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Old 03-05-2009, 01:09 PM   #1
KentXie
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The current economy and the way the media portrays it

When you pick up the newspaper, one of the first things you see on the front pages is the economy. While the economy is certainly big enough of a news to be on the front page, the way it portrayed is not. Now before you label me as a Communist or anything like that, hear me through first. Everywhere you read in the newspaper is the current economic crisis talking about job unemployment, bail-out, same corporations failing, the dow dropping, and comparison to the Great Depression. Now that is all fine and dandy but having the same thing printed out on the newspaper everyday is overkill. This includes the news on tv. The media is probably doing the worst thing it could do to help stop the economic crisis.

Do you know what consumer confidence is? It is probably one of the most important pieces in the US economy. Without consumer confidence, there will be no spending and no investment. Now go pick up a local newspaper or watch the evening news. Chances are, there will be a lot of reports containing words such as "recession, depression, unemployment, lay offs, foreclosure, etc." Other reports will include how the future of the US economy will look bleak, and will continue to slide. Now think about how these reports will impact consumer confidence. Nobody wants to take a chance during an economic downturn. Nobody will be willing to spend their cash when the economy is so unstable. If the media continues to emphasize on the doom and gloom, surely they are correct, right?

Of course they are, but not because they predicted it correctly. It is because of the consumer confidence. Having repeatedly knock down with constant negative reports of the same news, consumers have no confidence in helping to cure the economy. Sure there are many other reasons, like debt, the credit crunch, mortgage payments and foreclosure. But consumer confidence can be found in the mix of all these problems. Remember the housing bubble? Why do you think people continue to buy property even when the price of one was so high? It's because their confidence was also high (whether it was smart or not is a whole another discussion). They believe that the prices would continue to rise so they could sell their house for more than they bought. What we see today is the complete opposite. With confidence low, people are unlikely to spend, which means less money will be flowing from the hands of one person to another. People are afraid to put money in the bank and banks, with smaller amount of money in the safe, will lend out less money. The reverse has to happen.

Now hammer me all you want about how confidence is the reason why there is a bubble. That is true for the most part. Banks started lending our randomly without taking account of the risk. That is a lesson the US needs to learn from, but doing so now is the worst time. With the stimulus package coming our way, the best usage of this is to create jobs that target those in danger of foreclosure. Instead of simply bailing them out with free money, make them work for it. Help them pay off their debt by giving them jobs and money. When the banks feel more confident that the debtors can pay off their loan, start lending more money but do so more safely. This will help get the economy back up and running by increasing the spending and flow of money.

None of the things I mentioned above, however, will start without, again, confidence. To help increase confidence, the media needs to start emphasizing the positive, not the negatives. Sure, there are probably not much that can be reported that is positive, but it is better to report about the positive possibilities of the coming future. Instead of focusing so much on which sectors are losing jobs, report more on those that are gaining, for example, the medical sector. Instead of focusing on how a project can be built during a downtime, focus on how, if properly financed, it can create thousands of temporary jobs that will bring money flowing into people's hands. Talk about the successes of small business who are taking advantage of the current crisis. List ideas and information on how to get more for your money without necessarily cutting spending. Focus on a possible bright future. Avoid depressing words such as "depression, recession, default, debt, etc." While this won't be enough to fix the economy entirely (other pieces have to fall into place), it will be the first step in curing the economy.
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Old 03-05-2009, 01:45 PM   #2
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Re: The current economy and the way the media portrays it

Buy more and be happy? There's a word for that and it's not confidence. It's called delusion.

Increased consumer spending is not going to save us like the Keynesians want you to believe. If the U.S. wants to be able to come out of this depression even somewhat intact, we need to start producing now. What's going to happen down the road when the Dollar collapses and we want to buy things? Other countries won't take dollars. They'll want gold. We'll have to sell tangible goods to buy the things we need and the last time I checked, manufacturing is almost non-existent in our country now.

We know that Obama is going to be spending billions of dollars. This money needs to go to productive, tangible things that have lasting value. No more money for the banks, no more money for finance, which are non-productive sectors. Let the banks fail; let them file chapter 11 and then chapter 7. Good riddance to the parasites. We can't let our infrastructure fail however, nor our farms, nor our factories. These are essential to any economic survival.
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Old 03-05-2009, 01:54 PM   #3
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Re: The current economy and the way the media portrays it

Producing what?

What should we be manufacturing? Who is going to buy it? We can't even sell what we do produce (see GM).
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Old 03-05-2009, 02:23 PM   #4
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Re: The current economy and the way the media portrays it

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Originally Posted by statler View Post
Producing what?

What should we be manufacturing? Who is going to buy it? We can't even sell what we do produce (see GM).
Infrastructure for a start. I know it's been talked about at length here, but if we're going to be spending billions of dollars it should be turned into something that will have tangible value 50 or a 100 years down the road. Transit systems in metropolitan areas, inter-regional mag-lev trains, water systems, energy, etc. Let's build 100 nuclear reactors across the country..

Also this notion of putting $100 billion into "green" jobs like Obama wants to do, is pure Malthusianism and just rediculous. This money will end up going to the most backwards, uneconomical way of doing things all for the reward of saying it's "green," while people are out there starving because they don't have jobs.
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Old 03-05-2009, 02:36 PM   #5
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Re: The current economy and the way the media portrays it

I agree on infrastructure.

I'm confused about your take on green jobs.

Solar panels require manufacturing jobs, as do wind turbines. Window and insulation installation also creates jobs, both in manufacturing and in construction. More construction jobs are also created with the installation of energy efficient HVAC systems. It also provides the side benefit of reducing our foreign energy dependence. Seems like a win/win.

Last edited by statler; 03-05-2009 at 04:03 PM.
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Old 03-05-2009, 02:55 PM   #6
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Re: The current economy and the way the media portrays it

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Buy more and be happy? There's a word for that and it's not confidence. It's called delusion.
Of course not. That isn't what I meant. The message I am trying to convey is that consumer confidence helps start things. We cannot always rely on the government to help jump start production. To start things up on our own, that requires investments. Investment depends on consumer confidence. It depends on whether people are willing to spend their money to start production which leads to new jobs. New jobs means money into hands of workers and more money will lead to more investment and the cycle continues. What we have now is the reverse of it. What I am claiming however is that the media is doing the worst possible job in covering the faltering economy because it is discouraging folks from reversing the cycle.

Also the green jobs. If the US can start manufacturing state of the art green technology products and sell it overseas, then that will be a good start in balancing the debt.

And I agree with your infrastructure. As I stated before it should be required that most of not nearly all the bail out money is contributed to creating jobs, any jobs, that can help people pay off their mortgages. The government should stop thinking about bailing out those in trouble of paying off their mortgage. Make them work for their money.
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Old 03-05-2009, 06:44 PM   #7
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Re: The current economy and the way the media portrays it

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Originally Posted by statler View Post
Producing what?

What should we be manufacturing? Who is going to buy it? We can't even sell what we do produce (see GM).
We should be manufacturing technology. We should have the smartest citizens in the world, and we should be manufacturing the highest quality, most cutting edge products on the planet. Be it our cars, our wind turbines and solar panels, our computers, our foods, our furniture, our clothing-everything. The label "Made in USA" should make people everywhere think of prosperity and power, the reason millions immigrated here in the first place.

IMO, we need a manufacturing revolution.

Quote:
Originally Posted by disturbanist View Post
Buy more and be happy? There's a word for that and it's not confidence. It's called delusion.
No, we're talking about the psychological effect of the negativity portrayed in the media. If people are afraid and unsure of their future, they will not spend, even if they do have the money to spare. Face it, the consumers must spend, or our economy won't revive itself. Fortunately, my family was able to sell our house just before the recession became official, and my father has a secure job. My parents are very aware of this, and do everything they can to help the economy as they can. Shopping at local stores, keeping credit cards balanced, and depositing in savings accounts. They are confident, not deluded. People who can afford to spend, must spend smart. People who are terrified, will not spend smart.

Quote:
Originally Posted by disturbanist View Post
Increased consumer spending is not going to save us like the Keynesians want you to believe. If the U.S. wants to be able to come out of this depression even somewhat intact, we need to start producing now. What's going to happen down the road when the Dollar collapses and we want to buy things? Other countries won't take dollars. They'll want gold. We'll have to sell tangible goods to buy the things we need and the last time I checked, manufacturing is almost non-existent in our country now.

We know that Obama is going to be spending billions of dollars. This money needs to go to productive, tangible things that have lasting value. No more money for the banks, no more money for finance, which are non-productive sectors. Let the banks fail; let them file chapter 11 and then chapter 7. Good riddance to the parasites. We can't let our infrastructure fail however, nor our farms, nor our factories. These are essential to any economic survival.
Consumer spending is the key to our economy. Who the hell will buy the manufactured goods?

I'm not saying America shouldn't focus on revamping the manufacturing industries-look above. It just needs to be done in a smart, planned way. The auto industry must survive, no question about it, but they don't need more money from the government. The UAW and other unions must realize that they are far less necessary, and plays a much different role in the 21st century than they were when they started-the union system is incredibly antiquated.

While the stimulus already passed, and arguing it's contents is a moot point, IMO the most money should have gone to revamping the manufacturing industry (creating jobs), vastly improving public education (more educated population), and improving on infrastructure and public transit.
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Old 03-05-2009, 07:10 PM   #8
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Re: The current economy and the way the media portrays it

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Originally Posted by kennedy View Post
We should be manufacturing technology. We should have the smartest citizens in the world, and we should be manufacturing the highest quality, most cutting edge products on the planet. Be it our cars, our wind turbines and solar panels, our computers, our foods, our furniture, our clothing-everything. The label "Made in USA" should make people everywhere think of prosperity and power, the reason millions immigrated here in the first place.

IMO, we need a manufacturing revolution.
That would be great, except that American-made goods cost a lot more to manufacture, due to environmental regulations, worker rights and a generation of worker expecting white collar jobs (or at least white collar pay & benefits)

Are you going to be willing to take a minimum wage job at a factory working 12 hours days, 6-7 days a week after you get out of college? Of course not and neither are your friends. But in India and China their are millions of folks who would jump at the chance.
So then you get into protectionism, a really, really bad idea in a global economy (and this from a Union guy).

So how do you make American-made products at a competitive price in a global economy?
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Old 03-05-2009, 07:43 PM   #9
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Re: The current economy and the way the media portrays it

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That would be great, except that American-made goods cost a lot more to manufacture, due to environmental regulations, worker rights and a generation of worker expecting white collar jobs (or at least white collar pay & benefits)

Are you going to be willing to take a minimum wage job at a factory working 12 hours days, 6-7 days a week after you get out of college? Of course not and neither are your friends. But in India and China their are millions of folks who would jump at the chance.
So then you get into protectionism, a really, really bad idea in a global economy (and this from a Union guy).

So how do you make American-made products at a competitive price in a global economy?
One possible way is to manufacture a product that is new or improved. If we spend our time and money developing that is cutting edge, especially in the green technology since it recently arrived into the market scene, we can mass produce something like hydrogen powered cars which in turn can lead to other things like hydrogen powered trucks, motorcycles, planes, etc. BMW is starting to develop this type of skin-cars. The US could have done the same if the big 3 had focused on something innovative. Fuel seems to be the most important product today. Develop more efficient solar panels. Focus on the medical sector. In order for the US to compete, they need to be innovative in what they produce.
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Old 03-05-2009, 08:36 PM   #10
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Re: The current economy and the way the media portrays it

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Originally Posted by kennedy View Post
No, we're talking about the psychological effect of the negativity portrayed in the media. If people are afraid and unsure of their future, they will not spend, even if they do have the money to spare. Face it, the consumers must spend, or our economy won't revive itself. Fortunately, my family was able to sell our house just before the recession became official, and my father has a secure job. My parents are very aware of this, and do everything they can to help the economy as they can. Shopping at local stores, keeping credit cards balanced, and depositing in savings accounts. They are confident, not deluded. People who can afford to spend, must spend smart. People who are terrified, will not spend smart.
The problem isn't that people are unwilling to spend, it's that they are unable to spend. New debt creation from consumer spending has slowed to the point at which existing debt is unable to be serviced. That is why the banks are failing. The reality is that Americans have little to no personal savings as real wages have been falling since the 1970s. Relying on consumers to restart the economy is a lost cause; all it can do is put off the inevitable.

This is the problem inherent in a debt-based (credit) monetary system and it will happen over and over again. Economists like to call it the business cycle as if it is natural and unavoidable.
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