"It's the economy, stupid" was a phrase in American politics widely used during Bill Clinton's successful 1992 presidential campaign against George H. W. Bush. For a time, Bush was considered unbeatable because of foreign policy developments such as the end of the Cold War and the Persian Gulf War. The phrase, made popular by Clinton campaign strategist James Carville, refers to the notion that Clinton was a better choice because Bush had not adequately addressed the economy, which had recently undergone a recession.
In our current political times it seems that we sometimes forget how important that phrase really is. When most of the conversations of late seem to center around taxes, deficit spending and a nice dose of political posturing that takes place in politics of today, it seems like this is the only thing being talked about. However, most of us don't have the option or luxury of having deficit spending in our own personal life, either you have the money or you don't. Wouldn't it be great to spend all the money you want and then when you are "able" you will come up with a plan to take care of that accumulated debit, fat change. And yet this is how we got here.
Despite all appearances President Obama has been working on the economy even before he took office. The implementation of new regulatory laws in the financial industry are ideally in place to prevent what got us here in the first place. You can't really improve the economy unless you have a clear understanding of how we got here. The new healthcare laws will, over time, make millions of Americans life easier and hopefully in the process drive down overall healthcare cost. I am completely amazed that so many are against the implementation of this new law. Yet, years ago many employers were complaining that the reason they were not hiring is because of the increasing healthcare cost. Now, we have the new boogieman theory that it will increase cost. I cannot help but laugh, remember when DVD's first came out everyone was talking about how great it was, but way to expensive to have, now fast-forward to today you can find a DVD player for $25. That's kinda how this will work out, insurance companies will have to compete more for business and this will hopefully drive overall healthcare cost down for all Americans, over time.
Which brings us where we are today, waiting for senators to approve a backdoor stimulus plan disguised behind the notion of tax-cuts, it's still deficit spending. That we will still need to find a way to pay for later. However, to most Americans it means more money on the paycheck, which equates to more household spending, which will hopefully lead to businesses adding jobs and an end to this dreadful recession.
When people quit spending, business have to cut jobs, this slows down the economy and leads to a recession. So we need to spend, spend spend.
This has been so far a good week for President Obama. The economy seems to be on a slow mend. The Associates Press reported that 45% of executives expect their companies plan to hire, this is the highest since 2002. 38% expect no change in current payroll. The executives group consist of 193 companies, 12-million workers and a combine revenue of 6 trillion dollars.
What is Quantitative Easing: [QE1,QE2]
"...what quantitative easing actually means, at least in part, is creating massive amounts of money out of thin air. Economists -at least some economists - believe that when you want to improve the economy, you need to get more money out there, circulating around...."
The Central Bank buys long term government bonds, $600 Billion, which in turn lowers the interest rates and speed-up the economy. Some concerns is that QE when lead to inflation, so far this has not happen. The Federal reserve announced that they will continue to purchase $75 Billion each month to inspire recovery in the economy. This will hopefully lead to banks lending again, people spending and investing and that will grow the economy.
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