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December 22, 2014

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Letter to the editor:

More jobs will help national debt

Another view?

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Is response to Michael Casler’s letter, “An uncertain future for all of us”:

The president does not control the debt; Congress does. The president submits his budget; even if it has major proposals to reduce the national debt, it will be probably be shot down by the radical Tea Party members in the House or filibustered in the Senate by followers of Sen. Mitch McConnell.

Maybe Mr. Casler doesn’t realize the stock market is at a record high and that 401(k) plans are soaring. Maybe he can’t remember prior to 2008 when we had a Republican president’s budget approved by Congress that bankrupted many 401(k) plans.

I do not know where Mr. Casler saves his money— nor do I care. What I can do is relay to him my past successes and failures. I lost a great amount of my retirement during the George H.W. Bush administration and recouped much of it during the Clinton era. Then I was smart enough to move it to a secured savings account the day after George W. Bush was elected.

Our economy has been on the upswing over the past several years. The only way to control the debt is to create more jobs and keep the ball rolling.

Good luck to all.

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  1. Letter writer is wrong on his economics and the stock market. The stock market is never a good indicator of the economy and the economy a good indicator of the stock market. They don't move in tandem, one with the other, or for the same reasons. I'm happy he put his money into secured savings accounts. I just hope for his sake and savings it's not in Cyprus.

    Carmine D

  2. Mr. Ellis,

    With all due respect, you're entitled to your view that we should keep spending much more than comes in via tax revenue and wait for growth to make everything workout. That plan 'may' work but I am worried that instead, it will result in large inflationary pressures that will crush most of us, even those with money in 'safe' investments.

    I am not someone who believes that growing spending by 5 % a year (D) or 3.4 a year (R) is a 'reasonable ' approach when Congresses and our Presidents are never even willing to attack waste, fraud and duplication in government programs.

    Do you see President Obama's recent speech where he talked specifically about that and the camera panned to two cabinet secretaries who just smiled. Watch and see absolutely nothing done about any of that, just like every time in the past, (R) or (D).

    Did you really believe that enough money could not be cobbled together from spending not as necessary as airport controller salaries to prevent closing of control towers at smaller airports?

    This isn't a partisan issue Mr. Ellis, at least for me. We have two parties that love to spend to stay in power.... and if it continues unabated, we risk inflation that will damage us all. Some polls indicate that 85 % of Americans think that government spending is out of control and yet one party increases it 5 % a year and the other 3.4 % a year. PLEASE!!

    Michael

  3. The guys an ideologue. The financial mess in the pig sty known as Washington, DC is a bipartisan one. Overspending and deficits go back as far as the eye can see. As for Osama Obama submitting a budget of any kind, when did that last happen? The Dumbocrats have never passed a budget during his presidency and one he actually submitted was shot down by the Senate unanimously. Gee, I guess that means some Dumbocrats must have also voted against it.

  4. If you study the 200+ year history of the stock market it's a very good leading economic indicator. Corporate earnings have been outstanding and businesses are sitting on trillions in cash.

    The only way the president can create jobs is to hire people. Other than that it's determined by demand factors. Worldwide economic growth is probably the slowest it's been since globalization began 40 years ago. Demand is slack and unemployment is high the world over. In Europe it's at 10% plus.

    The combination of the lowest birth rates in recorded history combined with aging societies in the developed world will reduce demand for goods and services, and increase demand for entitlements. This will cause unemployment to remain stubbornly high for many many years. In addition labor force participation rates will drop as the older folks retire and there are no youngsters to take their place.

    The problems are complex and at the current time there are no solutions. The Japanese are dying off. The Japanese and Germans are paying women to have children. A while back the government of Japan wanted to know why young people were no longer engaging in frequent sexual activity. The response of the young was that they prefer to play with electronic gadgets then to have sex.

    Every country has its problems. One important measure we could take here to get things going again is reducing medical spending. That would free up trillions for things other than pills and increase aggregate demand. It would also eliminate the deficit spending. An increase in demand would force businesses to hire. We'll see what happens!

  5. http://www.foxbusiness.com/markets/2013/...
    The above macroeconomic issues are going to take decades to resolve. The water issue is something that has to be dealt with NOW. The government can deal with debt and unemployment by printing money and hiring people. Try printing water.

  6. "If you study the 200+ year history of the stock market it's a very good leading economic indicator."

    Gerry:

    This market is way ahead of this economy. There's one overriding reason, which I have stated here recently, for it. Fed Chief Ben Bernanke and his inflationary monetary policy. QE 1, 2, 3 and infinity prints and puts over $3 billion dollars a day into the economy. In conjunction with deliberately keeping interest rates artificially low through Fed Banking maneuvers, the combination of both is fueling the stock market. It's a tightrope and Fed Chief Bernanke, a hard working brilliant man, will be the first to say so and list all the potential hazards associated with it.

    Carmine D

  7. Mr. DiFazio.. The stock market is driven by earnings. Nothing else matters. If you look at a chart from 1900 to the present time that reflects the trend in the stock market and the trend in earnings they sit right on top of one another. They correlate nearly 100%.
    I agree with you about interest rates being artificially low. I think this is doing more harm than good. They are doing it to stimulate the economy but they are hurting countless Americans that have money in savings accounts and money market funds. Many don't feel comfortable with the stock market. There are currently trillions of dollars in banks and money market accounts that are earning investors nothing. It's a ridiculous situation.

    If interest rates were a few points higher they would still be low by historic standards and savers would be getting billions of dollars a month in interest. Most of that would be spent in the economy. I think the additional income that people would receive would more than offset the higher cost of doing business that would come with higher rates.

    Credit card interest rates are 12% plus and banks are paying their savers nothing. The banks are loving it but I think economy is being hurt by it.

  8. When Mitt Romney Lost last year's Presidential Election ,with the re-election of Pres.Obama to a new 4 year term.

    Disgruntled republicans were complaining the stock market declined right after Pres.Obama's winning of a 2nd.term. And the reason they gave was voter's were not happy with the election results.

    Now these same republicans claim that that the reason the stock market has gone up is because the fed is printing more money. No mention about how many more new jobs have been created,and that the economy continues to improve as Americans continue to spend more on goods and services.

    So if the stock market did not go up at this time, and declined instead, would these same republicans be saying the reason the stock market is down is because the fed is printing more money every day?

  9. "Mr. DiFazio.. The stock market is driven by earnings."

    You're partly right. Fear and greed are the other factors that move markets. Fear is the reason that the companies are stockpiling funds rather than pouring them back into the economy. Banks are doing the same and not lending. Greed is the reason the stock market is rising. It's the only place people with money to invest can get a reasonable rate of return [appreciation] on their money since bond and interest rates are at zero.

    Carmine D

  10. Sam:

    I have to disagree. Ben Bernanke will tell you, if you follow his testimony before Congress, that the reason the stock market is climbing are his monetary policies.

    He'll also say weak jobs' growth and slow housing starts are keeping the economy down. While these sectors have done better lately, they are not nearly at the levels he and the Fed predicted in 2009 if the government unleashed it's stimulus programs, which of course it did. The Fed/Bernanke said unemployment by 2010/2011 would be at 6 percent. It's been 8 percent, now 7.7 and holding.

    Consumer spending is 2/3 of Gross Domestic Product. We have had 5 quarters of slow to weak GDP. Read under 2 percent. Last quarter [ended December 31, 2012] it was negative growth. These rates are below the Fed and Bernanke's predictions from 2009 when he and the Obama Administration argued for the huge government stimulus programs. Like the jobs and housing sectors, the lackluster GDP growth [which Bernanke predicted would be 3-4 percent by this time] is another huge concern to the Fed. These weak economic indicators are the reason in large part Ben Bernanke and the Fed are continuing the inflationary monetary policies, i.e. printing more money every day [$3 Billion a day]. Bernanke himself will say it is the primary cause for the stock market climb.

    Now, AS SOON AS BERNANKE signals a change to a tighter money policy, all the savvy investors in the market WILL BAIL OUT. AND Bernanke will and they will. Then the market will tank. I predict at the 15,000 mark or very close to it.

    Carmine D

  11. PS Sam:

    It was widely known that IF Romney won, Bernanke would have been fired. That would have had a short to medium term negative impact on the markets due to a possible change in monetary policy, i.e. tighter. That may have been better for the economy in the long run than a spike in the market due to inflationary Fed monetary policy that can't be sustained. It's like walking a tightrope. The slightest mistake wreaks havoc on the tightrope walker unless he has a safety net below.

    Carmine D

  12. http://www.huffingtonpost.com/2013/03/07...
    The economy has regained all the wealth that was lost during the crisis. After the Great Depression the economy didn't get all of the wealth back until 1954. This is probably the fastest recovery in history from an economic collapse brought about by a financial crisis.

    Bernanke said the stock market was going up because of his policies?? Provide me with a link to that statement. The Fed is really not even supposed discussed the stock market other than in very general terms.

    If people pull out of the stock market they're going to have to look high and low to try to get the 100% the market has produced over the last few years. You have to go out five years to get .5% on a CD. That's a long way from 100%. The market typically corrects a couple times a year. Nothing new there. Corrections are healthy and take out the excesses.

  13. Gerry:

    You can find Bernanke's testimony on line. Read it.

    Fed Chief's don't discuss the markets? Bernanke on Martin Luther King's Holiday in 2008 pulled an all night and all day weekend in his office while you and others in the U.S. were enjoying the long weekend. Why? The markets tanked abroad and his fear was it would pull down the markets here in the U.S. too. By all accounts this single event was the one that signaled the U.S. market decline, bubble burst, and the onset of the Great Recession that we are still in.

    Carmine D

  14. "And Carmine's predictions have all be wrong, so
    we need not worry."

    Teamster:

    If that were true, and it's not, then you should worry more.

    Carmine D

  15. Here's the headline from the Wall Street Journal on January 23, 2008. Because of the age, it's not available on line any longer. I remember it very well.

    "Fed Rate Cut Halts Market Free Fall, But Recession Fears Are Mounting
    Foreign Shares' Tumble Prompts Bernanke Call; Biggest Trim in 20 Years"

    Carmine D

  16. Per Zippert1 (gerry hageman), posting at 4:10 p.m., citing an article from http://www.huffingtonpost.com/2013/03/07...... "The economy has regained all the wealth that was lost during the crisis."

    Good article. Wrong interpretation. The article cited is headlined "Household Wealth Regains $16 Trillion Lost During Recession, Nears Peak" and offers a definition: "Household wealth, or net worth, reflects the value of assets like homes, stocks and bank accounts minus debts like mortgages and credit cards." Clearly, "household wealth" is NOT the same as the totality of the U.S. economy.

    The article goes on to note "The recovered wealth -- most of it from higher stock prices -- has been flowing mainly to richer Americans. By contrast, middle class wealth is mostly in the form of home equity, which has risen much less." In other words, the article is not so much about "regaining" wealth as it is about the on-going redistribution of wealth. It's the same thing we've seen over the centuries in mining: the rich skim off the high-grade profits, everyone else gets the shaft.