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The Poop: "Good for the Economy"



December 18, 2008 – Comments (3) | RELATED TICKERS: F , ED , UPS

GOOD for the economy

Good for the economy...

Good for the economy...

Good for the economy...

You are getting sleepy...

In a response to a post from TMFSinchiruna, player outoffocus shouted out that deflation was good for the economy, and TMFLomax, expressed concern that a "deflation bogeyman" might cause a "panicked reaction" in the markets. Now that is hard for me to swallow, because I have heard for the last 20 years that inflation is good for the economy as it represents growth. Now I like what I read from all three players, and many others, even some that I disagree with. But I am concerned that there are people who will say or do absolutely anything for personal gain. And I think for the last 30 years or so they are the type of people who have been listened to. "Greed is Good" they say. "Everybody does it" they say. But I can remember learning that years ago priests took a vow of poverty in order to show they could be trusted. Which certainly makes more sense to me than trusting my finances to someone who believes they are entitled to get everything they can, because they might include my stuff too.

I know I am not supposed to say this, but for the last thirty years the phrase good for the economy has been used to set policys of deregulation, which have been bad for the air, the water, and the country's finances. The money we did not tax corporations so they could have it to reinvest got reinvested in China. The money we did not collect did not get reinvested in our schools or infrastructure. And now in thirty years we have dropped thirty places on the education ladder. Curiously China, where that money went, improved their infrastructure, schools and educational standings. Neither did we tax fuel, because not collecting taxes was good for the economy. And that fuel tax money we did not collect? Did it build something wonderful in the USA? Or Saudi Arabia?

Now Ronald Reagan sold us trickledown, and free markets. He was a great actor wasn't he? I wonder who taught him economics. And since then working class salarys have declined, even as costs have risen. And curiously, executive pay has risen over the same time. But for the working class, they have seen costs rise and salarys stagnate until they were taught to borrow what they need by "economists" and "financial experts". Think of it as an investment they taught us, just as they had learned it. Invest in your education, your future. Invest in price appreciation. Prices always go up, whether its houses or cars or food. Thats what out Gov't told us, and our economists, and financial planners,

The working class has been waiting for trickle down. They have kept working too. Ten hour days, extra shifts, both parents, just working away....

"Hey, nice boat you have there."

"You like it? Why don't you get one."

"No.. I cannot afford one."

"Sure you can, let me show you how.."

"Gee thanks."

Momma comes home, she just lost her job at the toymakers. Its ok, they did not need her salary, just the healthcare. They decide to sell the boat and stop the payments. A few nice things in life are out of their reach for now. They lose some money on the boat, but that is to be expected. They cutback elswhere, no more soccer team for the kid, do what they can, make the payments. The next year they cost goes up again, much faster than the Mr's pay does. They shop for something cheaper, find it and get a little less coverage. They did not know it was less. It was also called comprehensive. They thought it was healthcare.

Of course, Momma gets sick. Bad luck comes in threes you know. Breast cancer, normal stuff. Their new policy only covers some of the costs, and the Mr borrows to pay the rest. Of course with the new note it is harder to pay for the insurance, and he cuts back overtime because he needs to be home when the boy gets out of school. Momma is throwing up from the chemo. He gets behind on the rent, and moves them all to a cheaper studio, and keeps steady a month late on the insurance.  Momma's bills are expensive though, and the insurance drops him. Momma gets the last two treatments, and when the insurance doesn't pay they send the bill to him. He doesn't care, he knows he cannot pay it.

A month later Momma gets sick again. He does not have money for a Dr so he waits in the emergency room. Momma's cancer has spread to her lymph nodes, she probably won't make it. He sells his car and buys a beater, and gets her some treatments anyway. He does not even know he is paying twice what UNH does. It wouldn't matter anyway, he couldn't afford half either.

Four months later Momma dies. Everybody cries at the funeral. Deep inside the Mr is thankful she did not hang on longer. Financially he is wrecked, and she was only suffering anyway. You don't say that out loud though.

With the small apartment, and Momma gone, he can work some overtime, His son is a little older and can let himself in now. He worked out a payment schedule with the debt collectors, and since that was without overtime, he can start saving a little for his sons college and retirement. The motor blew on the beater, but he just dumped it and grabbed another. Spent a few bucks on some brake parts, but sure was glad he didn't have to pay labor.

He grabbed  yesterdays paper from his neighbors garbage and read where car sales were down a little. Looked at the help wanted ads as he always did. One half column of mechanics jobs, only a year ago there had been three full columns. Now that Momma was gone he could spend time on training in the evening on the newest automotive computer systems. He was lucky his boss had been nice and let him slide on the training when Momma was sick. At work the next morning everyone was crowded around the manager.

"Yep, we got to close the place down, we just haven't been selling enough cars to stay open. You guys in the mechanics shop have been carrying us for months but the slowdown has killed us".

"Don't worry though, you all will get good recommendations from me. You'll all find jobs and you'll be ok."

At lunch he was thumbing through a trade magazine, read about stability control brake systems, and a transmission pattern failure from a ground near the undercarrige. 

When he left work that day he brought the magazine home with him. There was an article he wanted to read. 900 dealers expected to close this year it said.

After homework he put his son to bed. His son had brought home another "A" and a note from the teacher saying she would like to talk to him about putting the boy in advanced classes in middle school if they did not get cut from the budget. His son was smart, like his Momma had been. He thought about ways he could try to put more into a college fund. As he lay in bed falling asleep he thought about the future and what it might hold.

"It'll sure be nice when trickle down gets here" he thought, as sleep gave him some rest.

We here at "The Poop", having friends that have not fully recovered from the last "economic downturn" would like to ask you what the schedule is for when "trickle down" is expected to arrive? Me personally, I don't think its coming, but the guys at the mechanics shop think they'll be fine if they can just work a few more hours. Like Joe the Plumber they think if they can hold things together and get Gov't off of business's back they'll all be ok. I have spent a few decades reading that Gov't has been getting off of business's back. Last year in the USA 50mil people could not afford to see a Doctor.  After laying off 2.5mil, that will add, with their kids, and spouses enough to get us to almost 60mil? Alstry thinks things will be worse than that.

Deflation is  "good for the economy" you say, and I should believe you. I am just a mechanic, you guys are the economists and financial wizards and college grads. However I am thinking that "good for the economy" while easy to model in a book, should be replaced after schools is out with a different idea. I am thinking "good for my coworkers" or "good for Americans". I am thinking that maybe policys with one of those concepts as their guiding principle might work a little better.  I am also still questioning this "trickledown" thing. From experience I had thought that money "trickles up". For almost thirty years "trickledown" has been the guiding principle of our economic planning. And I have to admit, "trickledown" seemed to be working until last year when I realized how much economic losses had been camouflaged with borrowing. Perhaps some of you were fooled too? I hate to be the only idiot.

Since it has been almost thirty years since Reagan started this "trickledown" thing, I was wondering if you could suggest some sort of "calenderical" number to represent when "trickle down" is expected to arrive. June? June 2010? June 2050 in time to create opportunity for my Grandkids? But if the last is the answer, expect some dissapointed mechanics. Right now, they have no clue.

Shares of EPG, converter of BS into saleable products, plunged sharply lower on the announcement of the largest pile of BS ever.

3 Comments – Post Your Own

#1) On December 18, 2008 at 6:17 PM, StKitt (28.57) wrote:

Absolutely poetic!

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#2) On December 18, 2008 at 9:11 PM, outoffocus (23.06) wrote:

Well from where I stand, printing more money and giving it to the haves (banks, insurance cos, investment houses) sounds like the same economic policies as "trickle-down economics".  I personally am waiting for the trickle to finally get here myself.  Not to mention the Bible speaks against trickle down economics (Read Proverbs).

When I said deflation is good, I meant that its good to the common person like you and me. Its nice that housing and energy is  more affordable.  I remember back in the good ol days when a salary like mine was enough to purchase a house.  Now its barely enough to support renting.

So my logic in the argument for deflation is that it helps the have nots rather then the haves.  I personally believe that without the have nots you have no economy.  The trickle down economists would wholeheartedly disagree with me.  But honestly, without the have nots (middle and working class), who are the haves to market their businesses too? Other haves? I think not, haves dont stay haves by spending money...

But I appreciate your poop postings.  I may not know everything about the BS going on, but I sure know it stinks. 

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#3) On December 19, 2008 at 12:02 AM, devoish (78.10) wrote:

outoffocus (oof)

One of the red flags I use to locate excess supplies of cheap BS is how often "facts" get repeated. Generally the more a "fact" is repeated the less likely it to be true. Especially when that "fact" is repeated excessively often. Recent examples: "real estate always goes up",  "Iraq has weapons of mass destruction", "Financial armegeddon", "It is a wall street problem that will become a main street problem" when actually the reverse is true.

I think I understood you perfectly, and agree with you. What is left unsaid is that if prices deflate before labor, that is good for labor. If labor deflates before prices, not so much.

But honestly, without the have nots (middle and working class), who are the haves to market their businesses too? Other haves? I think not, haves dont stay haves by spending money

That statement does not belong in a post about BS at all. I would explain it this way. As union busting and unbalanced globalization since Reagan has driven the cost of labor down, in 1995 it reached a point where there were no longer enough customers with money to go around. However due to excellent marketing many were persuaded to replace income with credit and debt. That would have stopped in 2002/3 except interest rates were lowered and down payments were supplied. That extended the housing bubble a little longer. The financial armegeddon thing, as near as can figure it out involves the reselling of packaged mortgages for a fee in exchange for the interest. My understanding is that the package was guaranteed to the first buyer, but somehow the same mortgages were sold over and over again, each buyer told they would be guaranteed. When the mortgages started going bad, the guarantees only went to the first buyer. Everyone elses copies of the mortgages were not guaranteed, and suddenly everyone elses balance sheets collapsed. Notional values or something disappeared. I really cannot quite deliver an explanation on that load of crap though.

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