Well, a blog is really good for people who like to play economist, like me. So I’m reading this post and two things occur to me.

1. Costco up 7%, Penny’s down 12%, Wal-mart down .7%. That’s good news. Costco pays a living wage and tries to sell stuff made in the US. Proving they are profitable in a recession is one way to help frame the argument to get rid of the idiots who got us into this mess, the ones who hate unions and working people.

2. SN says:

This does not look like much, but it is the speculators who are in a hurry. They pay retail price for things. They may be small fraction of the economy, but they are a large fraction of the immediate demand on the far end of the demand curve. Things like FedEx and UPS having problems indicates that the speculative collapse has long since hit the profitability. This began in October and November.

The next thing that happens is that business stop hiring and start laying off. This too has started. Consumers, pressed by inflation and credit squeeze, restrain spending. This was December through March.
What is next is the rippling through the rest of the economy, much of which is not very profitable. Thin profit margin businesses start reconfiguring. First they try and hold the line on prices, and accept lower volumes. One reason for demand spreading is to create more people with just enough to spend, rather than fewer people with more to spend, it blunts this business tendency not to pay menu costs or write down inventory.

This cycle can continue for several iterations as the recession continues. Finally there is a bottoming, where the activity reaches a new equilibrium. However, looking back over two centuries of hydrocarbon business cycles, it is clear that wages only return when there is an injection of real stimulus. The present stimulus is nowhere near enough, and that isn’t necessarily a bad thing, because the nature of the stimulus also determines the shape of the expansion.

And that is better left to people who are capable of doing more than staying in office despite sub-30% approval ratings.

It’s really simple, so simple even an ignoramous like me can grok it: meet real needs, create real employment, keep it domestic.

Let’s forget about the Village economy for a minute. Let’s pretend there is so much money floating around in this country, so much that the gov’t can comfortably take from the population. What are our real needs? Health care, stabilizing and preserving the environment, and developing alternative energy solutions. Adress these needs properly, and Bam- we don’t have a recession or economic woe. Because we could give every American 2 jobs in these industries and still not meet every challenge they present. A lot of folks have been talking about our crumbling infrastructure too; I view that as an environmental opportunity as well and as a policy focus it only adds to my argument.

The nice thing is, in my make-believe world of logical economic priority, the government doesn’t really have to spend all that much, immediately, to get things moving in the right direction, quickly, again. Credit is a funny thing, it’s not “real” so much as it’s an agreement between people about a common future. This comment from the post really stirred my intellectual juices:

Is this not man made
None of the economic blogs I read, none, have a positive word and most are very very concerned. When you mention 300 Trillion please chew on this, and contemplate how far the gov’t can “bailout” these people, and at what cost -CD in derivatives, you understand the severity. But it is all man made. Money is man made, it’s value is man made - yet labor is man, and isn’t that what really counts, and without there is nothing.
Long and short, make everything free. Nothing changes, everyone goes to work just like they did before, but you don’t pay for anything. There are needed only basic rules: If you want it, you have to support it-want the Ferrari, better know how to change the oil or have a friend who really likes to do it for fun. Want the 10,000 sqft house, you are going to do alot of dusting, because volunteer maids may be hard to find.
Everyone works - but you work at what you want to do, and your value is equal - meaning the plumber is just as important as the doctor when the need hits.
Many many benefits, little downfall unless you believe that money IS actually more important than man.
Food for thought. -Bb

Right on, sister/brother.

Anyway, as others keep pointing out to me, the upside of downturn is that people start using their imaginations again. Things don’t have to, and haven’t, and won’t “always be this way.” Crisis has a way of freeing the mind. I look forward to the time when many share my idea: we don’t need to let a tiny handful of unelected multinationals playing a rigged game ruin the economy for the rest of us. Nor damn our grandchildren to climatological hell, but never mind that.