Top Gun

Greg Mankiw: Swap the Payroll Tax for a Gas Tax

Great Idea.

Peak Oil, Cars, and Depressions

Wow, good enunciation prudentinvestor, I didn't think anyone else "got it". Lower interest rates may be fowling up things, as those folks like me with savings hoard their cash, and dip into interest free savings to buy stuff. The Fed and investment guru's seem to think their precious credit is what's important, when it's really the needs of consumers!!! I don't need anything. My wife and I have been trying to justify buying a GM car to help out, and to use a bunch of GM points. Just don't need it, as our kids will be out in a time frame that means our current car will last, and a smaller new car won't work! Why can't companies and our government go back to meeting needs, and planning accordingly? Too much auto capacity, it just is what it is, so reduce capacity just like Pandit is doing with Citi.

Most importantly, you forgot luxury homes, and maybe just homes, in you pulled forward list!


On Nov 16 04:35 PM prudentinvestor wrote:

> Very sobering article.
>
> You state that "... basically, automobile manufacturers, in their
> drive to sell as much as possible, “brought forward” future sales
> of cars.....". But this is also true of furniture, luxury clothes,
> boats, snowmobiles, motorcycles, home remodelling, etc. Just as
> you said about cars, many people bought these things in excess of
> their normal needs and wants, just out of boredom.
>
> The reality is that the fed, like the automakers, in its eagerness
> to stimulate current demand by easy money for many years, essentially
> reduced future demand. Consumption that would have normally ocurred
> over the 20 years 1993-2013, was actually accelerated and made (by
> the fed's easy money) to occur in the 15 years 1993-2008. Now the
> normal demand that would have ocurred in the next five years, 2008-2013
> has been decimated by this artificial acceleration of consumption.

Economic Anomalies Explained

I agree with all of your analysis.

The FACTS are that we left the Clinton years with a $120B surplus, and now are in disaster. The first treasury sec. wanted to devalue the dollar to help US manufacturing, of which there is none.

This admin allowed the levering of 5 investment banks way beyond what a commercial bank could do. The leverage was used to make bubbles, not produce economic value. Hence we are messed up.

The dollar is high because we sent the rest of the world into a tail spin, no other reason.

At best we will have a long, slow road back, engineered by very good Fed and Treasury secs.

I look today and don't see that the word investment has any meaning at all. Time to look for a small business, I guess.