Consumption v. Investment - Part 2

As a follow up to April 24th's post, the Wall Street Journal, making the same distinction between borrowing for investment and growth purposes vs. borrowing that is simply consumed:

Review & Outlook: Debt and Growth - WSJ.com

The editorial concludes: "After five years of trying, we should know this doesn't work. The real way to promote a stronger economy is more austerity and reform in government, and fewer restraints on private investment and risk taking."

I'm not sure what they mean by austerity but, otherwise I agree. If austerity means that the government gets out of the retirement and healthcare business, amen.

Investment v. Consumption

Sounds like some intellectual name calling going on here:

oftwominds-Charles Hugh Smith: Why Krugman and the Keynesians Are Lackeys for the Neofeudal Debtocracy

Well worth the read but the bottom line: spending needs to be productive to be considered an investment. Otherwise, that spending is simply consumption. And...in our present world...the deficit spending that is supposed to be  causing the economy to grow is in fact grossly misallocating resources in non-productive ways and has enslaved us to debt.

Oh River City we got trouble with a capital "T"....

The Definition of Insanity...

It's not working...continuing to pump trillions of dollars, euros, yen, etc. into the world economy...but, if we just keep doing it, maybe it will start working? Maybe the world's economy will begin to grow again and we'll be able to get out of this morass of debt?

Didn't Albert Einstein say something like: "We can't solve problems by using the same kind of thinking we used when we created them."? Isn't that the definition of insanity: doing the same thing over and over and expecting to achieve results different from the ones being attained?

So, are the world's economic leaders insane? Maybe they just like to devalue their nations' currencies? Or, are they up to something else? Zero Hedge addresses some of the possibilities beyond insanity:

Guest Post: The Global Status Quo Strategy: Do More Of What Has Failed Spectacularly | Zero Hedge

So many questions!

A Couple of Things You Should Know About The Stock Market | Zero Hedge

Some excellent points to consider re: our manipulated financial markets and likely outcome of that manipulation. Hint: the great Keynesian experiment won't turn out well.

Guest Post: A Couple of Things You Should Know About The Stock Market | Zero Hedge

Trader Dan's Market Views - April 10, 2013

Trader Dan, insightful as usual, discussing fiscal policy and financial markets...

Trader Dan's Market Views: Gold Chart by Request: H ere's a look at the latest after today's sharp selloff in gold. Note that the metal is approaching the support zone which has held...

The cost of capital - Economics - AEI

Mmm...those pesky unintended consequences of Dodd-Frank. We're gonna make sure these too-big-to-fail/jail banks don't fail! But, then that capital is unavailable to be loaned to others.

The cost of capital - Economics - AEI

Does Government Create Jobs?

No it does not...but, it can help create an environment in which job creation is encouraged: lower taxes, less regulation, less market meddling. Check out the video...Does Government Create Jobs?

Zombie » Protesters greet Obama on S.F.’s Billionaires’ Row

Zombie ... an always entertaining and engaging look at protests. Great pictures and witty thoughts about protest participants:

http://pjmedia.com/zombie/2013/04/07/protesters-greet-obama-on-s-f-s-billionaires-row/

Consumer credit mainly student-and-car-loans

Consumer credit mainly student-and-car-loans
I don't know why I'm surprised by this. Naturally, I would think that new consumer credit being incurred was through credit card usage. Wrong! Student loans and car loans...by far...eclipse credit card debt.

The student loan indebtedness being incurred is sure to be a source of financial woe for those that went to schools that charged too much (because they could get paid whatever they charged) for an education that didn't equip their students with skills that allowed them to get a job that returned anywhere near what they (and the taxpayers) invested in that education. Has a student loan "bubble" been created that will eventually burst with massive defaults or more likely, with the U.S. taxpayers left to clean up the mess in some way...with another bubble to burst somewhere else?

Maybe the government should get out of the business of making sure that everyone have a post-secondary education no matter the cost? But, oh, that wouldn't be fair! It is bad policy and definitely not a function for our government.

Never mind the car loans!

The Great Disconnect - Markets Vs. Economy | Zero Hedge

Good explanation of stock market valuation v. economic health:

Guest Post: The Great Disconnect - Markets Vs. Economy | Zero Hedge