Business investment is falling

Thanks for sending the link, Pim ... but not sure why.

I believe that you're the capitalist - I am certainly not. Adding to that I cannot see anything other then capitalism being played out here. High unemployment will drive wages down - capitalists see employees as a cost, hence costs must be cut. To do that you get rid of workers or tell them that they are going to lose their livelihood if they don't take a massive hit. Hey-presto CEO gets massive bonus.

As for the stimulus money - that is being spent in a typical bureaucratic way - very slowly. Yet, at least it is being spent, still another few hundred billion to go I believe.

If I could add - I called this recession in 2005, I called the 'recovery' almost to the week - and I did say that I hoped it would be the end to the way capitalists work, it hasn't - so I can see another, far, far worse recession coming up in another couple of years - and then there won't be any money to bail out anything.

Quite a good read BTW.

Actually the stock exchange have been steadily rising stocks are of course much less than ten year ago, we have had a recession of course they are. Business investment did fall but there is solid proof that people are starting to invest again and that's why that all the charts for stock exchanges are rising.

PIM's the doom and gloom is over from last week the hype has stopped and once again we are seeing a slow but sure recovery. 

No need to get completely depressed wait till the real thing five years from now, thats when USA will totally go bust if it continues the status quo.

I see this depression is brewing a cathartic cottage industry in stories of hard-times-anecdotes with the flood of stories as people's lives are turned upside down. And many who felt isolated in this downturn may be getting genuine relief from their own worries to know that many share the same boat and they are not alone with their trying times.

But, as a lazy person myself, I always have a gnawing suspicion that vigorous attention to anything belays a subconscious distraction from bigger issues we'd rather not face. Namely, what concrete, ledger-based solutions are being discussed to avoid the ever growing global train wreck?

I've enjoyed the time recently lambasting "Trembling" Timmy Geitner and pillorying G.S.  vicariously through Matt Taibbi as much as any other reader but the clock is ticking...

This video below already explained (to my satisfaction) the solution to the crisis 2 years ago. You can be sure it'll never be adopted...

This video sets forth a realistic Solution to funding government by using the interest collected on loans to private sector borrowers. This Solution will not only eliminate the income tax, this Solution will totally eliminate all taxation in the entire Federation and will also eliminate the boom and bust economic cycles and profit taking foreclosures inherent in the private ownership of the Federal Reserve.

http://video.google.com/videoplay?docid=2298046812080377528&hl=en#

Well is also the masses of hidden unemployed who just gave up ever finding a job to count as well.

This is scary, Pim.

We need to bottom out and get on with growth. Since you and I agree that this is not an ordinary recession but a depression requiring a restructuring, the news is as expected.

Vision on restructuring is not easy to find. I do have mine. I am willing to share it.

The quick sketch is that we need to produce massive amounts of energy here in the US.

Let's begin with oil. Our own oil would reduce our trade deficit and reduce the downward pressure on the value of the dollar. I would even suggest a tariff on imported oil to help push this.

We have a sixty-year supply of natural gas , as reported recently in the UK Telegraph. A lot of it is in the US.

Then get to work on nuclear power and the alternatives such as bio-diesel from algae.

All of this would reduce our trade deficit, reduce our costs for all economic transactions, create taxes, reducing our budget deficits, and create wealth that could be saved.

We need to stop all immigration for a while. Why do we need two million new souls here a year while unemployment is so high?

That would increase wages or decrease the downward movement of wages.

I'm a bit confused by this one PIM. Isn't this a part of the very creative destruction that you are in favor of? The airline industry is but one example of  the stagnant or non existent wage growth of the average US wage earner. This phenomenon  didn't just start during this current recession, depression or whatever the hell else you want to call it. You can trace it back to the 80's and the Regan Revolution. Destroy the unions, drive down wages, ship or manufacturing base to third world "developing countries" and create a service based employment economy. And while you are at it, dispense with Federal revenue sharing and shift the burden of providing services to State and Local governments. I thought it was supposed to be our money, not the governments. What the hell is wrong with me?  You wanna talk about class warfare?

I don't question the statistics. I guess I look for pragmatism in the solution as the problem has been identified numerous time already. The question remains, was the economical recession mitigated by the stimulus. There is no question there is a crisis, but would the crisis be worse without government investments.I would argue, based on a balance sheet recession that government investment was not only necessary but critical.

The, the next question what is the fix. A nihilistic collapse and let the cockroaches survive the fall out is not going to happen. A restructuring, an improved industrial policy and better governance on a go forward is required. Roy put forward some ideas as to positive policy steps (and while I may not agree with them in entirety)  he is delineating a process forward.

We have seen several of these articles and the fact is the same, the economy is in crisis. I think they would have more import if they advocate a path forward through sound economic policy IMHO

The malaise started already in the seventies if I do recall correctly, when it became the norm to pay as you go, and not to save first before you bought anything additionally to yr daily living. The credit supply became the norm not the saving. And during that period the economy turned already in its roots sour. The credit build-up the cause of the present crisis took about 50 years and the correction cannot be made overnight as I previously explained.

Now the global industry has a 30 - 40% over capacity that through creative destruction has got to be eliminated.

What Roy is suggesting is so far I know one of the very best suggestions to get ourselves out of this mess, it does save money and create new jobs.

Barry's & Hugh's conclusions are very correct, and as Roy concluded scary indeed as is expressed in one of the cartoons included in this posting.

Another good article.

This again shows there are major problems with the economy. I am not sure if the recovery has started and in any event it will be slow and take a long time to return to the previous levels.

Stats don't tell much until you drill down into them and do the analysis.  And just when you think you have the analysis mastered the govt. goes and changes their methodologies.  It's like a game of cat and mouse.

Indeed very difficult to keep track of changing events often the result of interventions and stimuli. But get trained to look through it. As long joblessness is sky high at ca. 10% and probably still rising, there will be no turn for the better. The consumer economy from before will not return in our lifetime could take another 80 years or so, by then people have forgotten about we went through nowadays.

To be more precise on this subject: Large government deficits choke off the very investment that we need to create jobs. In the name of doing well by the government, the unintended consequence is to make it more difficult for small businesses to start up and create jobs. And we all know that small business is the engine for job creation.
The way out of the current morass is to create jobs and increase productivity. But if the government runs deficits of $1.5 trillion that means whatever savings corporate and consumer is generated it will not go into the investments that is needed, contrary it goes into government debt.

“The Small Business Administration reports that losses are rising. Last year, the SBA had to take back $2.1 billion in loans that it had guaranteed. This year, it looks like the total will be higher.”

Normally, small businesses lead the economy out of recession. But this is not a normal recession. This is a depression. And small businesses are getting crushed. An AP report says, “Small businesses are not bouncing back as hoped.”