No recession for 2008

February 14, 2008 at 10:27 am 2 comments

You often hear people criticize George W. Bush’s comments about the economy. Whenever he mentions that the economy is fine, steady, and strong, it’s usually accompanied by mocks of stupidity and ignorance. But, the nation’s leading economists, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson are saying the exact same thing.

It’s something that has bothered me because all of the hum-drum about the economy, I believe, is due in large part to this being an election year and the media. If presidential hopefuls run on the theme of change, well, there obviously has to be something to change from. Like maybe, a bad economy that they can fix. But, anyone that understands economic statistics, people like Bernanke and Paulson, knows that the economy is fine and is in fact not headed into a recession. I’ve mentioned this in a previous post.

According to Bernanke, “at present, my baseline outlook involves a period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be felt.” Paulson echoed these sentiments by stating that “the U.S. economy is fundamentally strong, diverse and resilient, yet after years of unsustainable home price appreciation, our economy is undergoing a significant and necessary housing correction. The housing correction, high energy prices and capital market turmoil are weighing on current economic growth.”

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Source: Bernanke, Paulson: No recession in ’08

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Entry filed under: Money Fun, Soap Box.

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2 Comments Add your own

  • 1. Sameer  |  February 21, 2008 at 1:57 pm

    Hi,

    I just went through some of your writeups and I wanted to have your opinion on the following –

    People earn money via job/enterprise. They take that money and go to market to buy stuff and pay taxes. Money spent in buying stuff goes back to investors & employees (people… investors ..are people too..
    not all, but few) and other partner companies via enterprise (abcMart) which sold the goods.
    Then one fine day, the abcMart says – “We can go ahead and outsource some of our work from our employees and partner companies, to gain efficiency and serve investors & customers (customers …are investors too… not all, but few) better”.

    abcMart lays off 10 people, who lived in that community. abcMart’s partner company HiFiSoultions is running not in the best of luck and loses couple of customers like abcMart and also lays off some engineers to save costs and increase profit for investors and ofcourse add value to customers.

    It has been good so far, abcMart & HiFiSolutions delivered good savings to investors reduced costs. And seeing this everyone in their domain catches up with the trend and their practices. Companies are saving a lot, increasing efficiency and reducing operational expenses. Cool !!

    Now the guys who lost their job, could not come to the abcMart to buy the new playstation, it was expensive and it would still take them some time with their job and paying off old debts…. ( well they did not get jobs immediately, as most of the companies like abcMart & HifiSolutions were cutting jobs and with basic logic of supply & demand, getting a job was far more hard than it could be. And they had to reinvent their skills, and lose the value of some of their previous skills and time. And given this, their fiscal, professional & personal growth slowed down. And of course they paid less taxes… well government can manage, it will just have to increase its deficit.

    Over the period of years, what happened with abcMart & its partner companies became case studies and many companies adopted it and all saw growth of value for investors, but along with it came – slowing down of the people who were affected, sady you have to include them in calculations, you cant send them to mars, right. And it all happened on a larger scale.

    Soon, companies noticed, not many people were coming to buy playstation3 compared to sales happening 2 years back…. their is a slow down, economy is slowing and lo… here comes recession.

    When everyone is doing well, growing right and reinventing, its does the same for economy. When everyone is not, same holds for the economy. So shouldn’t one look at growth of individuals on a professional/fiscal scale, rather than increasing value for handful of investors, who anyways shop in Paris or New York.

    Other thing is –
    If we see gain/rise of country, it has historically been the trading activity (on the positive side… how much money you bring in..) and output produced. Both of which is not looking good for USA. Does this mean ….

    Reply
  • 2. Sameer  |  February 21, 2008 at 2:10 pm

    It has been famously said that a country is what its citizens are.

    In the growing world of technology, do you think youth of this country has the appetite for knowledge and creativity (creating a technology is way harder than using it)

    Is the ipod generation willing to take up serious careers in technology, medicine and finance or would is more keen on downloading the podcast. Is there a passion for thinking, debate & discussion, is there an awareness on politics and economic needs of the country… or is the generation just keen on knowing what happened with Paris Hilton.

    This a very vital perspective, one would have to see through, to gauge where does US’s future stand on world stage. Historically speaking leisurely life and lack of fire in the belly are the first sign of a decline. Only way to rise is through hardwork, real & sincere. One should understand their needs to be a work-life balance but it is just a part of life, not life it self. Our work defines who we are and thats where the focus should be

    Reply

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