Good News for the Economy - Yes/No/Maybe?

Under normal circumstances this would be exceptional news because higher corporate profits generally result in the hiring of additional workers and/or purchasing capital equipment. The purchase of capital equipment then puts additional people to work. There are two problems here – first, businesses are doing little of either, they are not hiring and they are not spending, they are simply hoarding the money and second, due to lowered corporate tax rates (courtesy of the prior administration) we are unable to take advantage of their windfall by receiving higher revenues in the form of tax payments.
 

Here again, this should be excellent news because when banks are flush, they make loans to the average John/Jane to purchase homes, cars, make home improvements, etc., etc., etc. Again, this is not a win for the country because the banks are doing the same exact thing corporations are doing with their money, they are hoarding it and as long as they are not lending the money out to the average American the housing market will not improve.

I’m sure the first question that will be asked is WHY are they hoarding the money? My personal opinion on this is it’s all a matter of politics. The longer banks and companies hold unto the funds, the worse it will look for President Obama. Instead of being labeled a hero (which he should be by having kept this country from going into another deep, dark, depression, and making enormous strides in the other direction) he will be labeled a failure due to the lack of jobs and dismal housing market if the same conditions prevail around election time 2012.

What that will mean is a Republican will probably be able to take over the White House in 2012 and they can continue to suck the life and money out of this country.

Why do the corporations and banks want Republicans in office? Republicans mean lower taxes for them (not for you, the average John/Jane, but for the super-wealthy) and fewer regulations.

The housing crisis in this country was caused by the fact there were few regulations in place for non-FDIC financial institutions providing loans so millions of sub-prime loans were provided to those that could not hope to repay because the majority were provided with ARM’s [adjustable rate mortgages]. A detailed analysis of this problem may be viewed at the following link.

Why did the banks do this? They made an incredible amount money on interest in the first two years – many ARM’s were 2/28 – click following link for chart http://www.articlesandanswers.com/ARMCHART.htm When the initial 2-year period was up and the mortgage amount due increased dramatically and folks could not longer pay.
 

» left by straight talk

351 days 17 hours ago.

Patricia, a good article. Of course I disagee with some aspects, not all, and understand that my opinions are not held by the vast overwhelming majority. Yet, I understand all to well Americans are doomed to look in the wrong places when by fact, deed, works the answers right before them. I have written to them for years and understand the rejection and why. However, that does not change one bit the truth. As this American and world crisis unfolds we will see the emergence of this New World system, already in place, and the destruction and discarding of the old. Since the vast majority of mankind follow, those that lead and have look at us preoccupoied by the things which are opposite of what is transpiring. Like the Bovine walking to their death up the plank they see not what is at the end of the path but follow blindly along. Just an opinion clothed in fact. As long as we look in the wrong direction we will not see what has and is really taking place. Yes like magic we see not what is right before us. Yes, you ask some good questions but do not look at the rhetoric look at the works. When these leaders speak they speak of the have, that 20% and the World. Untill we understand that perspective we will continually wonder why? Thank you, once again good job.

Respond to this comment

» left by Patricia Johnson 350 days 15 hours ago.
12 fans.

Thank you for your comment Straight Talk

You are not alone, on some days I disagree with some aspects of my articles :)

I am forever an optimist and I look at what is happening in our country and the world and cringe at what the future holds because it appears so bleak. Our country has gone downhill so rapidly from 2001 on, in the hands of so few that I truly fear for the lives of those that come after us.

It’s as if common sense has taken a permanent leave of absence.

There were only a few things that got us where we are, the Bush tax cuts, the two wars and Medicare Part D.

I’ve written about the tax cuts and the deficit till I’m blue in the face – the wars are simple. Historically, taxes are raised when we go to war to pay for the cost of war, but the Republicans started two wars and lowered taxes. If you’re spending more, you don’t limit your source of future income… unless the plan is to overextend yourself.

Providing seniors with prescription coverage in the form of Medicare Part D was wonderful, at the time, except restrictions were placed on whether or not Medicare could negotiate the drug prices with the pharmaceutical companies. The difference between what a government agency (Veterans Affairs) pays for drugs compared to what Medicare pays for the same drug is astronomical.

Our government is ever so complex that the majority of voters truly don’t have a clue as to what is really going on, or where to go to find the truth.

Freedom of speech is good until it comes to TV commentators. If they’re going to report the news, they should be forced to report the real news and not their version of the news. If the public is being misled by commentators, they should be penalized.

Pat Johnson

Respond to this comment