

The recent reforms are a good start, more is needed.

0

Don Bauder June 28, 2010 @ 2:49 p.m.

Response to post #25: It just came out (June 28) that Sen. Russ Feingold, liberal Democrat of Wisconsin, won't support the financial reform bill because it has been watered down too much. This complicates passage a great deal. Best, Don Bauder

0

SurfPuppy619 June 28, 2010 @ 10:56 p.m.

Interest rates on consumer debt must be lowered.

Our business friendly Supreme Court fixed that by not allowing the states to regulate banks who are HQed elsewhere-to get around state consumer credit protections.

It hurts the country when you have predatory lending. I have posted this before, but it is worth a second look;

http://www.cashcall.com/General/Rates.aspx

0

Don Bauder June 29, 2010 @ 6:14 a.m.

Response to post #27: It's not simply a "business-friendly" SCOTUS. It's a "pro-business, pro-fraud" court. Best, Don Bauder

0

Psycholizard June 29, 2010 @ 12:45 p.m.

The central problem is not the Supreme Court, but the shocking ignorance of the public, here and worldwide. We blog furiously to fix this. The truth is not enough, we must be interesting.

The public is very interested in the exploding rates and collapsing limits of credit cards. A direct federal intervention, as was done already with Sallie Mae, (undoubtedly a response to discussion in this blog), is in the public interest, and would be popular.

We will march to the polls this November to the whining music of a filibuster of some wildly popular banking proposal. This is certain as a third down pass on the final possession of the team behind.

0

Don Bauder June 29, 2010 @ 2:06 p.m.

Response to post #29: More than two years ago people were warning about the shakiness of credit card debt, including the securitized kind, and Sallie Mae. Now that consumer spending seems to be weakening scarily, the fears should gather intensity. Correctly. Best, Don Bauder

0

SurfPuppy619 June 29, 2010 @ 4:42 p.m.

A direct federal intervention, as was done already with Sallie Mae, (undoubtedly a response to discussion in this blog), is in the public interest, and would be popular.

You mean Freddie Mac and Fannie Mae.

0

a2zresource June 29, 2010 @ 6:40 p.m.

RE #30:

The latest rumor I am hearing now is that people with stellar credit numbers are being denied credit cards in favor of those with less credit-worthiness. Maybe I'm just paranoid, but since Goldman Sachs was found to be creating and trading synthetic derivatives on bad mortgages to the degree that congressional hearings have been held, what's stopping Wall Street firms from creating synthetic derivatives out of purchased unsecured credit card debt, marketing the derivatives to supposedly sophisticated speculators, then taking the short side of the trade as a bet that their new innovative financial product behaves as expected and implodes?

I'm asking because from a systems-analytical view of Wall Street, those firms seem to be addicted to clever moves for quick profit, and I don't see economic conditions that favor people with marginal credit ratings to make more than minimum monthly payments in the short run,as long as they don't later end up under/unemployed... That, plus the people who creatively gave us mortgage-based derivatives are largely still receiving their annual bonuses as too valuable/too clever to be allowed to leave, even after causing the Crash of 2008.

0

Don Bauder June 29, 2010 @ 7:45 p.m.

Response to post #31: Psycholizard may have meant Fannie and Freddie, but don't be surprised if the federal government has to rescue Sallie. Best, Don Bauder

0

Don Bauder June 29, 2010 @ 7:49 p.m.

Response to post #32: There is already securitized credit card debt. Nothing would surprise me. Goldman Sachs and other firms could deliberately load derivatives with doggy credit card debt and short it, in effect. Best, Don Bauder

0

Psycholizard June 30, 2010 @ 5:47 p.m.

The Sallie Mae reform deals with new debt, and is direct federal lending, repayment is linked to ability to repay, no more than 10% of income over 20 years. The Fannie and Freddie intervention refinances current loans at lower rates, with Fed guarantees, as well as guaranteeing new loans at low rates.

My proposal, which is not so original that I think no one is discussing it now in top circles, is for the Fed to offer longer term loans at reasonable interest to those trapped by predatory loans. Releasing consumers from high interest rates could put over $100 billion annually into the pockets of those who have spent freely in the past.

This crisis will end only when demand is restored to previous levels. Higher pay in the private sector worldwide is the only real fix, but reducing the portion of workers pay that is diverted to banking profits would help.

0

Don Bauder June 30, 2010 @ 9:54 p.m.

Response to post #35: C'mon, Psycholizard. You know that the low interest rates are only for banks. They are getting money for 0% effectively. They can do what they want with it. Are you getting money for 0%? (Although I must admit that through quantitative easing, or the buying of long term paper, the Fed has succeeded in bringing mortgage rates down to a level not seen in decades. Still, those rates aren't zero. I might also add that through quantitative easing, the Fed may succeed in ruining its own balance sheet.) Best, Don Bauder

0

Psycholizard July 1, 2010 @ 1:13 a.m.

Now cmon, Mr. Bauder, how can the Feds balance sheet get ruined when it can charge the government what it pleases for the trillions the government borrows.

Now should this idea gain currency, I don't doubt that the argument will be made that we can't afford it, because the printing press is too worn out after all those trillions printed to bail out the banks.

To all those who need a book to understand this, I suggest 'Alice in Wonderland', still the best explanation of modern economic thought.

0

Don Bauder July 1, 2010 @ 7:33 a.m.

Response to post #37: Yes, read Alice in Wonderland if you want to understand modern economics. Concentrate on the Mad Hatter. Best, Don Bauder

0

Psycholizard July 2, 2010 @ 12:24 a.m.

Almost as funny, and equally absurd, there is John Kenneth Galbraith, THE GREAT CRASH 1929. Every stock Investor should read it, and if they don't understand should stick to bonds and preferred.

0

Don Bauder July 2, 2010 @ 7:51 a.m.

Response to post #39: Galbraith's book is a classic. Best, Don Bauder

0

SurfPuppy619 July 2, 2010 @ 1:56 p.m.

THE GREAT CRASH 1929.

Oh, oh, we have been jinxed!

0

Don Bauder July 2, 2010 @ 2:27 p.m.

Response to post #41: Reminder: history doesn't repeat, but it rhymes. Best, Don Bauder

0

Psycholizard July 3, 2010 @ 1:30 p.m.

After forty posts of discussion of Federal lending and spending, I felt certain that all those not in the know had been driven to sleep, or couldn't understand the Economese, only to find that the Surfpuppy had jumped the fence and wandered into the top secret discussion.

I expect general P/E to drop below 10/1, they always have before, some will call it a panic, but the stupidity is before the crash, not after. Since the banks now play stocks directly, something worse than 1929 is possible. For the banks 1929 was a good year.

Surfpup, let this be our little secret, if you bark about it you will be blamed for popping the bubble, and there are judges who might find you responsible.

0

Don Bauder July 3, 2010 @ 1:46 p.m.

Response to post #43: It depends on what index you use to measure P/E, but a drop to 10 would almost cut the market in half if you are talking about latest 4 quarters of earnings. Best, Don Bauder

0

Psycholizard July 3, 2010 @ 10:45 p.m.

to 43

I have read the figure of 15/1 P/E as an average over the years. This return of 7% or so seems a rational return for the risks of an equity play. The lower returns today, and certainly in the 1990s, seem irrationally low. This is perhaps the only point which I agree with Greenspan.

Irrational pessimism remains a possible condition of mass psychology, when this strikes, earnings will drop below 10/1. Perhaps not any time soon, perhaps not in our lifetime, but sooner or later. One day the gamblers will leave the crooked gambling house and return to making bets at honest casinos with posted odds. On that day real business people will return to run the nation's economy.

0

Don Bauder July 4, 2010 @ 7:14 a.m.

Response to post #45: Over the last three decades or so, the U.S. has evolved from an economy dedicated to engineering to one dedicated to financial engineering. The percent of the economy devoted to manufacturing has roughly halved while the percentage devoted to finance has doubled. As the song goes, "It's only a paper moon." Best, Don Bauder

0

Twister July 4, 2010 @ 5:58 p.m.

Response to 1:

It isn't just the manufacturing jobs we've exported. We've killed the skills and the desire to acquire them. The former can be retrieved, but not the latter.

We will soon be the Disunited States of Norte Americana, with the money in the hands of a few playboys and girls and the rest of us begging on the streets before an indifferent minority. Mexico will have to erect barriers to keep us from migrating south, looking for gleanings and bugs to eat.

0

Psycholizard July 4, 2010 @ 10:23 p.m.

Trade fundamentally is barter. Our financial services are traded for foreign goods. the bankers gain from overseas is loss for our manufacturing, raw materials and agriculture. The problem is worsened by the willingness of overseas investors to hold dollars gratis. These dollars represent goods received but not paid for in American goods or services.

Only inflation or the fear of inflation will induce holders of the dollar to convert those dollars to useful US goods in these troubled times. Until we see inflation, the Government should continue to pump money into the economy. The amount spent so far is huge, but apparently inadequate, because wages are not rising enough to buy the surpluses.

0

Don Bauder July 5, 2010 @ 6:56 p.m.

Response to post #47: The bottom 40% of Americans have only 1% of the nation's wealth, according to stats I saw recently. Those stats may be somewhat off, but not by much. Best, Don Bauder

0

Don Bauder July 5, 2010 @ 7:02 p.m.

Response to post #48: Yes, there is a big debate between those who want even more stimulus (Stiglitz, Krugman, the younger Galbraith) and those who say that the deficits are already out of control. Some would say the Keynesian spending really hasn't worked: take out the fiscal stimulus and there has really been no recovery of consequence. But the monetarist approach of creating money like mad (keeping interest rates at zero for banks and buying up mortgage instruments to keep long rates low), has not worked either. Best, Don Bauder

0

Psycholizard July 7, 2010 @ 2:57 a.m.

to 50

Without the stimulus the world economy would be in the same state it was when it was passed, in complete and utter collapse. If inflation returns those who complain about deficits will have a case to make, and I will listen. Right now the world seems closer to deflationary disaster than true recovery.

The Republicans are no more serious about reducing the deficit than the Democrats were when Bush was ruining the country. They simply want to save money so they can start another war. The parties agree on the deficit, just not on where it should be spent.

The high moral tone taken by both these parties when out of power is truly laughable. Both parties pitch an incoherent and opportunist economic philosophy in order to get in power and run up the charge card.

This just happens to be a good idea right now.

0

Don Bauder July 7, 2010 @ 6:10 a.m.

Response to post #51: The argument that the economy will fall apart without more fiscal and monetary stimulus is persuasive. But so is the argument that the easy money and government spending programs really haven't done much good. I would say that it is urgently necessary to extend unemployment deficits. That's money that goes right back into the economy. Continuing infrastructure spending is also necessary. What should be cut? Military. We can start by getting out of Afghanistan and stepping up the timetable for leaving Iraq. Best, Don Bauder

0

SurfPuppy619 July 7, 2010 @ 8:27 a.m.

Without the stimulus the world economy would be in the same state it was when it was passed, in complete and utter collapse.

Agreed 100%

I said it back in 2008-let the companies fail, that is why we have BK courts. That is the natural selection process for a democracy.

The ENTIRE bailout and stimulus scams have gone to both parties that caused this mess;

1) to big business that was not held accountable for their bad decisions, and 2) to the states, who in turn doled it out to the public unions, the teachers union and the cops were HUGE beneficiaries of the money.

So both narrow special interest groups are getting windfalls from the working class poor and middle class who are paid and have significantly less.

I watched a special on PBS a few nights ago- it was on Patrick Henry and the colonies in the 1760’s. It was about the birth of our nation. Went into great detail about how the colonies were being taxed exorbitant amounts and received little or nothing in return while the taxes went to the privileged few who lived like kings (yes, actually kings, as in the King of England).

The colonist saw this continuing and knew their new homeland could not function if this continued and that was what led to our independence from Great Britan/England.

I see the same thing today. Yes, I know this is an over the top comment-but this is how I see, and describe, out country today.

The narrow special interest groups are controlling the legislature and the judicial branches of government, and are destroying the country in favor of the narrow special interest groups that were the beneficiaries of the bailout programs, public employees and Big Business.

Anyone else agree? I am curious if people think I am a bit whacky or are on the same page I am.

0

SurfPuppy619 July 7, 2010 @ 8:31 a.m.

The argument that the economy will fall apart without more fiscal and monetary stimulus is persuasive.

And the argument that more deficit spending will destroy the country is even more persuassive IMO.

If we have to face the music and a longer term recession, then so be it-we need to fix the out of balance budgets and spending.

I might agree with you Don if Gov put a hard cap on ALL spending for a period of time-say 3-5 years, but they won't. They continue to spend far beyond the means of the people and country-and that will collapse everythibg eventually.

0

Don Bauder July 7, 2010 @ 11:08 a.m.

Response to post #53: I don't think it's over the top at all to say that special interest groups (mainly but not entirely corporations) control the legislative and judicial branches in the country at the federal, state and local levels. You left out one: the administrative branches, which are controlled by the same special interest groups. Best, Don Bauder

0

Don Bauder July 7, 2010 @ 11:17 a.m.

Response to post #54: I don't disagree with most of your message: excessive spending and excessive money creation could be our ruination. The president of the Dallas Fed just said it on TV. But I do believe that without certain forms of spending -- extending unemployment benefits and continuing infrastructural improvements -- a double dip is possible, if not likely. As I said, if we want to cut, we should cut defense spending. We should hasten our departures from both Iraq and Afghanistan. The Fed's zero interest rate policy and its quantitative easing to bring mortgage rates down to very low levels are definitely destructive. They crush savers. And we must rebuild our savings. Best, Don Bauder

0

Psycholizard July 8, 2010 @ 1:12 a.m.

I expect another round of tax cuts before the election, not because they are the best policy long term, but because this form of stimulus would be too popular to stop, and if the Democrats don't do it now, the Republicans will get the credit after winning the election.

More stimulus is needed.

0

Don Bauder July 8, 2010 @ 6:53 a.m.

Response to post #57: Tax cuts for the poorest 50% or 60% will come back into the economy, and be efficacious. The trouble is that the top 1% to 5% have all the clout with Congress and will get an inordinate percentage of the cuts, and the money will go into the products of financial engineering, not product engineering, thus not stimulating the real economy. (Some will be secreted offshore, too.) Best, Don Bauder

0

Psycholizard July 8, 2010 @ 10:29 p.m.

To 58

If the Republicans win they will attempt to restore the Bush tax cuts, an act of complete idiocy, but they are what they are.

Before this happens I would suggest the General Fund return some of the trillions borrowed from the Social Security Trust Fund, for a temporary Social Security tax holiday. This would go only to American workers pay under $80,000, and American businesses that hire Americans. It could win wide support. Most of the relief might go to businesses, but they would be the right type of businesses. Employers.

0

Don Bauder July 9, 2010 @ 6:44 a.m.

Response to post #59: Those who believe in trickle-down economics won't approve of your proposal. Best, Don Bauder

0

Psycholizard July 10, 2010 @ 7:14 a.m.

The opposition makes the proposal to temporarily cut Social Security taxes safer than some other tax cuts. The danger in temporary tax cuts to stimulate the economy stems from the effective opposition to anything resembling a tax hike after the emergency is over. Because the Social Security account is the only part of the Federal budget that Reaganists believe should be solvent, it would be easier to restore the account to balance when the crisis is over, by restoring the tax.

Trillions have been plundered, so called "borrowed" from the SS account to cover the general fund, now is the time to return some of that money. The 18% of wages collected for Social Security is a drag on the economy we can't afford right now, just as so many cant afford to put money away for retirement right now.

0

Don Bauder July 10, 2010 @ 7:30 a.m.

Response to post #61: Yours is a wise observation. Let me give a couple of examples. People are now discussing Keynesian economics. Keynes, the leading economist from the 1930s, believed that government spending should increase sharply when private demand falls off. But Keynes believed that once the crisis was past, the government should work on closing the deficits. But Keynes's successors, as well as politicians, didn't follow through on the second half of his proposals. The deficit has kept ballooning, and we now owe a huge portion of it to foreign nations such as China, so we can't say we owe it to ourselves. Similarly, supply siders believed that tax cuts cured all ills. Reagan took up the mantle. Taxes were slashed, especially for the rich. Now we have monstrous deficits that are clearly a danger. But politically, we can't raise those taxes back to prior levels. Mustn't discomfort voters who have been told there is a free lunch. Best, Don Bauder

0

Psycholizard July 10, 2010 @ 10:54 a.m.

I would sell the proposal this way:

For years the General Fund has taking money from Social Security and paying a poor rate of interest. Now is the time for the general fund to pay back some of that money, and pay Social Security the interest it deserves. Because families and businesses face tough times right now, we will pay their Social Security from the General Fund for one year, to pay back what they have overpaid before. For the future we will pay Social Security 10% for all money we have borrowed, to guarantee the fund forever.

I would call it the Social Security Guarantee Act.

The right economic timing would be after the stocks plunge, the right political timing is today.

The astute would notice that it will transfer money from the General Fund to Social Security, some will be scandalized, but Social Security has been plundered for years. Granting this fund a generous rate of return is only fair.

Long term solvency of Social Security is the best pitch for surpluses we will need when inflation returns. Al Gore's lock box metaphor did persuade, Bush was forced to pretend to agree, then proceeded to pass his tax cuts immediately after the inauguration.

Those days seem like a dream now, when the economy was so good and peace seemed so permanent, that the nation's political leadership concerned itself with the President's sex life. A time of happy hilarity that will make us the laughing stock of the ages.

We will laugh again, and work again, if we take the right steps to fix our problems.

0

Don Bauder July 10, 2010 @ 12:57 p.m.

Response to post #63: Intra-governmental transfers arre a mess and have been for some time. I don't pretend to know the solution. Best, Don Bauder

0

jv333 July 10, 2010 @ 1:35 p.m.

Don.... is Welsh a bit off re: our nat'l debt....isn't it over $13 trillion?

see http://www.usdebtclock.org/

also, could the global peddling of trillions of dollars worth of worthless derivatives have something to do with the global economic downturn?

and here's another wild notion....could the Gore film in 2006 and the subsequent revelations about our compromised environment have sped the "get as much for me now" and enhanced greed vehicles on Wall St and elsewhere? ie, if the world is going to hell in a handbasket, i need to hoard as many acorns as soon as possible...

that last item might make for an interesting study for a social scientist...pure speculation on my part, but we are seeing a lot of hoarding going on and not much investment

thoughts?

0

SurfPuppy619 July 10, 2010 @ 1:37 p.m.

The deficit has kept ballooning, and we now owe a huge portion of it to foreign nations such as China, so we can't say we owe it to ourselves. Similarly, supply siders believed that tax cuts cured all ills. Reagan took up the mantle. Taxes were slashed, especially for the rich.

In 1980 we were the largest creditor nation in the world, in 1988 we were the largest DEBTOR nation in the world.

So, while the Ronnie Raygun years did have monster growth, the twin deficits (trade and budget) wiped out any positive net gains IMO.

AB Laffer needs to remember that. His supply side ideas might work with a BALANCED budget, with controlled spending, but if spending is not controlled it doesn't work. I do agree with Laffer that lower tax rates are important for business growth.

0

Don Bauder July 10, 2010 @ 2:07 p.m.

Response to post #65: I got the debt figure from A. Gary Shilling, not from Welsh. I believe it does not include intra-governmental debt -- owed by one part of the government to another. Best, Don Bauder

0

Don Bauder July 10, 2010 @ 2:09 p.m.

Response to post #66: Remember that taxes were slashed in the 1920s. That's one thing that made the Roaring '20s roar. But look what happened. Best, Don Bauder

0

jv333 July 10, 2010 @ 2:12 p.m.

response to #59.

the 'trickle down' theory via Reaganomics results in a 'trickled on' economy ... it unleashed a flurry of merger/acquisition mania leaving bread crumbs behind for the devastated middle class...i hope Geo W is having fun playing golf and his Daddy is having fun jumping out of planes....

so much for "compassionate conservatism" ... what a terrible joke on the Bible Belt that supported these candidates...

0

SurfPuppy619 July 10, 2010 @ 4:58 p.m.

the 'trickle down' theory via Reaganomics results in a 'trickled on' economy ... it unleashed a flurry of merger/acquisition mania leaving bread crumbs behind for the devastated middle class...

By jv333

I agree 100%-trickle down was a fraud. Why not trickle up??? B/C the little people don't pay bribes..errr "campaign contributions" to the officials.

The M&A mania was a disaster for America-less competition means two things;

1- higher prices.

2- lower customer service level.

0

Don Bauder July 10, 2010 @ 11:35 p.m.

Response to post #69: You speak the truth. Private equity and merger and acquisition activity, which dominate Wall Street, actually detract from the real economy. They are just money shuffling -- financial engineering. Mergers are the worst way to grow by far. Private equity groups take over a company, load it with debt, suck money out of it in the form of huge dividends to themselves, juggle the accounting to make it look profitable, lay off a slew of workers and try to peddle it for a profit. Private equity and M/A have been around for a long time, but accelerated with Reagan. Best, Don Bauder

0

Twister July 14, 2010 @ 2:55 p.m.

On 59:

Casting pigs in pokes before pigs in pokes, but make no mistake about it, the votes north of Dixie could be decisive too--the Devil is in the details.

Right after the crash somebody suggested that the $750,000,000,000.00 be distributed to every citizen age 18 and up; the computation worked out to somewhere around $300,000-plus per person (no I didn't do the arith), but this suggestion was considered "impractical," even by the so-called "progressive" pundits, and I don't think it ever hit "the media," or should I say "the manipulators?"

I guess I won't cry over the loss of the New Yankee Times after all--institutions, like individuals, become sclerotic with age, and their demise might be some kind of blessing in disguise. But that's for a different thread . . .

0

Twister July 14, 2010 @ 3:04 p.m.

Re: 53

The raw truth is ALWAYS "over the top." Lonely are the brave. (See the movie.) But Don said it well in another forum--he EXPECTS howling and screaming; that's how he knows he's done an exemplary job. See the "gay" newspaper piece.

0

Don Bauder July 14, 2010 @ 7:03 p.m.

Response to post #72: You are condemning my favorite paper to death. And I still own 200 shares. Best, Don Bauder

0

Don Bauder July 14, 2010 @ 7:05 p.m.

Response to post #73: Only the brave deserve the fair but only the rich get the fair. Best, Don Bauder

0

a2zresource July 26, 2010 @ 7:38 a.m.

RE "Cunningham keeps track of what’s called the gross regional product, or the total annual output of goods and services, in San Diego County. 'In 2009, there was an actual decline in gross regional product,' he says. 'We will see some growth in 2010, but it will be weak growth, and if you take out inflation, it will be just 1 percent. In 2011, it will probably be a little stronger,' unless, of course, there is that double dip in the state":

Right now, I see the SDG&E proposals for Wildfire Expense Balancing Account (WEBA) billing authority and its brand new PeakShift at Work/PeakShift at Home (PSW/PSH) business day rate increases on small businesses and residential customers to be a fairly significant tax on both small businesses and residential consumers in San Diego County.

CPUC's Division of Ratepayer Advocates opposes WEBA statewide as an open-ended unlimited consumer liability for current industry standards that declare utility-caused wildfires are just the cost of doing business. Locally, Michael Aguirre has intervened and is preparing a protest to the joint WEBA application by SDG&E, PG&E, and Southern California Edison components because utility shareholders and not customers should be liable for negligently-caused wildfires stemming from overhead utility equipment.

As for PSW/PSH, these proposals are specifically designed to drive small business and residential customers away from peak business hour electricity consumption on the argument that doing so will reduce the need for SDG&E peaker plant construction. And I thought that was what the Sunrise Powerlink project was for. In any case, SDG&E attorneys in their application to CPUC stated that peak rates may be as high as ten times the off-peak evening and weekend rates. While residential PSH customers may bend with the wind and start doing laundry after the bars close, PSW is plainly anti-competitive as SDG&E tries to reserve peak daytime power for the Sempra-owned utility's larger, industrial-strength customers.

I'm predicting a further decrease in San Diego gross regional product if these proposals now before California's Public Utilities Commission are approved as SDG&E and Sempra Energy now hope. The only rational solution for remaining small businesses in San Diego is to generate increasing amounts of their own electricity for daytime usage through off-grid solutions such as free-standing solar panels. This is a much less expensive option than having SDG&E turn one's business into a paid on-grid power producer, still with all of the FERQ Qualifying Facility hoops to jump through before getting paid for one's excess electricity delivered into the grid for later SDG&E sale to others.

0

Founder July 26, 2010 @ 8:39 a.m.

Regarding #76 I agree with your "Read" of SDG&E's new metering boondoggle!

Posted from a later blog:http://www.sandiegoreader.com/weblogs...

The CPUC, is a just front you see, for additional billing of you and me;

It is really making me very sick for them to get away with that "cheap" trick!

If it was not for their big spoof, we'd all have Solar on our roof!

What they now charge is not really funny especially when they "RIP" our money!

So call all the rate paying people you know, and have them also say, "It should not be so"...

0

Don Bauder July 26, 2010 @ 9:02 a.m.

Response to post #76: It is interesting to watch the establishment reaction to such theft. If SDG&E wants to raise rates on consumers, you don't hear a peep. If there is discussion of a tax increase, the establishment screams. It all depends on who goes to whose parties. Best, Don Bauder

0

Don Bauder July 26, 2010 @ 9:09 a.m.

Response to post #77: Sempra can't flounder without hearing from Founder. Best, Don Bauder

0

Founder July 26, 2010 @ 9:55 a.m.

Response to post #79

SDG&E is double fishy!

·.¸¸..>·.¸´¯`·.¸¸..>.¸¸..·

Best 2 U 2

0

Don Bauder July 26, 2010 @ 11:13 a.m.

Response to post #80: Smells like a fish once in awhile, too. Best, Don Bauder

0

Sign in to comment

Join our
newsletter list

Enter to win $25 at Broken Yolk Cafe

Each newsletter subscription
means another chance to win!

Close