About Me

Nov 14, 2011

Rebooting American Economy

I just finished a new book by Bill Clinton. The title reads: Back to Work: Why We Need Smart Government for a Strong Economy. In this book, he offers advice and some criticisms for Obama. He regrets that Obama didn’t raise debt ceiling when Democrats hold majority voice in the Congress. OK, leave that story to the historians.
There are two points I’m really interested in. Firstly, he argues The Gramm–Leach–Bliley Act he signed into law in 1999 didn’t play a major role in causing an economic crisis in America. But I’m still skeptical about that. But I have to revisit two chapters I touch on financial deregulation in my book.
He urges Obama administration to reduce principle for homeowners who are underwater. He should have done this. That’s just a point I would be disappointed with him, if I were an American. It’s been long overdue. It’s not a time to argue who is right, who is wrong. It’s a time to save the economy; I often herd this argument when the big corporations in US were being bailed out. I think it’s a time to get the economy going again by reducing principle.
It’s not only Clinton who proposed that kind of initiative. When their homes are underwater, they tend to choose to default. And the default will drive down the home prices and the vicious cycle continues.  That’s why housing market never recovers. Never expect that American economy will recover unless the housing crisis is fixed.
It’s a political suicide to do so. But politicians should love their country not their job. Mr. Obama should do what he should do for the sake of his country. I think the anemic recovery of American economy was, in a part, the result of unwillingness of his administration.  He was a scapegoat.  In economic area, he did a better job, not a good one, than Bush.
I said months ago that American economy should have been recovered by 2015.  I still hold that view. Why? It usually takes 5 to10 years for a crisis caused by cash crashes to recovery. It should take roughly ten years for America. This crisis is both cyclical and structural. Some Americans don’t possess 21 century skills and naturally they become unemployed. 
I don’t expect any bold moves by Obama until 2013. I think he is going to elected again. He would be more careful about his legacy for his second term.
 I came across an OWS slogan: I don’t mind you being rich; I mind you buy my Government.  Income for Middle Class Americans barely increased over the last 30 years, adjusting for inflation. The Mega rich Americans, like Warren Buffets, Bill Gates, and George Soros, to name a few support tax hide. They understand well about this.
We can’t have a strong economy without a strong middle class. The rich are not paying enough tax. Make no mistake; I’m waging a war class for anyone.
Market can’t provide education, ports, bridges, roads and so on. What would happen when the Government doesn’t have enough money to invest in America’s future?  Million Americans now lack the skills and knowledge to compete in 21st century economy. The money the Government gets from the rich will be used to build roads on which they would take the goods to the market, build the ports they ship goods to sell abroad, and educate workforce that eventually work for them.  Income inequality turned a cyclical crisis into a structural one. 
The rich can’t provide those things but the Government can. But the Government needs money to do that. The rich should pay enough tax to get America going again. Rebooting American economy!!!