Yes, we all have heard it several times. If the US economy has to come out of recession it will be on the shoulders of me and you the US consumer. So open up your pocketbooks and show some green! Is it really?
Let's focus on the micro economics for a second. I as an individual have no money to spend - so I decide to issue SSK bonds which are the safest because they are backed by me...of course you know me - I am the most dependable person in this whole world - I will never go bankrupt. Of course some people will buy the bonds give me the money and life goes on. Until one day, suddenly some of these bondholders tell me it is time to pay up. Chapter 11 sound familiar at that time! We are in a similar situation on the macro economics side.
Sometimes I naively feel that the micro and macro spending principles are the same. You earn some, you spend some and save some for later. However, it is of course more complicated than that otherwise I would be a successful financial advisor earning top $$ in New York :) In any case, to me the solution is not more and more spending but to create opportunities of organic growth...think green initiatives...not the type where you would spend your entire paycheck on grocery from Whole Foods. Revitalizing the manufacturing sector in US and reduce cost of goods produced here. Yes health care reform is necessary and so is the reduction of dependence on foreign oil. Along with that we have to figure out a way of becoming competitive on the front of labor costs since it directly relates to cost of goods produced. Government subsidies belong to these areas rather than "Cash for Clunkers" which is not only benefitting US car companies but more the foreign car companies since in general they have more fuel efficient cars.
...or maybe we will just go issue some more bonds...you know how a stock trades...there has to be a buyer for someone who is selling...even if it is at $.01.
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