Tuesday, July 3, 2012

What is slowing the economy: Low demand, not Dems

First the apology and the explanation. This is the first post that I totally lost, despite some effort to save it. I'm sorry, but I'm not going to try to reconstruct the whole thing. Instead I'll give just an outline. Sorry about that, but I'll keep all the highlights. (Unless my prose was the highlight for you, which I don't think is likely.) Here goes. The post roughly said:
  • The GOP blames regulation, current poor Dem policies, and uncertainty over healthcare and taxes for lack of higher growth in private enterprise.
  • However, this GOP talking point wasn't based on this survey, which showed that lack of demand is the biggest problem for businesses.
  • It's not surprising if investors aren't spending or investing that much after the rollercoaster of 2007-2008. They're holding on the cash that they have.
  • This situation won't last forever as long as the economy doesn't tank again. Eventually physical needs will push people and investors to spend more, and the uptick in spending will nudge the business cycle into an upward trend.
  • Please don't try to goose demand with low interest rates from the Fed forever, a big stimulus, more tax cuts, etc. Those haven't worked to build demand, and they'll just make the deficit worse or have other negative consequences.

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