Try not to get down s/m
Posted By: Sal on 2009-02-14
In Reply to: I'm sorry but I am just really down - sm
The US got into terrible shape over the last 8 years, culminating in almost a complete collapse of financial institutions, and a very, very major recession, as well as some other very major issues on top of that.
A very similar situation occurred in Japan about 15 years ago, where real estate values went sky high, banks were deregulated to a degree and were making bad.risky loans. The result was identical to what is occurring in the US today, a collapse of their banking sysyem, foreclosures, very high unemployment, etc. It was called The Lost Decade because during that time period there was no growth, just stagnation, high unemployment, tremendous deficits and the like.
Under dire circumstances such as that, as well as what we are going through today, the only options that work are attempts at stimulating the economy and simultaneously the financial system. Doing nothing is not an option under these circumstances, as doing nothing will likely result in a near total collapse of the financial system as well as a further deterioration in the economy, and by that I mean a depression versus a very severe recession.
According to Japan, having gone through a very similar situation 15 years ago, actually their opinion from their own experience is that the measures being taken here today are not massive enough to turn the situation around. In the end, in order to right their economy, they had to have a very massive stimulus (instead of lesser ones that they had been trying for years) as well as finally auditing banks, which resulted in letting some banks fail completely and the rest were nationalized. It cost trillions upon trillions of dollars to do that, but resulted in Japan ultimately getting their economy back on its feet.
I will say that I have read a fairly decent portion of the current stimulus bill, and in actuality there are many provisions in it besides creating solely jobs regarding infrastructure. There will be job creation in the health care field, the alternative energy field, a good amount of help for small businesses and in many other areas. In tandem, problems in the financial sector are being addressed, which you will be hearing about in short order.
While Japan ultimately had to pour massive amounts of money all at one time versus what they had been doing, smaller stimulus packages and less interference with their financial system, to ultimately turn their eceonomy around, hopefully, hopefully the measures that are currently being taken here will produce the start of a recovery, so we don't end up having to do what Japan had to, that being literally pouring trillions of dollars into the economy, and nationalizing the banks.
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