TheRealMafoo said:
All the companies that were poorly run, would disappear. Unemployment would rocket to 15-20% or so. But after that, the people still in business a the companies who still make a profit, are the ones that are strong. Banks know to lend them money. People who have a job know they will keep there job, and they will spend money. Strong car company's will take over. Ford, who knows how to make cars without it costing the American people, will make a lot of cars. Small banks who did things right, will become large banks that do things right, and the list goes on. All we did with the bailouts, it let a shitty systems keep going. It has never worked int he past, so I have no clue why anyone would think it will work in the future. Oh, and the sad thing about how bad it would get in one year, is that's where we are going to end up anyway. But we are going to spend trillions trying not to get there. Someone has to one day pay that back. |
Errr, I'm thinking that a deflationary cycle is more likely. And I don't think that the recession was caused by "inefficient" workers. Your belief is that somehow the efficient workers will remain, and they will spend money. And therefore that'll serve to eventually increase the economy. But the thing is, aren't they spending right now as well? I mean, they're confident that they're going to keep their jobs right? So given that their spending right now, why are we still going through a recession? Are you just saying that the recession is a cutting of jobs?
No, it's FIRST a cutting of spending. Because there's a cutting of spending, firms don't need to invest and don't need to produce as much, if at all. That leads to cutting their capital, which includes labor. It's not that firms decide to cut labor FIRST, and then spending falls.
So this is my line of thinking:
1) Government spendings/ or gives money to spend
2) Firms begin to invest in order to meet that government created demand
3) The money the firms spent as investment goes to other people, consumers, who spend that money
4) That leads to even more increases in GDP
5) Companies, seeing that the GDP is going up, begin to invest even more and begin to hire eventually, thinking that this growth is permanent and not temporary (like we think now, with the threat of a double dip recessions. You are right in a sense, Obama and congress did prolong the recession. But for COMPLTELY OPPOSITE reasons. I say not enough, you say too much).
6) Consumers/Workers seeing that the GDP is going up, and firms hiring, also think that the recovery is permanent
7) Consumers spend more
8) On and on
You think
1) Firms shed inefficient workers, and inefficient firms fail
2) Mass unemployment, and all that bad stuff
3) But on the good flip side, the best and brightest remain
4) They begin to spend more money and produce goods
5) Therefore they begin to hire again, and the inefficient people spend money again
6) Slow but sure recovery
The problem I see, is that how the fuck are there even going to be the best and brightest firms and workers left, when they are going to sell less goods. Why would the "brightest" people spend, if they, being so bright, know their purchasing power will increase due to deflation.
Look if the firms have nobody to buy their goods, then they fail. No matter how innovative or good their products, if people simply don't buy them, they won't make them.
===========================
As for the car bailout, I'm not too sure about that, really dubious and really sorta shaky. I would prefer stimuluses, since then the consumers decide what to buy, and they'll buy what they think are the best according to supply and demand free market.
