From all the information we’ve been getting lately, you can’t really tell if the world is coming to an economic catastrophe, or on the verge of an incredible turnaround. While many top economists think there’s worse to come, others think the actions taken and recent changes will have a strong effect in turning the economy around by the 2nd half of 2009.
I’ve heard all this before and it seems for the most part, things have gotten worse and worse. But there are some strong steps being taken, and the price of oil has “tanked”. Just the price drop in oil is the equivalent of a $350 billion stimulus package according to an article, Why the economy might bounce back in 2009 by U.S. News & World Report. They also go on to mention that the mortgage rate reduction, that could bring 30 year rates down to 4.5 percent, could put another $200 billion dollars into homeowners pockets.
Add to that, a massive stimulus package planned by the Obama administration, and that could turn things around very quickly. I do like the idea of payroll tax holidays. One of the reasons we’re in this mess is because working people simply do not make enough money. The consumer price index that many wages are tied to has been rigged for more than 20 years: Fake U.S. inflation numbers masked crisis according to Jim Jubak. I could certainly see that scenario even in the eighties. I remember the price of houses, cars, meat and health care all doubling over the course of 3-4 years. Each of those years had an official CPI of under 4%. It just wasn’t possible.
And that’s the problem. The people who do the actual work don’t get enough pay to live on. And, the companies that pay the workers have no money to give them, because consumers aren’t buying. A payroll tax holiday puts money in the pockets of both workers and businesses, where it’s sorely needed. I believe that would kick start the economy until the long term job programs kick in. If people are still out of work in large numbers, this would stop the bleeding of money going out in the form of unemployment, with nothing coming back in. At least with government work projects, the country gets an infrastructure and impetus in the renewable energy technologies. Both of which will really help this country in the future.
Not sure, but I think I see light at the end of the tunnel.
