Economic Populist Commentary

Economic commentary by a pro-capitalist, economic populist. Demand-Side Economic theory. Consists of author's economic views. Questions & comments appreciated. Dissenting views are VERY welcome and encouraged. Main "agenda" is crafting and advocacy of a "populist" economic agenda. A secondary goal is prevention of an economic Armageddon. Encouraging open discussion of US economy.

My Photo
Name:
Location: Southern California, California, United States

The author is a physician by profession, and a "student economist" by necessity. The current status of our economy necessitates the latter. The intent of this blog is to explain and discuss economics in layman terms. It is designed to promote thought and discussion. It is written by a layman. Comments and critiques of these theories and letters are welcome and ENCOURAGED. Dissenting comments are also WELCOME! They form the basis for discussion.

Saturday, June 25, 2005






BANKRUPTCY BILL, HOUSING BUBBLE & THE ECONOMY

The new bankruptcy bill will hurt the economy in several different ways. Not only will it reduce consumer spending by reducing credit card expenditures, but it will help burst the housing bubble as well.

The new bankruptcy bill will make consumers less willing to spend money and less willing to use their credit cards to make large purchases. Those who would have otherwise been able to declare bankruptcy, will have to spend more of their money paying off their debts. They'll have less money to spend on consumer goods, especially homes.

Consumer spending and demand in this country are approximately 80-85% from income, and 15-20% from borrowed money. Inflation-adjusted hourly wages have decreased over the last year. They've decreased 1.2% over the last month, and 2.2% from since January of 2005. With consumer income decreasing, the reduced ability of consumers to borrow is going to have a much greater effect. Consumers are going to have much less spendable money.
Less spendable money, in addition to higher mortgage rates, will accelerate the bursting of the housing bubble. The super rich, who buy 30% of the homes sold in this country as investment, are not going to keep buying. They won't be able to profiteer by selling them at their current inflated prices. Still less people will be able to afford them. The market supply of homes will increase from "investors" trying to dump their homes before prices bottom out. When this happens, the Greenspan-created housing bubble will burst. And the real estate speculators are going to wish they'd invested in solid gold, instead of the hot air comprising the housing bubble balloon.

Bush's bankruptcy bill slant is just like his tax-cut slant. Preserve the wealth of the most affluent, at the expense of the less affluent. The alleged theory behind such high-end giveaways is to increase capital and investment. Even if that WERE the real reason for this slant (and it is not), it's illogical with our current economy. The markets are "glutted with capital" according to the Wall Street Journal. Other sources state business is "awash in cash." There is an abundance of investment capital. In contrast, there is NOT an abundance of investment opportunities.

Why aren't there more investment opportunities? Because there is NOT an "abundance" of spendable consumer dollars. Investment opportunities are the result of consumer DEMAND for products. That demand is created by consumer spending. Aggregate spendable consumer dollars limit aggregate consumer spending. As such, aggregate spendable consumer dollars limits investment opportunities. In order to increase investment opportunities, and the utility of investment capital, spendable consumer dollars need to increase. With declining incomes, this had been maintained by credit card spending and borrowing. The new bankruptcy legislation will reduce the addition to consumer spending that comes from credit cards and borrowing. Combined with rising interest rates, this contribution will be further reduced.

The new bankruptcy legislation will amount to a further maldistribution of wealth. Many people clearly see this. At least some people understand that the "means-of-consumption' and the "means-of-production" must be balanced. (Unfortunately, none of them work for the Bush Administration.) Business profits are NOT made by producing goods. They're made by SELLING goods. Someone needs to buy the goods for any profit to be made. Reducing spendable consumer dollars reduces this ability. No amount of increase in investment capital increases that ability. At the current time, economic growth will NOT occur by increasing available investment capital. It would occur from the investment of that capital in productive investment opportunities, but those investment opportunities are scarce. Again, those investment opportunities are created by consumer spending, and the demand it creates. Thus, consumer demand needs to receive more emphasis. Consumer demand is what limits our economic growth at present. Unfortunately, acknowledgment of this reality does not fit into Bush's "No-Corporation-Left-Behind" policies.

Bush policies clearly favor "means-of-production" over "means of consumption." The bankruptcy bill unbalances this even further. In so doing, it further reduces the utility of investment capital, while further increasing the investment capital excess over investment opportunities. We can't "grow" our economy this way. Building new production facilities with this capital has NO benefit whatsoever. Our current industrial capacity is underutilized. Current utilization rate is 79%. It was 85% at the end of Clinton's presidency. Further "growth" will only occur with increased utilization. Increased consumer demand increases that utilization. It will increase the demand for production by those facilities. Increased demand for production also increases demand for workers to create that production. Increased labor demand increases both the numbers of those working, and the wages of those already working. (increased demand ALWAYS increases price. In this case, that price is American wages.) We don't need to assist the rich, and increase their investment capital. We need to help consumers, and increase their purchasing power. This would create more investment OPPORTUNITIES. This helps business, as well as consumers. Some might describe these wealth-redistribution ideas as "share-the-wealth" concepts. But I call them "increase-the-wealth" concepts. I think many would agree.

20 Comments:

Blogger unlawflcombatnt said...

Note to posters:

I delete anything that appears to be an advertisement for a product. Information-type site postings are OK, but postings that are advertisements for consumer products will be deleted.

4:55 PM  
Anonymous Anonymous said...

I looked at several sites during this search but yours was the best I found on this subject. Keep up the good work.

10:20 AM  
Anonymous Anonymous said...

I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.

Take a look at Wallstreetwinnersonline.com

RickJ

5:35 AM  
Blogger unlawflcombatnt said...

7-10-06
Note to posters,

Though I normally delete responses that are mainly for business advertising purposes, I've allowed several in this category because they pertain to bankruptcy. Given that this thread deals largely with bankruptcy, they seem appropriate here if they provide information on the new bankruptcy legislation.

1:57 PM  
Anonymous Anonymous said...

Hi people
I do not know what to give for Christmas of the to friends, advise something ....

4:47 AM  
Anonymous Anonymous said...

Hello. Good day
Who listens to what music?
I Love songs Justin Timberlake and Paris Hilton

11:21 PM  
Anonymous Anonymous said...

How's it gone?
[b][url="http://hydrocodone.dewall.info "]hydrocodone order[/url][/b]

12:43 PM  
Anonymous Anonymous said...

Thanks a lot for such a wonderful site i see that you created it going the whole hog!!
- www.blogger.com 8
spaghetti alla carbonara

5:27 AM  
Anonymous Anonymous said...

Only for community www.blogger.com! HOT! Out of stock
1.[URL=http://www.medicinese.org/tramadol.htm]Cheap TramadolNo Prior Prescription Required. US Based Pharmacy, US Licensed Doctors, Free Online Consultation. Fedex Overnight Shipping.[/URL]
2.[URL=http://www.medicinese.org/soma.htm]SOMA 90ct $70 FREE OVERNIGHT SHIPPING![/URL]

7:52 AM  
Anonymous Anonymous said...

[url=http://adult-cam-to-cam.urbambo.info/]adult cam to cam[/url]
[url=http://adult-video-cam.urbambo.info/]adult video cam[/url]
[url=http://asian-babe-cam.urbambo.info/]asian babe cam[/url]
[url=http://cam-chat-nude.urbambo.info/]cam chat nude[/url]
[url=http://cam-in-ass-sex.urbambo.info/]cam in ass sex[/url]
[url=http://cam-porn.urbambo.info/]cam porn[/url]
[url=http://cams-sex.urbambo.info/]cams sex[/url]
[ur
l=http://directsex-cam.urbambo.info/]directsex cam[/url]
[url=http://fat-sex-cams.urbambo.info/]fat sex cams[/url]
[url=http://free-fuck-cams.urbambo.info/]free fuck cams[/url]
[url=http://girl-strip-cam.urbambo.info/]girl strip cam[/url]
[url=http://girls-room-cam.urbambo.info/]girls room cam[/url]
[url=http://hidden-cam-fuck.urbambo.info/]hidden cam fuck[/url]
[url=http://hidden-sex-cam.urbambo.info/]hidden sex cam[/url]
[url=http://hot-sex-cams.urbambo.info/]hot sex cams[/url]
[url=http://lesbian-cam.urbambo.info/]lesbian cam
[/url]
[url=http://live-dorm-cams.urbambo.info/]live dorm cams[/url]
[url=http://live-teen-cams.urbambo.info/]live teen cams[/url]
[url=http://naked-cam-strip.urbambo.info/]naked cam strip[/url]
[url=http://nude-free-cams.urbambo.info/]nude free cams[/url]
[url=http://nude-spy-cam.urbambo.info/]nude spy cam[/url]
[url=http://porn-chat-cams.urbambo.info/]porn chat cams[/url]
[url=http://real-sex-cams.urbambo.info/]real sex cams[/url]
[url=http://sex-voyeur-cams.urbambo.info/]sex voyeur cams[/url]
[url=http://spy-cam-dildo.urbambo.info/]spy cam dildo[/url]
[url=http://teen-cam-strip.urbambo.info/]teen cam strip[/url]
[url=http://teen-peep-cam.urbambo.info/]teen peep cam[/url]
[url=http://teen-sex-cam.urbambo.info/]teen sex cam[/url]
[url=http://web-cam-adult.urbambo.info/]web cam adult[/url]
[url=http://web-cam-porn.urbambo.info/]web cam porn[/url]

8:47 PM  
Anonymous Anonymous said...

[url=http://asian-girls-cam.urbambo.info/]asian girls cam[/url]
[url=http://cam-2-cam-girls.urbambo.info/]cam 2 cam girls[/url]
[url=http://cam-teen-chat.urbambo.info/]cam teen chat[/url]
[url=http://free-lesbian-cam.urbambo.info/]free lesbian cam[/url]
[url=http://girls-web-cams.urbambo.info/]girls web cams[/url]
[url=http://lesbian-cams.urbambo.info/]lesbian cams[/url]
[url=http://mia-cam-nude.urbambo.info/]mia cam nude[/url]
[url=http://naked-women-cams.urbambo.info/]naked women cams[/url]
[url=http://private-girl-cam.urbambo.info/]private girl cam[/url]
[url=http://teen-cam-videos.urbambo.info/]teen cam videos[/url]
[url=http://under-desk-cam.urbambo.info/]under desk cam[/url]
[url=http://draghixa.bamboquia.info/]draghixa[/url]
[url=http://hentai-famous.bamboquia.info/]hentai famous[/url]
[url=http://xxxspacegirls.bamboquia.info/]xxxspacegirls[/url]
[url=http://nude-soccer.bamboquia.info/]nude soccer[/url]
[url=http://hot-box.bamboquia.info/]hot box[/url]
[url=http://hedonism-ii.bamboquia.info/]hedonism ii[/url]
[url=http://sexyvids.bamboquia.info/]sexyvids[/url]
[url=http://www-abadboy-com.bamboquia.info/]www abadboy com[/url]
[url=http://boot-fetish.bambomundo.info/]boot fetish[/url]
[url=http://granny-slut.bambomundo.info/]granny slut[/url]
[url=http://cucumber-sex.bambomundo.info/]cucumber sex[/url]
[url=http://mytunes.bambomundo.info/]mytunes[/url]
[url=http://lolita-kids.bambomundo.info/]lolita kids[/url]
[url=http://kung-fu-hustle.bamboterra.info/]kung fu hustle[/url]
[url=http://dawnsplace.bamboterra.info/]dawnsplace[/url]
[url=http://free-handjobs.bamboterra.info/]free handjobs[/url]
[url=http://bus-travel.bamboterra.info/]bus travel[/url]
[url=http://avril-nude.bamboterra.info/]avril nude[/url]
[url=http://blowjobs-com.bamboterra.info/]blowjobs com[/url]

6:24 AM  
Anonymous Anonymous said...

[url=http://shemale-gallery.1wwwabadboycom.info/]shemale gallery[/url]
[url=http://chyna-sex.1wwwabadboycom.info/]chyna sex[/url]
[url=http://live-porn.1wwwabadboycom.info/]live porn[/url]
[url=http://pee-squad.1wwwabadboycom.info/]pee squad[/url]
[url=http://clickher-com.1wwwabadboycom.info/]clickher com[/url]
[url=http://muscle-xxx.1wwwabadboycom.info/]muscle xxx[/url]
[url=http://brazil-pussy.1wwwabadboycom.info/]brazil pussy[/url]
[url=http://naked-brunettes.1wwwabadboycom.info/]naked brunettes[/url]
[url=http://anal-plug.1wwwabadboycom.info/]anal plug[/url]
[url=http://teen-flood.1wwwabadboycom.info/]teen flood[/url]
[url=http://baby-rompl.1wwwabadboycom.info/]baby rompl[/url]
[url=http://sexo-oral.1wwwabadboycom.info/]sexo oral[/url]
[url=http:/
/hot-red-head.1wwwabadboycom.info/]hot red head[/url]
[url=http://old-young.1wwwabadboycom.info/]old young[/url]
[url=http://bunny-glamazon.1wwwabadboycom.info/]bunny glamazon[/url]
[url=http://actiongirls.1whiteteens.info/]actiongirls[/url]
[url=http://fazed-net.1whiteteens.info/]fazed net[/url]
[url=http://cum-guzzler.1
whiteteens.info/]cum guzzler[/url]
[url=http://stripper-shoes.1whiteteens.info/]stripper shoes[/url]
[url=http://fozporn.1whiteteens.info/]fozporn[/url]
[url=http://lesbian-chat.1whiteteens.info/]lesbian chat[/url]
[url=http://wifeys.1whiteteens.info/]wifeys[/url]
[url=http://jizz-on-my-jugs.1whiteteens.info/]jizz on my jugs[/url]
[url=http://thebestporn-com.1whiteteens.info/]thebestporn com[/url]
[url=http://hot-mom-sex.1whiteteens.info/]hot mom sex[/url]
[url=http://teen-tiffany.1whiteteens.info/]teen tiffany[/url]
[url=http://nipple-play.1whiteteens.info/]nipple play[/url]
[url=http://amateur-bbw.1whiteteens.info/]amateur bbw[/url]
[url=http://electro-calgary.1whiteteens.info/]electro calgary[/url]
[url=http://tunaparty.1whiteteens.info/]tunaparty[/url]

8:46 PM  
Anonymous Anonymous said...

Well done!
[url=http://gabqqxfu.com/qlgm/iaiu.html]My homepage[/url] | [url=http://cawxyrob.com/gqat/vhdb.html]Cool site[/url]

10:22 AM  
Anonymous Anonymous said...

Good design!
My homepage | Please visit

10:23 AM  
Anonymous Anonymous said...

Great work!
http://gabqqxfu.com/qlgm/iaiu.html | http://necurfle.com/auwk/lqkr.html

10:23 AM  
Anonymous Anonymous said...

Experience Breast Enhancement in 5 Minutes Or Your Money Back!

4:23 AM  
Anonymous Anonymous said...

**adult webcams**adult web cam hosting
www.zopez.com is a free adult webcam community check it out and have fun,you have nothing to lose it's free.

6:39 PM  
Anonymous Anonymous said...

Hi
Shocking news! Each 100-th visitor can receive all our products for free! More info inside...
[url=http://rubyurl.com/Zpc]Diet Pills[/url]
[url=http://xhref.com/17bd]Enlarge Your Penis[/url]
[url=http://32url.com/?XBgR]Penis Patch[/url]
[url=http://z.la/irlat]Pheromones[/url]
[url=http://dtmurl.com/9tx]Human Growth Hormone[/url]
Improve your health!
See you later, thanks
P.S. Delete this message if you want...

12:42 AM  
Anonymous Anonymous said...

photo russian sharing site

1:13 AM  
Anonymous Anonymous said...

Les jeux de machines a sous en ligne sont les jeux de casino les plus populaires dans un casino en ligne cascade plusieurs raisons. Une des principales raisons est qu'il y a une grande variete de machines a sous.

10:44 PM  

Post a Comment

Subscribe to Post Comments [Atom]

<< Home