Krugman: Republicans Have No Coherent Opposition to Spending

[Velleity]

From what you are saying we should be selling more of our information or R and D findings to foreign manufacturers.  I have a problem with that in that innovation, particularly in cars, comes from abroad and not from Detroit.  If domestic car makers have some new ideas then they must be sitting on them.

How much value does a piece of innovation or information have unless it can be applied to a product, process, or service?  One cannot eat, ride, or keep warm by reading a book of informative and clever new ideas, so I am dubious of abstract ideas or information having much value other than to dreamers and schemers and those who are looking for a new idea to include in their business operations.

As elitist and noble as it may seem, there are simply millions upon millions of people in the nation that aren't equipped to come up with innovative ideas or to implement them for that matter.  Given that, we need to place value in more than just abstract information, and in
saying that I am not proposing that we pay union trash collectors 25 bucks an hour to dump our waste into trucks.  That to me is another dumb of the liberal left that they have been inflicted with since the advent of the union movement in America. 

I think we need manufacturing because we need to have as diverse an economy as possible. So far, having a diversified economy has served my home town very well.

We're not as diversified as we were 5 years ago, and that worries me.

Right now our financial sector in this country constitutes a huge percentage of the nation's business activity. That sector must lead us out of the recession. Therein lies, I think, the real problem with concentration.

[lucy]

Vel, I agree.

[ivanm]

The financial sector is an important facet of our economy and employees a lot of high paid people.  However, money is simply the thing that buys the thing, and as powerful as that may be, it is useless without goods and services available to buy and sell.

Tight credit can have a negative effect on the business community as well as on consumers, but I think it takes more than money being available at cheap prices to make folks want to spend or to invest in a future that is apparently so lacking in demand.

Today the front page speaks of Obama's stimulus plan and it seems that much of it involves a reduction of withhholding taxes from people's checks.  I like that better than outright borrowing up front but if the budget cannot be trimmed to offset the loss of tax revenues then borrowing will be done to make up the shortfall.  This approach gives the government time to wait until the economy has perked up before it borrows heavily.  If the stimulus works then more tax revenues should come in from the new jobs that are created.

[Velleity]

The financial sector is an important facet of our economy and employees a lot of high paid people.  However, money is simply the thing that buys the thing, and as powerful as that may be, it is useless without goods and services available to buy and sell.

Profit is the motivation for producing goods and services. If people will pay more than the cost of production, goods and services are produced. If they cannot or will not pay, goods and services are not produced.

The financial sector is by far our largest sector in our economy. I am not saying that is how it should be. I am saying that is how it is.

If you want to have a recovery the financial sector is the only sector that will lead us into that recovery.

Again, that is how it is.

[lucy]

You assume the "financial sector" WANTS to lead us to recovery...it might indeed want to lead us to financial ruin as well, as a "nation"....

[ivanm]

Profit is the motivation for producing goods and services. If people will pay more than the cost of production, goods and services are produced. If they cannot or will not pay, goods and services are not produced.The financial sector is by far our largest sector in our economy. I am not saying that is how it should be. I am saying that is how it is.If you want to have a recovery the financial sector is the only sector that will lead us into that recovery.Again, that is how it is.

You make a good point Vel.  Since corporate American operates very much on borrowed money the availability of capital is a key ingredient to the recovery.  Apparently the credit lines are opening up again, at least for the car dealerships, but they learned their lesson, no bargain basement interest rates are being offered.I think of finance as a service and without borrowers that make things or offer some other sort of service the financial sector wouldn't have much income.  Perhaps for you and the investors, in your own microcosm, the financial sector is it but once again a bank or a brokerage firm or a financial adviser doesn't make milk, or grain for bread, or meat for burgers, and doesn't mine coal or crude oil for energy. 

Some people can get along quite well without much personal borrowing and
Edna and I am prime examples of that.  We owe 3,200 on a car loan and could have paid cash for the vehicle 5 years ago, and aside from that we are on a cash basis.  We also happend to live quite well for the local economy, even moreso than younger couples that are living from one paycheck to the next.

Before the farmers went crazy on the mega machines many of them operated basically on a 
cash basis, as do many small merchants.  Sad to say, these independent operators cannot offer the high wages and good bennies that the corporations who live on borrowed money do.  They have done this down thru the decades by passing the interest costs on to the customers, but I fear that has come to a screeching halt, thanks to low margin foreign producers.  Maybe it is a good thing as we need more realistic pricing that is sustainable from a cost standpoint.  The way it is the consumer is tapped out and cannot continue to pay thru the nose for housing, cars, fuel, and even foodstuffs. 

Given the tapped out consumer the beloved financial industry is a duck out of water.