Economic Stimulus

Analysis in popular media tends to attribute the retrace to deflation following the stimulus package in 2008 to the consumer paying down debt rather than spemding it. It is a fundamental misattribution that identifies the problem.

The stimulus money was inflationary. It went right to the profits of the corporate and was paid out to the shareholders who are largely, disproportionately, the top ten percent of incomes, which causes the need for the other 90% to incur debt borrowed from the very rich. The result was consolidation of the stimulus, or deflationary crisis.

According to Ivy-League analysts that pop media offers us as the experts that will lead us out of the crisis with the intimate understanding of having engineered it and having led us into it for the General Welfare, this is not a matter of Wall Street versus Main Street. It most certainly is and indicates where their leadership will lead us--crisis!

Without reversing the regressive tax code, economic stimulus just stimulates consolidation of the wealth and recession.

While stimulus will cause a steep V-curve in equity valuations, this will not indicate economic recovery. That will be a sell signal. If you do not sell, you will be left holding the bag, and once again Wall Street wins at the expense of Main Street. The People's dependancy on Wall Street is thereby supported through the credit economy in which paying down your debt means you are less likely to have a job which, of course, means you must incur debt, and who are you going to get that from?

Interesting how if The People are forgiven debt, it is taxed as income, while the capital organized to produce the debt is regressively taxed if at all by various accounting rules available only to the very rich. The People need to seriously ask why that analysis is not a part of the pop-media presentation. That it is not included defines the analysis of pop media as mere propaganda that cannot be trusted.

Consider that the trillions of dollars applied for a worldwide, coordinated bailout plan being administered by treasuries and central banks still yields the prospect of global recession. That measures how much value has been expropriated from The People by financial, Wall Street, interests and used against The People. Expecting financial interests to fix it is foolish. The "fix" is in, and fixing that is the political will of The People to identify leadership that will not use The People's value against them. That would not be a person like this Governor Palin that regurgitates Republican platitudes on cue.

Arguing, for example, that spreading the wealth around--that The People fully sharing in the value they produce--will deprive them of the value they produce because they are depriving the investors of the value they need to cause financial panic and crisis is a complete comedy of errors. McCain's bottom-up proposal to buy out bad mortgages at full value, for example, does not recapitalize the benefit which is what is required to allow the mortgage to be affordable with economic conditions that adds the ability to pay for it at any price.

If we consider that the Economic Stabilization Act leaves the use of bailout funds entirely to the discretion of institutions that are prone to cause crisis for The People--the kind of decisionmaking Palin says is good for The People, the probability for risking the funds to perpetuate the crisis and another stimulus package does not indicate recovery.

The recovery funds are likely to be used to buy back shares, pay debt, and buy smaller regional banks with the argument that such consolidation is to ensure stability of the banking system when it has proven destabilizing.

Stabilization and stimulus will produce only a short term recovery because the causal factors of recession are both left intact and reinforced. It does not imdicate a bullish trend till we decide to recpaitalize the benefit with a more progressive tax code and deconsolidate the financial sector. Otherwise, we are locked in short-term oscillations (volatility) indefinitely. Improved leading indicators will only serve to indicate the volatility.

An Obama/Biden victory is a sure bullish indicator.