Beware the Obama stimulus bubble

Money is only a meadum of barter. To create wealth requires “ADDING VALUE” and that means you must have have raw material or market that you “MODIFY” through labor and innovation.

The Goverment is Broke so any stimulus spending is from borrowed money.
There are times that borrowing money can be effective such as if you can borrow at 3% to create a project that yeilds 5% but that requires you to sell the end result and pay off the loan.

To pay men to dig holes in the ground or polish bridges or build bridges does not create wealth because no one is buying the end result and therefore we are only redistributing the money. Yes its better than simply giving it away but in the end your only redistrbuting our own money.

Since goverment doesn’t create weath it becomes apparent that only industry does….industry creates jobs , creates new products, new markets and those markets create tax base.

America didn’t listen to Ross Perot who said 20 years ago “you gotta make things” or the whooshing sound will be the money and jobs leaving this country…. well the jobs are gone and our dollar is about to crash and no amount of road work create the wealth we need to pay back 15 trillion in foreign loans or the 50 trillion coming up for entitlements.

Spending money on the infrastructure will improve the infrastructure. And that would be a good thing.

As for the economy, borrowed money will not help the economy. As has been pointed out in comments already, sometime soon someone is going to notice that the government is out of money. And none of the variations on “If they can give money to (name undeserving recently bailed out ga-zillionair), then it makes more sense to give it to deserving working Americans.” will matter.

Our economy will need to find another way out besides ever bigger government commitments of money to be borrowed in the future.

Politicians can not run an economy in an efficient way. That is called a plan economy and the last time that was tried was in the Soviet Union. The productivity was disastrous. The market should run the economy, that’s how it’s best done.

Putting people to work is the fair thing to do. On the flip side, the government better be getting contracts at fair prices for doing so. That means “fair prices” in this poor economy not the prices during the go-go years!

The pork barrel spending of the US government has been the biggest problem over the last 30 years. Not only do they buld bridges to no where, they do so at the most expensive prices possible.

Obamas bubble will be government based like many on here have said and the only thing that can pop that bubble is foreign investors refusing to buy Treasuries. When the lenders stop coming to the Treasury auctions the government’s money bubble will burst and that will be the end of the game.

Are we looking at the final bubble ?

Obama’s spending plans means there is still more money to burn. Once all the money has been burned then the nation will confront the pain. This will put paid to FDR’s New Deal mindset.

I wonder when the fact that we are out of money will sink in.

Jim in Harrisburg: Are you suggesting that we should rebuild our infrastructure by exploiting sub-minimum-wage illegal immigrant construction workers? That might do some good for Mexico’s economy, but I think your rant about wage standards is misplaced.

There is nothing that benefits folks who are struggling more than neighbors who are doing a little better, who spend money in local stores and support their communities. Don’t forget, people with decent jobs provide all the funding for local government.

The somewhat obscure truth of our situation is that we’re broke mostly because we’re sending all our money overseas. Building infrastructure won’t solve all our problems, but then, it’s not the only arrow in Obama’s quiver, either. That stuff you see at WalMart may look cheap, but when you buy it, you’re helping to impoverish your community, because the only moneyy your community gets back from what you spend at WalMart is the dirt-cheap wages of WalMart’s employees; the bulk of the dollars spent at WalMart disappear from the local community entirely and forever.

If you want to tell people how to fix the economy, start by trying to understand how it broke down.

Heavens knows that our bridges and roads need to be maintained and improved, BUT…why should highly paid no competition union workers be the happy recipients (because of stupid federal laws which require labor on major contracts to be paid the prevailing union scale). Folks who are struggling don’t get paid union scale, and they are the ones that need the help the most.

If you have a choice between millions of people sitting at home drawing unemployment or putting them to work on infrastructure, I think the choice is clear. Recessions are a great time to service infrastructure without increasing inflation; the government can buy infrastructure at very low prices. Plus, you actually buy something productive in the long term with money that would, otherwise, go to paying people to stay home.

I like the idea of repairing all of the bridges at this time. There are a lot of bridges out there in rough shape.

I also think we need to move forward on increasing the capacity and reliability of the electrical grid. When plug-in hybrids become the norm for cars in 10 years and renewable generation becomes common, we need an electrical grid that can handle the shift to distributed generation. We’ve got to be able to put the electricity generated at small sources, like homes, to where it’s needed.

The only thing that worries me is the timing. If Washington dithers, as it usually does, the economy will recover on its own and the infrastructure spending will hit just in time to cause inflation. The government will end up spending far more on necessary infrastructure than necessary.

We need to meticulously examine China’s economy and take many pages off their books. It makes sense if you are printing loads of money to spend it wisely. Spend it on creating jobs to secure our food and energy supply makes perfect sense to me. Rebuilding roads, tunnels, bridges should be targeted in needed areas to generate growth not in alaska where the population is miniscule.

Looking forward to our current deficits in public and private sectors and unfunded future liabilities, we should allocate some money buying strong fundamental multinationals from abroad like energy, agriculture and mining companies anticipating future growth.
Stop throwing good money after bad saving these fools on wall street. Putin from Russia nationalize lucrative oil giants. We nationalize insolvent financial institutions with trillion dollars of liabilities in derivatives and other toxic securities. Amazing isn’t it?

Peter Schiff, Jim Rogers, and Ron Paul are smart investors. I get worry when more and more people agree with what they are saying b/c it means we are past the point of no return.

Peter said, “We can’t all get out of the market at once.” I guess we owe gratitude to all those wall street analyst, economic commentators and economist for continuing to mislead and confuse the public and leading them down a path off a cliff.

If it’s done right. The short-term job creation could stabilize some households that have lost jobs, and the improved infrastructure could help the public psychology.

A lot will depend on which projects get funded, where they are and what they do to bolster the future as well as the job market.

I rather to have Obama stimulus bubble
than Bush “ownership society” bubble…

If those figures are correct, it looks as if the next bubble is already forming. Construction and related companies up 65% and 70%, that is a speculation increase if ever there was one. As for the psychology needed, it is one of greed, desperation and a lack of reality. We have that is great supply. Many people, including editor Joe Birger, argued that there was no bubble in commodities, right up until it burst. Now, many people who said there was no bubble are saying there clearly was one, one they did not see at the time. Those investing in these stocks need to learn from those past mistakes and look for real value and growth, not the promise of high returns and quick cash.

Short-term, yes; long-term, no. World War II got us out of the depression, not building roads, bridges, and dams. It’s just a great, big band-aid.

Yes. Going forward, the growth sector of the economy will be … tadaah … government. It’s the only sector that can grow, because it has money, and the ability to tax, create, and borrow more money to spend.

The 1980s had retail, the 1990s had technology, and the 2000s had real estate; they each bubbled, burst, and never came back. This will be no different.

There is always the risk of creating a new bubble somewhere else when interest rates are so low (1% Fed rate). The bubble happens when a healthy attitude of ‘buy low, sell high’ turns into a dangerous attitude of ‘buy high, sell higher’, such as happened in commodities and real estate, asset classes that don’t produce income.

New bubbles are possible, and government lending and spending can easily cause them, again. Be careful.

I doubt the result will be a bubble, in order for bubbles to occur a certain psychology needs to be present in the marketplace. The sharp market correction, lack of consumer spending and fall in commodity prices are all indications that the marketplace psychology is tepid at best. The falling yields on 10 and 30 year notes indicate that this will be long, it is doubtful there is a bubble on the horizon.

Of course one can be created if expansionism is taken too far but is not likely yet. Significant amounts of wealth and credit have been destroyed, and that will persist. To believe we’re entering the next bubble is presumptuous.