I am starting to feel that the Obama admin has "fixed" the economy

[TwixVoy]

Many here know that I am generally of the opinion the economy is going to continue to go to hell.

I no longer am totally convinced of that. Looking at the moves the Obama admin has made make sense if you look at them from a certain perspective.

Are the moves that have been made going to "fix" the economy? No, not at all. The underlying problems are still there.

However, the moves the feds have made I DO believe appear to be highly successful in slamming on the brakes of the move down. The banks themselves even - while being HIGHLY unfriendly to consumers from a "I want a loan with a good rate perspective" - are also doing a good job preventing consumers from cutting their wrist any further with credit cards. I have read many articles the past few months regarding lenders such as AMEX, BofA, Citi, Chase doing massive credit limit decreases and account closings across a very large customer base.

While this will get the media to make reports that consumer spending is down and that economic "growth" is down it will help prevent many people from making consumer purchases that put them further in the hole.

To us this may appear to be a hostile thing to do, but I think the Obama admin has a different view of things. I think right now they simply want to STOP the bleeding even if it hurts.

I expect the next two years to be about getting the bleeding to stop. I think these actions may not always look positive to us, but I think overall he knows what he is doing.

I expect the last two years of his first term will actually be about fixing the underlying problems.... and things will hurt for us until then.

But do I think we are looking at much more extremely dire economic numbers? Do I think we are looking at a deperession? No. I think many of us have been looking at things from the perspective of "What the hell has he done to actually fix things for we the people?" when right now his focus needs to be simply holding the system together and sadly that does not involve "we the people". It WILL involve us soon, but not right now.... simply because for him to be successful it can't. Not yet.

I think we WILL see a recovery. We are just going to have to be patient and give him time.

I think I should put out the disclaimer that the lives of MANY people will have to change. No more waste. No more being able to finance the latest consumer toy. Those days will be over. But we will be looking at a more healthy country with more progress being made in important fields.... like energy, manufacturing, less poverty. But we will look back at most of the 90's and 2000's as being the time of crazy wasteful excess.

[Richard Steele]

1. A yup. K&R

[Warpy]

2. Some banks are talking about a schedule to pay back TARP money

and that is a good sign. I'll believe it when I see it.

However, the economy as a whole is moribund.

We won't get a strong economy here without rebuilding a manufacturing base and using renewable energy to make it competitive with countries whose labor is dirt cheap.

And we'll have to figure out how to keep those new jobs here.

We'll have to end the ridiculous wealth disparity in this country. We'll have to cut the Pentagon budget in line with other powers.

In short, there is so much work to be done and so many obstacles that it is highly premature to say he's fixed the economy. There are a few positive signs in one sector of it but the rest is still very ill.

[TwixVoy]

3. Exactly

We WILL see a return to manufacturing and renewable energy. But not yet. It is too soon. Right now he is having to do damage control... and will probably have to for the next 18 months.

After that time we will actually start to see some of this start to happen.

[anonymous171]

4. Setting up (or in this case, rebuilding) a bubble-bust economy is a fairly easy thing to do. nt

[TwixVoy]

7. I don't think that is what he is doing

if he is serious about bringing back jobs that have been exported, serious about allowing us to produce our own energy, serious about fixing health care, then we WILL see a nation that has true wealth. Again, give him time. By the end of his first admin if he has not started to build the base for these things I would worry. Not until then.

[Mojorabbit]

5. It is killing off small businesses

that use credit for inventory.

[TwixVoy]

6. And they will have to die

there is no way around it. The system is too screwed to do precision surgery right now. If Bush only had one term much of this would not be necessary, but the last term screwed us beyond the point of that being possible.

Obama WILL help small business come back... but it will be after the damage control is done.

[BR_Parkway]

11. There are small businesses who don't use credit for inventory -

we have a wine shop, you can't buy inventory on credit (in this state at least) - so our entire business has to exist off of the inventory we purchase outright. I'm pretty sure that applies to the distributors we buy from as well - they pay the winery or importer for the product when it gets delivered.

My plumber and electrician don't work on credit - they come do the job, hand me an invoice and wait there while I write them a check. The rent gets paid on the first of the month - the utilities and print advertising we do are about the only thing I can think of that actually come due after we've had use of them.

But perhaps too many businesses who were financing everything were also building a false picture of profit and prosperity. I know that the huge retailers who based their entire year's worth of profit but were counting on that profit to show up in the final days of the Christmas shopping season seem totally ridiculous to me. Maybe a lot more places will have to change how they are doing business after going through this.

[Mojorabbit]

18. My brother in law is an electrician

and he uses credit to buy supplies for his jobs. He got creamed when they lowered his limit. When he bids for a big job he buys the supplies to complete it. He gets paid when the job is complete. He has had to lay off three of his employees.

[BR_Parkway]

21. My heart goes out to your brother and the people that got laid off

so please don't think that I'm some heartless bastard when I say this - but if a business can only grow to a certain size or have a certain # of employees based on credit, then it's not a sustainable business model. Obviously, many businesses are going to be impacted, because their framework has been based on debt and credit just like the housing and consumer bubbles.

I think what I'm trying to say (and fear that I'm botching up terribly) is that the business models we've been used to and the reported growth in them may have been just as falsely propped up by credit as the stock market, housing, consumer spending, etc... and that we're going to have to learn to structure/size businesses again without the reliance on credit if we're going to rebuild a sustainable economy rather than one that is always subject to the bubble/bust cycles we've been seeing the past few decades.

That's not to say that I think the current businessman who's having a credit crisis is a failed or poorly run business - it's simply the lessons we were taught in the business schools, from our banks and all the other's who promoted leverage as a way to grow - same as the mortgage companies, stock brokers did with the personal financial side. And while it's been very profitable for those promoting it (for business or households) - I'm not seeing that it was a lasting prosperity for those of us who they were promoting it to.

I'm curious - are your brother's layoffs because there are no jobs available or because he couldn't get the credit to buy the materials to do the job? Everyone around here in any of the building trade simply has no work.

[galileoreloaded]

22. WOW, an honest to goodness free-marketeer. I agree with you to a point

but I don't think you really want to live in an honest, non-fiat dollar free market. Tends to be a nasty existence for many, and great for others. I assumed we want to get away from that.

Perhaps a little reading on the original Mediterranean trade routes and fiat vs. gold backed currency is in order. Or maybe the Medici or Machiavelli. The Medici were the first to really work with and utilize credit in trade.

[BR_Parkway]

31. How do you pull free market out of a statement that maybe business

shouldn't be based on credit so much? I understand the ancient credit in trade on the long routes - but I also understand that I can have practically any product I want to sell delivered in a matter of weeks now versus months or years - and I can pay for it with a bank transfer in milliseconds - not having to haul 30 bricks of gold with me to do so.

I also understand that paying 9-13% on some revolving line of credit means I have to have higher margins or give up that money as a cost of goods sold rather than pocketing it as a profit (or using that cash to expand my inventory). Credit would allow me to expand the business at a faster rate - but it would be less profitable and not as sustainable - it would also be less likely to survive downturns in the economy.

[Mojorabbit]

28. The reasons

are both. He was making good money when they were building subdivisions all over Florida. He would bid on a job, buy the supplies to set up the electric in the houses, install the ceiling fans, fixtures, etc. He had 6 employees and for a time had 10 working for him.
He went through a long dry spell the past six months but recently started getting some jobs but then his credit was cut and he can't afford to buy his supplies to do the jobs. I think he will go under in the next few months. It is a shame as he has had his small business for twenty years and does wonderful work. He can't bid on decent sized jobs if he can't buy the supplies and pay employees.

on edit he has also been stiffed twice by builders after he completed the work which before now was unheard of.

[quiller4]

23. Actually credit has eased up for small business

Wells Fargo and Key have eased restrictioons and lowered rates. SBA loans are easier to get now than they have been in the past 6 months. I've been working on a story for a local publication for which I interviewed a number of small business owners and Chamber of Commerce officers--all spoke of how much things have improved with most of the improvement coming since the 1st of March.

[Pirate Smile]

27. Awesome. Some of the President's programs are helping. For some reason, some people on DU seem

to not want that to be the case. I get it from RW'ers. I don't get it from people supposed to be Democrats.

[sendero]

8. I think..

..... there is an orchestrated campaign of propaganda to make people think that, but no, nothing is remotely fixed.

[TwixVoy]

9. And where is this propaganda coming from?

Turn on FAUX lately? They are already saying he has failed. Honestly I think many people in the MSM are not bright enough to see/accept the big picture like he does.

[madokie]

10. I can say one thing for sure

and that's I love what you have to say and agree wholeheartedly. If I can lay my ass around and not go postal or something these last 8 years I damn sure can have patience with President Obama that last more than a few weeks or months. I've also decided to use the big red X ignore button on some of the more persistent Obama basher's posing as concerned citizens around here too. fuck'm

[earth mom]

12. You forget that many people now have trashed credit & no jobs. They can't buy a damn thing.

Obama needs to stop ki$$ing Wall Street a$$ and help the people!

Who needs banks when you have no job and no cash?!

Forget about credit!

People need MONEY-NOW!

Wall Street can fuck off for all the good it does Main Street!

:argh:

[TwixVoy]

13. In order to have REAL wealth

we need to produce things. That is coming, but it can't be done overnight.

Who gives a damn if your credit is trashed as long as you have a job that pays a living wage? Those jobs are coming, but he can't make them magically appear overnight.

[bvar22]

14. Actually, he could.

A multi $Billion 10 year contract with the American auto makers to retool, design, and build a state of the art Rapid Rail Mass Transport (passenger & freight) using only American manufactured equipment would have an immediate impact.
It would cost much less than the multi $Trillion Top Down Bailout of the Wall Street Bankers,
AND America would have something useful to show for their money.

That is only one example.

[earth mom]

15. Obama is propping up the failed system AKA ponzi scheme of Wall Street at the expense of the people.

Wall Street has been extremely detrimental to the well being of the middle class, working class and poor.

Which is proven by how companies all across America have outsourced jobs, trashed unions and cut wages so they can continue to feed their greedy stockholders.

Wall Street is the reason why we don't have manufacturing or living wage jobs in this country anymore.

Anyone who can't see that is lying to themselves and propping up a very corrupt criminal enterprise themselves.

[Uzybone]

19. What a mindless screed

you complain about lack of credit and in the same post say "forget about credit!". Which one is it?

[earth mom]

29. So what's your answer, Einstein?

:eyes:

[bluesmail]

16. I hope nothing happens to him or any loved ones. That would stop

economic recovery dead. If that sounded selfish it was not intended. (The real DUers know). ;-)

[Zenlitened]

17. At best, IMO, he may have fixed the banking system and may now focus...

... and may now focus more intently on fixing the economy.

The banking system and the economy are intricately intertwined, certainly, but they are not one and the same.

I hope -- as his proposed budget indicates -- that Pres. Obama is going to be bold and creative in addressing the still-sorry state of the economy.

[opihimoimoi]

20. The GOP has a vested self interest to see Obama fail....better for them in nx years elections

They do not have PATRIOTISM... they have dry rot....they are evil asshole bullies all pissed they lost and hardly anyone listens to them anymore

They are ATTENTION WHORES...they say weird things to gain your attention....Bachmann included...

[blondeatlast]

24. Agreed. Recovery isn't possible until the bleeding stops.

I can see some indication that the downturn is slowing considerably. It ain't a recovery yet, but I'll settle for not getting any weaker at this point.

[Tashca]

25. underlying optimism

I have noticed a change the last few weeks here. Most of the major employers here in town had put on hiring freezes a few months ago. I think it was a move in anticipation of hard times. Almost all of them have now lifted the freezes and are actively hiring employees.

My wife and I went out to buy trash containers a week ago. We also made a stop for supper. All three places we stopped had help wanted signs up. Granted they probably weren't high paying jobs.

I've been looking for a few acres in the country....I saw something just listed a few days before and inquired about it. I thought it was still overpriced but I might as well check...It was already sold.

Small signs, but positives ones. Credit doesn't seem to be a problem here in the midwest for the most part.

[Kip Humphrey]

26. While I agree with you about Obama's intent, I'm less optimistic as the next 2 dominoes are ready to

fall: namely, credit card debt and commercial real estate. AMEX et al. are cutting low-no balance customers not because of credit risk. Those people tend to have superior credit ratings. Rather, they can't cover the additional debt exposure of all those credit lines and, worse, can't cover current and expected rising loses from credit card defaults with those accounts that generate little to no interest payments. So, they are hanging on to the big balance card holders who will miss the occasional due date thus generating not only ongoing interest payments but also the additional revenue from occasional late payment fees. Thus, when it comes to credit cards, the banksters are walking a tight rope - dropping their best credit risks while hanging on to those with less than stellar credit ratings but with big balances and making more than minimum payments in a "mostly" timely manner. That said, credit card defaults are skyrocketing and loom as the next big economic domino to crash to the ground, bringing on yet another banking crisis (or in the case of derivatives, a continuing worsening of the economic crisis).

[truedelphi]

30. K & R for reading later.

[Locrian]

32. nothing will change until we get the profit out of banking

1000's and 1000's of people doing NOTHING except moving money around. Getting fabulously wealthy off it. We have two economies: productive and nonproductive (parasitic). THAT is why we are fucked.


http://susiemadrak.com/2009/03/25/08/10/infinite-debt/

"But if you’re able to charge 30 percent or, in a payday lender case, 200 or 300 percent, you don’t care so much if the loan—in fact, you actually want the loan not to be repaid. You want people to go into debt. You want to accumulate this interest. And this addicted the financial sector to very, very, very high rates of return compared to what investors were used to getting in the real economy, the manufacturing sector, General Motors, which would give piddling five, six, seven percent returns.

So the capital in this country began to shift in the financial sector. That’s why the financial sector began to bloat up. That’s why we ended up, by 2006, having a third of all profits going into the banks and the financial firms and not into the real economy. "