Well the big news over the holiday (I’m sure it’s no coincidence when this was released) will probably be the ‘economic growth’. But let’s keep things in perspective (thanks to Kos for the links)
While we have had a good quarter, one good quarter does not make a recovery. And there are alot of things hidden inside this recovery that aren’t so good. The Economist takes a look at a few of them and gives a darker look to our ‘recovery’.
One cold wind blowing across this particular recovery is that Americans are up to their necks in debt. With short-term interest rates at a 45-year low, households are spending some 13% of their disposable income on servicing their debts—a higher number even than in the sharp recession of the early 1980s, when the Federal funds rate topped 13%. How much longer can they carry on spending at this rate, let alone increase it? If they don’t, then someone else will have to spend on their behalf.
The government, perhaps? The Bush administration has turned a budget surplus of 2.4% of GDP into a deficit that official numbers say will amount to 4.3% of GDP next year. Not much room, in other words, to raise spending. Nor do American companies have oodles of money to play with. For all the talk of restructuring, they continue to increase their borrowing, though at least a slowdown in the rate at which they borrow and better profitability mean that their dreadful financial ratios are starting to look better than they were. Whether they will continue to do so is another matter.
(source: The riddle of the bonds)
And just so you know, the Economist certainly isn’t a good example of the ‘liberal media’. They are traditionally pretty fiscally conservative.
And while they mention much of the good, there’s an undercurrent of bad in this article from the New York Times.
The combination of tax cuts and mortgage refinancings were instrumental in triggering the surge.
In large measure, growth in the current quarter will probably slow because consumers will have less cash in their pockets.
“There will be a lot less growth in consumer spending,” Mr. Resler said.
“A ton of cars were sold in the third quarter, probably more than is consistent with current demographics.”
At the moment, Mr. Resler said he expected consumer spending to expand at a 1 percent rate in the fourth quarter. And he admitted that there will need to be “some improvement” in retailing activity this month and next to reach that level.
For the quarter, Mr. Resler said he expected overall growth to slow to a 3.5 percent rate. Moreover, it remains to be seen just how many jobs such growth will generate, he said.
“We will not get all of those two million jobs we have lost back in the next 12 months,” he said.
Going forward, “non-farm payrolls probably won’t increase that much.”
(source: Economy Grew Even Faster Than First Thought in 3rd Quarter)
Those are important notes. Much of this ‘recovery’ has been spurred by the measly ‘tax cuts’ that most Americans got (I’ve already talked about how more money for the rich/investor class doesn’t really spur growth) and by mortgage refinancing. Both can only sustain a boost for a short time before people are back to previous levels of spending.
Also the fact that the amount that most Americans are in debt is going up, but they are still spending more, is another sign that this can only be short term. We can only handle so much debt until we have to start cutting spending (funny, that applies to the federal level as well as individual).
Nothing has really been done to foster strong sustained growth. No works programs that improve infrastructure in our decaying inner cities (this would really help out the economies of cities, and not just short term). No help for state budgets and their tax rates. Cuts in education funding. This ‘boom’ will probably last a quarter or two before it fizzles out into a long, very very slow, 1-3% GDP rise that creates very few new jobs.
Speaking of spending, an interesting report came out from the Democratic minority on the House Appropriations Committee. It’s called “Grand Old Porkers” and definitely worth a read. To summarize, it shows that since 1995 (when the Republicans took over the House), ‘earmarks’ (spending attached to other bills that go directly to specific projects in congressional districts) have increased at an alarming rate. The Republicans always liked to hammer Democrats for pet spending in their districts, but the numbers show that, as Calpundit said, everyone does it but the Republicans do it alot more. Somewhere I hear the faint cry of ‘hypocrite’. Go read about it on Calpundit and also check out the full report. It’s an eye opener to yet another example of GOP hypocrisy.
This is comforting. Congress just gave the FBI even MORE power to spy on citizens without a warrant.
Congress approved a bill on Friday that expands the reach of the Patriot Act, reduces oversight of the FBI and intelligence agencies and, according to critics, shifts the balance of power away from the legislature and the courts.
A provision of an intelligence spending bill will expand the power of the FBI to subpoena business documents and transactions from a broader range of businesses — everything from libraries to travel agencies to eBay — without first seeking approval from a judge.
(source: Congress Expands FBI Spying Power )
All the FBI does is have to issue a National Security Letter (which is of course, classified), and the bill gets rid of reports that say how many NSLs are issued. Even worse, the GOP inserted it into an intelligence spending bill - a type of bill that is usually kept very secret and not debated. Sleep well!
Anyway, I wanted to post more but I gotta go to a meeting. Just thought I’d write up a few links real quick. In case I don’t post before tomorrow, everyone have a happy Thanksgiving! I hope you all get to spend it with good friends and family and have a wonderful time.
hehe oh well, either way it should be fun, that’s for sure! I also put in a few good words about the Dean campaign. I’m going to try and get Jody to come to our meetup on Wednesday and maybe eventually (closer to the primaries) write a story about young people’s involvement in the Dean campaign in Indianapolis. 