Bush has a plan, Obama has a plan, Hil-dawg has a plan.
Does anyone think any of these will save the economy?
More importantly, has the government ever been able to avert/pull the country out of a recession?

No and no.

The Fed has more power over the economy than the legislative and executive branches ever will. And I'd much rather have guys who have actually studied economics be in charge of it than politicians.

If I recieve a tax rebate check in the mail, I'm saving it to pay back next year when the IRS asks for it back. Thats what happened to me back in 2001 when this happened. I was so happy to be out spending that 600 bucks that came as a surprise...only to be highly dissapointed at tax season, when I owed the IRS money for the first time ever...still working the same job, with no changes in my W4. SCREWED!! This really started my disapproval of Bush.

Maybe they'll learn that one-time tax rebates never work.

Isn't the prime minister of India an economist? How bouts we trade him for whoever we elect in November. We could fund some portion of the Federal government through the airing of the reality show "Executive Swap". What else are they going to have on TV during the writers strike?

The whole idea is pandering almost to the point of being condescending. That said if such a plan is approved I better damn well get a check.

If only this country had the collective intelligence of something more evolved than an empty peanut shell. It would rock if the gov gave us all one of these BS tax rebates and we all just put it in the bank instead of running out and buying big unimportant TVs and shit. lol

yeyy lets owe china more money than we already do

The Federal Reserve is a bunch of morons, don't they realize that further lowering the interest rate is going to continue to devalue the dollar and ultimately harm our economy in the long run. Oh wait, of course they do.

Politics, politics, politics. It should never have any relation to the economy whatsoever.

That said, there are benefits of lowering the interest rate. Right now, credit is apparently pretty hard to come by, and that is generally a bad thing for the economy. Basically, they're trying to choose between devaluation and severe recession. Which do we want?

Can anyone give me a good summary of the effects of the Bush 2001 tax cuts.

I have $3.33 in my checking account. I figure either way, I'm still broke. LOL

I think the credit system needs a serious overhaul. Banks shouldn't be allowed to swap customers around, that's what got me into the hole I'm in. I wasn't have any trouble at all managing my debt until my card changed banks (for the third time), and the new bank was under no obligation to honor my previous arrangement of $100 a year for a special 4% interest rate.
I think if there was some kind of debt relief/forgiveness system set up, that would be a HUGE boost to the economy. I know an extra $600 a month would sure as hell help my ability to contribute to the economy. Set as many people back to zero as possible. I don't think it'd be unreasonable to set something in place that bans anyone who takes advantage of the relief from getting any credit card at all for 5 years or something. Separate Credit Card credit from getting considered when buying Cars and Houses and the such. Limit the number of cards a person is allowed to carry. Yeah, it'd be a blow to the banks/credit companies, but they're what got us into this mess anyway.

I don't know. I've taken zero economics courses, and I suck with numbers so I'm not pretending to have the answers. They're just general broad ideas. But credit card companies seem to have the most bloat as far as being able to take a serious hit money wise without it causing as much pain to the general regular every day people, where solutions that usually include taxes and taking MORE money out of the hands of the public don't.

Will the cure be worse than the disease?

Politicians are scrambling to offer a stimulus package, and Fed Chairman Ben Bernanke is slashing interest rates. But they may be paving the way for a bigger calamity down the road.
By Shawn Tully, editor at large

(Fortune Magazine) -- The wobbly economy is overtaking Iraq as the issue weighing most heavily on the minds of America's voters. And Washington has noticed. The White House and Congress are almost certain to enact some kind of stimulus package. But like all such temporary, feel-good measures, it will generate a quick blip in growth that will quickly evaporate. In reality only one player has the power to do anything swift and decisive: the Federal Reserve. And its chairman, Ben Bernanke, has already made his intentions abundantly clear. Unfortunately, the cure he's prescribing may be worse than the disease.

Just how low will the economy go? There are conflicting signals. It's clear that the economy is losing steam. The plummeting value of America's houses is chilling consumer spending, layoffs are mounting, and banks and other creditors burned by the subprime crisis are far more reluctant to lend to everyone from small-business owners to private equity firms. But GDP increased by 4.9% in the third quarter, and economists estimate that GDP was still growing in the fourth quarter. Exports are strong, thanks to the weak dollar. The Fed did a brilliant job last summer by flooding the banks with money to prevent a full-scale credit crunch. Credit is far more expensive today, but it's also becoming more plentiful, as demonstrated by the falling rates on everything from LIBOR - the rate at which international banks lend to each other - to junk bonds. So while a recession is a real possibility, it's not inevitable - even the Fed is not forecasting one this year. And if we do get one, it may be brief and shallow, like the one we had in 2001 - with economic growth falling by perhaps half a percentage point for a couple of quarters, and unemployment rising from its current 5% to 5.5% or 6%.

By cutting rates early and often, Bernanke is acting as though a recession - even a mild one - would be a calamity that must be avoided at all costs. He has already reduced the Fed funds rate (which banks pay when they borrow from each other) by one point, to 4.25%, and promises to "take substantive additional action as needed to support growth," a pledge that Wall Street interprets as meaning at least another half-point cut at the Fed's meeting on Jan. 29, if not sooner.

Many on Wall Street back Bernanke. "I'll defend the Fed," says Bear Stearns chief economist David Malpass. "Part of the slowdown is the result of banks' tightening credit, and you help that by lowering the Fed funds rate." Mickey Levy of Bank of America agrees: "You need to lower rates to offset the drag on housing."

But Bernanke is setting the stage for an even bigger recession down the road. Just as the ultra-low rates of the early 2000s created many of the problems we're experiencing today, pumping money into the system would probably stoke inflation, forcing the Fed to hike rates sharply in the near future. "It's better to take a small recession and kill inflation immediately instead of facing high inflation and a really big recession later," says Carnegie Mellon economist Allan Meltzer.

Meltzer, who is finishing the second volume of his history of the Federal Reserve, warns that Bernanke is risking a disastrous replay of the 1970s, when high oil prices fueled double-digit inflation. Every time the Fed started to tighten and unemployment jumped, chairmen G. William Miller and Arthur Burns lost their nerve. They lowered rates to boost job growth, and inflation inevitably revived, causing a vicious price spiral. The Fed let the disease rage for so long that it took draconian action by chairman Paul Volcker in the early 1980s to finally defeat inflation. The price was a deep recession, with unemployment hitting 11% in 1982. "The mentality is the same as in the 1970s," says Meltzer. "'As soon as we get rid of the risk of recession, we'll do something about inflation.' But that comes too late."

Indeed, while the economy is sending mixed messages about growth, the signs of increasing inflation are flashing bright red. For 2007 the consumer price index rose 4.1%, the biggest annual increase in 17 years. Gold, historically a reliable harbinger of inflation, set an all-time high of more than $900 an ounce. The dollar is languishing at a record low against the euro and a weighted basket of international currencies. "Flooding the market with liquidity is a disaster for the purchasing power of the dollar," says David Gitlitz, chief economist for Trend Macrolytics.

The Fed's supporters tend to downplay those dangers. They contend that the inflation surge is being driven largely by energy costs. Since oil isn't likely to rise from its near-$100 level, inflation is likely to tail off in 2008. "That argument is wrong," says Brian Wesbury, chief economist with First Trust Portfolios, an asset-management firm. "As people spend less to drive to the golf course, they will spend the extra money on golf clubs or other products. The Fed wants to reflate the economy, so the money that went into higher oil prices will drive up the prices of other goods."

Fed supporters also point out that the yield on ten-year Treasury bonds stands at just 3.8%, a figure that implies that investors expect inflation to be around 2% in future years. So if inflation is really expected to rage, why aren't interest rates far higher? The explanation is twofold. First, government bonds are hardly a foolproof forecaster. For example, five years ago Treasury yields were predicting 2% inflation over the next five years, and the actual figure was 3%, or 50% higher. Second, investors are so skittish about most stocks and corporate bonds that they're paying a huge premium for safe investments, chiefly U.S. Treasuries. "It's all about a flight to safety," says Meltzer. Stand by for a major rise in yields as the reality of looming inflation sinks in.

So what is the right course for the Fed? Bernanke should hold the Fed funds rate exactly where it is now, at 4.25%. Standing pat might well push the economy into a recession. But the Fed's newfound vigilance on inflation would boost the dollar, effectively lowering the prices of oil and other imports. America would suffer a short downturn and restore price stability, paving the way to a strong recovery in 2010 or 2011.

Sadly, the Fed has already chosen sides. It's likely to lower rates every time growth slows or joblessness rises. As a result, it will never tame inflation until it becomes a clawing, bellowing threat. Then we'll have to suffer a real recession, the kind we suffered in the aftermath of a time we should study and shouldn't forget - the 1970s.

http://money.cnn.com/2008/01/18/news/ec ... tm?cnn=yes

What are you talking about? The economy is the extension of politics by other means (to paraphrase Clauswitz). That's what governments do, they regulate economies. They of course have other functions, building big bombs, making potholes in roads that need to be fixed over and over at overinflated prices, selling me Jesus, but gov'ts regulate the economy. They go together like peas in a pod (to paraphrase the Great Gump).

Seriously though, you should do some reading into political-economy and see how the two are necessarily linked.

Eh... the idea behind the Fed is that it should be generally apolitical and insulated from short term political whims. Thats not necessarily the practice mind you, but its primary job is supposed to be preventing inflation, not to benefit one group at the loss of another.

Exactly. The Fed's goals should never be influenced by the politicians in office. That's what makes them sometimes ignore sound long-term economic strategy in favor of vote-garnering quick fixes. In other words, the Fed should not be trying to make things smoother over the next year at the expense of the following five years in order to keep the voters happy about the current administration. These people are hired for their economic knowledge and decision making, and those decisions should always be economic and not political. Politicians, on the other hand, generally have little or no knowledge of economics, and shouldn't be trying to meddle in those types of affairs--it would be like if a medical doctor were appointed as the Chief Justice.

I don't know if there's any reason to separate credit card debt from houses and cars. In fact, I think that'd actually be worse. What caused the current credit problems was faulty assumptions regarding the ability of subprime borrowers to repay their debt--they normally plan for a certain rate of foreclosures, but they screwed up in that they didn't consider that subprimes would foreclose at a much, much higher rate. If they weren't allowed to consider credit card debt and other lines of credit in giving out home loans, they'd essentially lose their best indicator in determining one's ability to pay back debt, which would make mortgage-backed securities even more risky. If those other lines of credit didn't count towards your mortgage-buying credit, everybody would be subprime when they bought their first home. Then how could they conceivably evaluate the risk? If this were to happen, I'd bet you'd need mortgage insurance until you're at 60% LTV and the premiums would be higher to cover the increased uncertainty.

Now I wouldn't have a problem with a limit on credit cards, but how do they set that limit? I'd rather they just compare current debt to income (like they do with mortgages) in deciding credit limits rather than having some arbitrary limit on the number of credit cards.

I know little to nothing about economics so for whatever it's worth I thought I'd include this here:

I think there's a problem when credit card companies go out of their way (or it seems that way to me) to get people into debt- not that people have to use the cards, and I generally do not use credit cards myself, but I can tell you that when my boyfriend was unemployed (for years, not months) the credit card companies sent offers to him in every day's mail - there hasn't been more than one or two days a month when the mail doesn't include some kind of offer to him, and it's always been this way- He's successfully applied for and received dozens of credit cards regardless of how he fills out the applications.

And he's filled them out in various ways, often just as a way of testing their research abilities.
Do the credit card companies not bear some of the responsibility in cases like this? Why would they assume an unemployed person would be able to handle ANY debt?
My guess is they don't, and they don't care regardless- I think it's part of a larger scheme for making money in the long run off of all types of risk people may present. I have no actual proof, obviously, and I don't think it's a conspiracy, I think it's simple capitalistic greed on the part of the creditors, and complete ignorance on the part of the card holders, and I think that has played a very big part in what's happened to the economy over the years.

I think the bigger question is, why would an unemployed person assume an unemployed person would be able to handle ANY debt?

It's alot easier for me to feel sorry for people who get bigger loans with trickier financing (i.e., when you make an offer on a house, you don't know exactly what your monthly payments will be), but anybody should be able to figure out when they can handle a credit card and when they can't. I don't think it is the credit card companies' responsibility whatsoever to tell people whether they can afford a card. I'm fine with the current system, where if you don't have a high score, you get a lower credit limit. And if people are stupid enough to get credit cards when they don't have any income, creditors should be allowed to be stupid enough to expect those people to pay them back. The problem with mandating things like that is that some people who may be temporarily unemployed may want to borrow for a few months until they get a job. Obviously if they're going to do that, they're taking a bet on their employability, but it certainly could be a viable options for many people.

Most of the case studies, as it were, about people in deep trouble with credit cards had something like ridiculous amounts of debt towards stuff they don't need. I had a friend of a friend who had $40,000 in Nordstrom debt before graduating college. I just can't feel sorry for people like that.

I think I feel sorry for the fact that some people are naturally much more compulsive and yet are living in a system which promotes far more wants than what anybody actually needs.